The fast-moving consumer goods (FMCG) industry is grappling with challenges of an unprecedented nature -- meeting a surge in demand amid the Covid-19-induced lockdown that has grounded distribution and logistics to a standstill.

While companies have been increasingly showing an inclination towards direct distribution, its implementation remains riddled with challenges, according to experts.

“Retail direct distribution continues to be a challenge due to containment zones. We are now focussing on driving growth through wholesale and rural channels. We have no plan to drop direct coverage. We have initiated van coverage in rural markets, introduced loyalty programmes along with advertisements in mass media. We are also investing in digital marketing to connect with our rural consumers.

“While wholesale is catering to the urban demand currently, direct coverage in urban areas seems to be on the recovery path as more and more stores adapt to the new normal,” Mohan Goenka, Director, Emami Limited, told BusinessLine .

For a widely- distributed company, such as Emami, it is not feasible to have a direct dealership strategy, with its direct pan-India footprint of 9.5 lakh stores, which includes the rural market, he added. “A right mix of direct, wholesale with a rural coverage will help us overcome the current difficult times. Currently, rural and wholesale channels are witnessing a double-digit growth,” said Goenka.

Anil Talreja, Partner, Deloitte India, said shifting from the traditional way of distributors interacting with consumers to companies doing it directly is a challenge. “I think what companies are now thinking is this--how do we achieve the best of both, that means, on one hand, go directly to the consumer, and on the other hand, doing it in the most efficient and economical way,” said Talreja. One way to achieve this would be by adopting digitisation and virtualisation so that the work that would be done physically would be done by machines and the internet, he said.

While a direct distribution strategy would be easier for the big companies to adopt, it is is not the case for the smaller companies with lesser financial resources, he said. In this case, companies will engage with third party service providers to reach out to consumers, said Talreja. It would also be easier for the smaller companies to reach out to consumers directly in urban areas as the travel cost in rural areas is higher, he added.

There have already been efforts at direct distribution amid the pandemic and the changes it brought about. Dabur, for instance, has tied up with online delivery services like Swiggy and Dunzo. Similarly, Emami has also partnered with Swiggy and Zomato, apart from also tying up with tertiary delivery models like Delhivery and Jarvis “whenever there has been a significant delivery challenge to retail”..

Digital retail ordering systems to connect with retailers pan-India are also being adopted to service retail and SFA-based ordering which its frontline field forces use, Goenka said.

Saugata Gupta, MD & CEO, Marico Ltd, had earlier told BusinessLine that “people with direct distribution or alternate channels of fulfilment are more likely to do well”.

“We would like to continue with direct-to-consumer because that gives us direct contact and access to data, which is very good for consumer engagement. We will look at multiple fulfilment, and I think the omnichannel is here to stay. A lot of transformation in what I would call the go-to market or the shift to e-commerce — that would have happened in two-three years — will now happen in six months,” he had said in May.

Tata Consumer Products Ltd said in a statement in May that it has strengthened its direct distribution model by partnering with food delivery applications such as Domino’s Pizza and Zomato. Similarly, in April, it had said that the company’s distributors would list as marketplace sellers on the Flipkart platform. Through this consumers can use the Flipkart platform to buy different combo packs of essential products such as beverages and foods offered by the company.

“Through these partnerships, Tata Consumer Products intends to safeguard people’s health by giving them alternate channels to buy our food and beverage offerings. They can now purchase our products from the safety and comfort of home.

“The partnerships leverage complementary strengths to ensure essential products reach the doorsteps of consumers who need them,” said Sunil D’Souza, MD & CEO, Tata Consumer Products.

“We rolled out the 'Immunity at your Doorstep' programme to reach out directly to consumer households across the country and provide them easy access to our range of immunity-building and hygiene products during the lockdown,” said Mohit Malhotra, CEO, Dabur India Ltd.

Dabur has also rolled out the ‘Dabur immunity van’ initiative, wherein

specially designed vans move around residential localities across India, reaching out to consumers and giving them access to its range of Ayurvedic preventive healthcare products. These vans are currently running in Kanpur, Varanasi, Indore, Bhopal, Nagpur, Jabalpur, Ludhiana, Bilaspur, Jaipur and Raipur, said Malhotra.

Kartik Johari, Vice President, Nobel Hygiene, said that the company had experimented with a few models of direct distribution in the initial days of the lockdown when the traditional models were abruptly caught in a limbo. For instance, it had a partnership with Zoom Car, wherein 10-15 orders per car was made on a daily basis to ensure direct delivery to customers. But, now that the traditional channels have also started opening up, there is a coexistence of both these models, he said.

All companies that BusinessLine spoke to said that there is no plan to cut down on traditional dealerships.

The pandemic has proved to us how important it is for an organisation to leverage digital technology to survive and grow, said Goenka. Emami, for instance, is working closely with agencies to develop rural potential mapping, apart from expansion or consolidation plans being made with the use of maps and digitisation of rural markets. It is also taking steps to automate the modern trade deliveries. The company has plans to fully digitise the entire distribution system for Emami, he said.

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