Distributor: Key to success in FMCG Distribution

In architecture jargon, keystone is the one which locks the other stones into their positions. That makes it structurally very important. If we apply the analogy to FMCG distribution channel, the Distributor is the keystone. He is called by various nomenclatures like Distributor, redistributors, dealer, wholesale dealer etc…but broadly defined and generally acceptable definition of the distributor is ‘A person or a firm who links the manufacturer/marketing company with the retailers.’ He is the one who purchases from the manufacturing company in bulk quantity and re-distribute it in small quantities to retailers. Let’s look at the position of the distributor in the whole distribution channel first and then define the role played by the distributor.

Role of Distributor: FMCG distributor generally has exclusive rights of distributing all products or a set of products in a defined geographical territory. In the given territory, he will be responsible for the redistribution of the products, retail penetration and market coverage. Sometimes, distributor is also appointed to serve a particular clientele base like hotels, canteens, restaurants etc. Traditionally a distributor is treated like a trader in the distribution channel. But now many organizations have started seeing distributors playing much bigger role. Following are some of the functions a distributor plays in modern FMCG channel.

• Basic role of distributor is to purchase/stock products in bulk from the manufacture and sell/distribute them to retailers in smaller quantity.
• Distributor takes orders from the retailers and institutions and ensures timely and quality delivery of products.
• Distributor maintains stock of the products to absorb the supply fluctuation from manufacturer.
• Distributor provides required financing for allowing credit to the retail market.
• Distributor is the person who will provide ground level data on demand estimation for the products.
• Distributor expands the retail universe (by opening new outlets) as well as the retail penetration of various products.
• Distributor takes up field level marketing activities like H2H promotions, inshop promotions etc.
• Distributor helps in minimizing consumer complaints and resolving them.

This basically clarifies the broad role of the distributor in modern FMCG channel. We will see the functions and daily routine of a typical distributor in the next part to finally derive the criteria for selection of a good FMCG distributor.