India is a country of 1.3 billion people and the numbers are soaring on a daily basis. Increase in population has also lead to a surge in the demand of the Fast Moving Consumer Goods (FMCG). The FMCG is the fourth largest component of India’s GDP and the surprising fact is that the rural sector provides 60% of the total revenue for the FMCG companies.
The rural markets have the potential to become the next FMCG growth contributor owing to increased awareness and upwardly mobile incomes. They can have the first mover advantage over there if they streamline their products and supply chain. The main hindrance for the FMCG giants to tap this market is the supply chain bottlenecks.
Non Visibility to the End Users
A major roadblock for FMCG companies in leveraging the rural market is the lack of customer understanding. Many companies are not well about their customer preferences, hence they often find it difficult to push the distributors to stock up new products.
Inconsistency in Supply and Slow Speed in reaching out to the Markets
FMCG MNCs generally use the sub-distributors for supplying goods to the interior areas. The issue in this supply chain management is that the logistics capabilities of the sub-distributors are limited and they can’t handle a sudden surge in orders. This leads to loss of revenue for the Company.
Opportunistic Players in the Supply Chain
Most of the discounts/ offers or funds allocated for brand promotion do not percolate to the last mile. Often the middlemen, distributors of supply chain providers grab a major slice of the promotional budgets for themselves. These opportunistic players not only delay the products time to market but also tarnish the brand’s image.
Since the problems of players and products, are here to stay, it may be beneficial for the companies to partner with platforms which have minimum transmission losses and maximum customer outreach. Pay1 with its robust distribution network and sound technology platform can prove to be an effective delivery channel to reach the far-flung pockets in unorganised rural ‘kirana stores’ across the length and breadth of the country.
Timely Supply of Goods to the last mile
The retailers under Pay1 network raise a request for goods via the application and the same request will be sent to the companies. This makes the process of demand and supply fulfillment seamless.
Economical Transaction Costs
Since the FMCG Companies would be able to use the communication technology of Pay1 they can reduce wasteful interventions and multiple handling across distribution channels. On the other hand, even Pay1 can enjoy benefits of collaborating with the FMCG companies as it will help the fast-rising startup to have a new revenue stream, gain more market presence and visibility and it will help Pay1 become a consolidated business solution for the retailers.