FMCG companies initiative to lower replenishment period in rural areas
In recent times, rural demand in India is growing more rapidly than the demand in urban areas. Major fast-moving consumer goods (FMCG) players like Britannia, Godrej Consumer, and ITC are using stock-ready vans to quickly deliver their products to small shops in rural areas. It will aid the shop owners in getting stock at faster speed and also keep their stock full. It will promote good business for the retailers as well the companies. Its main purpose is to contract turnaround times for shop owners.
Old two-step process of FMCG distribution
In the past, FMCG used to distribute their products to the retailers in rural areas by following a two-step process of FMCG distribution. In this, the sales representatives will visit retailers in rural areas and collect their respective orders. The delivery of the stock will be completed on the same day or the next day.
New initiative of FMCG firms
In this new plan, many FMCG players partnered with stock distribution vendors. These vendors are the one with responsibility to coordinate between stockists and van drivers. According to this new initiative, the stockists load the company’s products in a van. On a daily basis, the van driver, along with stock distribution vendors goes to 4 to 5 villages. The most important benefit of this initiative is that it leads to immediate fulfillment of the order in just a few hours. In the past, the time period required to fulfill orders was 1 to 2 days leading to stockout. With the help of this plan, replenishment period is contracted to just a few hours.
The main goal of the plan is to reduce replenishment time to less than a single day. It will aid in mitigating revenue losses caused by no stock. In the previous few months, some FMCG players have implemented this strategy.
It broadens the role of van drivers to someone who is knowledgeable about a firm’s product portfolio and also able to promote it. In the past, the role of van drivers was just to deliver products of the companies at the right location.
In the midst of growth in rural demand, this initiative of FMCG firms is gaining progress. Many firms are adopting this strategy to expand their market presence in rural areas.
Steps taken by ITC
ITC is the leading company to introduce a van-led distribution model in rural areas for a long period of time. To ensure their products reach to the most remote parts of the country, ITC uses stock-ready mobile vans. It is cost-effective and makes it easier and faster to deliver products in the most remote parts of India as well. It ensures the products are reached to small retailers in the village in a short span of time and helps them to not get stockout.
The company also appointed stockists to handle the work of vans in order to improve its distribution network in the country. Apart from this, the firm uses the latest technology like artificial intelligence (AI) and geo-spatial mapping. It helps the company to recognize high potential markets and plan the best route for their delivery vans. It aids in improving the efficiency of distribution networks.
In order to expand product sales via vans in rural areas, Godrej Consumer launched Vistaar 2.0. Many companies have identified the growing potential of rural demands supported by expansion in disposable incomes and rise in internet penetration in rural areas.
In the present times, many companies are using stock-ready vans, and smart logistical strategies. The recent initiative of FMCG companies will help them to improve their sales efficiency and transform the dynamics of the rural retail market in India. It will increase availability and accessibility of essential products in the rural market.
