FMCG Sales channels

2. INTRODUCTION Fast-moving Consumer goods (FMCGs) also called Consumer Packaged goods (CPG), refer to the products used in day to day lives. It consists of durable goods, nondurable goods, and services with higher consumer demand and relatively lower margins. FMCGs have a short shelf life and perishable nature. In India, the FMCG market has a remarkable impact on the economic structure. As the name suggests, the demand for these goods is steeply rising giving opportunities to most of the companies to invest in it. Every next item sold or service provided via online platforms such as Amazon, Flipkart, or any other e-commerce platforms also belong to FMCG such as skincare products, beverages, and other categories. With most of the companies betting a larger portion of their incomes on these ventures, it is important to differentiate your product from varieties of products out there competing to sustain. A strong and well-built sales channel plays a vital role in the case of FMCGs to provide adequate provision to customers.The distribution channel involves independent businesses or organizations to carry out the process from manufacturing to supplying the products to consumers.

3. Elementsof Sales channel Sales channel consists of independent organizations aligned to the company to distribute products or services from source to consumers. The channel of distribution includes the producer, the ultimate consumer, and any middlemen. To understand the working of the sales channel, it is important to understand the crucial entities. Manufacturers – There are companies or unit responsible for the production of goods. Distributors simply buy the products from manufacturers and sell them to wholesalers or retailers. Usually, a company has its distributor to sell its product to other outlets. Merchants such as retailers, wholesalers buy and stock the products in bulk amount and then sell them to other retailers or sometimes directly to the final buyer. Merchants can be independent companies or sometimes a manufacturing unit has its retail or wholesale division.

4. Facilitators ease the transportation of manufactured goods. It includes logistic services, warehouse owners responsible for transportation and storage not trading of goods. Consumers– They are the final user of manufactured goods or services.

5. Need for sales channel A channel involves various levels that break down the process of buying and selling making it easy and manageable. What is the company sells directly to the consumer? Will it be cost-efficient? Companies with incompetent sales channel but the efficient quality of the product will fail to handle all the necessary functions themselves. So the independent company’s involvement will carry out the work of transporting and trading effectively. A geographically strong and wide-ranged channel for FMCGs help to • Cover a large market of customers. • FMCGs have perishable nature and immense demand making them a necessity. • High profitability can be achieved through high sales volume. • Minimize inventory cost.

6. Types of distribution channels- • Manufacturer to Customer • Manufacturer to Retailer to Customer • Manufacturer to Wholesaler to Retailer to Customer Manufacturer to Customer– This is the direct selling process with no middlemen involved. A manufacturer sells directly to the buyer through its retail units, for example, Bata. The network is fast, economical, and the shortest. Small producers and producers of perishable items sell through a direct network to local consumers. Big firms equipped with sufficient facilities also adopt this technique to cut distribution costs.

7. Manufacturer to Retailer to Customer– This channel involves one middleman that is the retailer, and is therefore called one stage distribution channel. Manufacturers supply the products to big retailers like departmental stores and chain stores. These retailers acquire goods in large quantities and perform marketing activities on their own to sell them to the final buyer. This network is very common for purchases such as TV sets, refrigerators, washing machines, and other durable products. Manufacturer to Wholesaler to Customer– This channel is widely used for an extensively circularized market for eg: drugs, groceries, etc. It is the traditional channel of distribution with wholesalers and retailers. This channel is used by small producers with a narrow product line. The advantage of this network is the sales and promotional support by the wholesalers.