How are traditional distributers competing with big brands?

“India’s biggest FMCG companies are favouring new generation e-commerce firms and turning their back on distributors who served them for decades”. This was the plank on which 4.5 lakh traditional distributors launched their offensive against local and foreign consumer goods firms. They are represented by All India Consumer Products Distributors Federation. 

Distributors say they are unable to compete with modern trade companies like JioMart, Metro and Udaan, who are offering deep discounts of as much as 20% to kirana stores.

The AICPDF had written to more than 20 companies demanding uniform pricing and schemes across distribution channels in the country.

On January 1st, distributors stopped supplying Hindustan Unilever’s Kissan range of products and Colgate Palmolive’s MaxFresh range in Maharashtra. A week later both the companies gave an assurance to correct the issue of price parity, following which AICPDF suspended its agitation against them.

The Maharashtra example shows the might of India’s vast traditional distributor-community. Business Standard on Monday reported that the government is considering an insurance scheme for traders. It is also planning to help them get easier access to low-cost credit.

This is part of the proposed national retail trade policy, which could be aimed at strengthening the BJP’s core voter base of traders, who have been facing stiff competition from large e-commerce firms.  

Standing in solidarity with the distributors' federation is the Confederation of All India Traders or CAIT, which claims to represent eight crore small businesses. It is led by its General Secretary Praveen Khandelwal, who is considered close to the ruling party.

Khandelwal has become an influential voice in small traders’ fight against Amazon and Flipkart. CAIT has previously called for investigations over alleged violations of FDI law by the e-commerce companies. AICPDF’s National President Dhairyashil Patil is a senior office bearer at CAIT. The lobby group may not hesitate to flex its political muscle if needed to protect distributors’ interests.

Small distributors have put up a successful fight not only against FMCG giants but also against eB2B companies. They have regained some lost ground, but there is a long way to go before harmony is achieved. On the other hand, FMCG companies say distributors are their valued partners. Their words will now be put to test.