How Goods Reach a Crore Shops

How consumer goods companies distribute products through layers of distributors and wholesalers to millions of small shops, and how B2B apps are changing it.

A packet of biscuits made in a factory must reach a tiny kirana in a remote village. How do consumer goods companies get their products into over a crore shops across India?

The traditional chain

Manufacturer makes the product.
Carrying and forwarding agents manage regional warehouses.
Distributors or stockists buy from the company and supply shops in their area.
Wholesalers supply smaller shops, especially in rural areas.
Retailers such as kiranas sell to consumers.

Companies like Hindustan Unilever, ITC, Nestlé and Dabur have built networks reaching millions of outlets, directly or indirectly.

Salesmen and beats

Distributors employ salesmen who visit shops on regular routes, called beats, to take orders, deliver goods and collect payments. This system reaches even small shops weekly.

Margins along the chain

Each layer earns a margin. Together, distribution margins add significantly to the final price, but they pay for the vast work of reaching scattered shops.

Credit

Distributors often extend credit to retailers, and companies extend credit to distributors, financing the flow of goods.

B2B apps

New business-to-business platforms let kiranas order stock through apps:

Udaan, JioMart Partner and others offer wide selections, delivery and credit.
Prices can be lower, and shopkeepers can compare options.
Traditional distributors complained about unfair competition from well-funded apps.

Rural reach

Reaching rural areas is harder and costlier. Companies use van sales, rural distributors and partnerships, such as with self-help groups or post offices, to reach villages.

Why it matters

Strong distribution is a major competitive advantage. A great product is useless if it isn’t on the shelf when the customer wants it.

The biscuit's journey

A packet of biscuits leaves a factory near Pune, goes to a regional depot, then a distributor in Nashik, then a wholesaler, and finally reaches a kirana in a small village. At each step, someone earns a small margin and provides credit or transport.

Thinking middlemen only add cost

Distributors provide transport, credit, storage and regular visits that small shops rely on. The question is whether these services can be provided more efficiently.

Key takeaways

Goods reach shops through manufacturers, distributors, wholesalers and retailers.
Salesmen visit shops on regular beats.
Each layer earns a margin and often provides credit.
B2B apps let kiranas order directly, challenging traditional distributors.