Economy

Top FMCG companies cut down supplies to online retailers

Ayushi Kar | | Updated on: May 16, 2022

Deep discounting practices, esp by Jio Mart, is hurting ecosystem, says AICPDF President

All India Consumer Products Distributors Federation (AICPDF) told BusinessLine that top FMCG brands have reduced supply of their products to e-commerce companies, especially Jio Mart, due to their anti-competitive practices. This comes after the trade association had organised retailers in Maharashtra to stop carrying products by Hindustan Unilever and Colgate Palmolive in January, to protest deep discounting carried by B2B retailers such as Udaan, Jio Mart, Walmart Best Price etc. 

AICPDF President, Dhairyashil Patil told BusinessLine, that top FMCG brands such as Nestle, Marico, HUL, Dabur and many more have reduced their supply to Jio Mart. Patil said, “Top FMCG companies have rationalised supply to Jio Mart, due to their anti competitive pricing policies. FMCG companies are choosing to prioritise offline distributors that contribute to 85 per cent of their sales revenue, over e-commerce companies like Jio-Mart ,Udaan, Intex that make for less than 2 to 3 per cent of their sales revenue. All top FMCG companies have informed AICPDF that they have reducing the quantities  they were supplying to such players.”

Jio Mart singled out

Patil clarified that FMCG companies have been reducing supply to Jio Mart for the past two months. As per Patil, Jio Mart has been specifically singled out, since it is undercutting pricing much more than other online retailers in the ecosystem. 

“Our margin is approximately 5 per cent, JioMart ends up offering a discount of at least 10-15 per cent even below our authorised distribution margin. This is hurting the ecosystem,” Patil had told BusinessLine in a previous story”

AICPDF had also claimed that Marico had completely stopped billing to Jio Mart, after the Association complained to Marico regarding the deep discounting practices. BusinessLine had previously reported that sources in JioMart denied admission that Marico had stopped billing the Reliance Retail-owned grocery giant.

BusinessLine reached out to FMCG companies as well as Jio Mart for an official comment. None of them gave an official statement at the time of filing the story. 

Published on May 16, 2022
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