Rural consumption of FMCG products is growing faster than in the urban sector. Led by increasing incomes and higher aspiration levels the rural market is seeing a higher demand for branded products.
It is to be noted that in our discussions with our customers, the urban segment contributes to about 70% of the revenue share, while the rural segment accounts for 30%. FMCG products account for 50% of total rural spending and increased demand for branded products in rural India.
While more and more FMCG brands are finding traction in the rural and semi-urban markets, visibility on distribution is still a major challenge for most FMCG companies. Distributors or Sub-distributors working in these areas are generally behind on the technology curve, and infrastructure, and do not have the viability to spend on upgrades.
Salesperson Productivity: Most companies manage the rural markets by deploying their sales representatives to capture orders from retailers through them, and the orders captured are to be serviced by the rural distributors. Expectation from companies is to get the coverage and productivity details of the salespersons working in this market, which is today a challenge. Along with coverage information, companies are also looking to get the travel expense settlement done based on the actual distance traveled by the salesperson or by pre-defined rates based on the market they are working in.
Stock and Sales Visibility: Companies consider the sales which happen from super stockiest to sub-distributor as secondary sales, due to the lack of visibility of sales happening from sub-distributor to retailers in the rural market. Companies are not able to plan any promotions or effective stock management due to a lack of visibility of the actual movement of products from sub-distributors to retailers or orders placed to super distributors. The visibility of actual demand in the rural market is an unknown factor for many companies, the sales are derived based on the closing stock data captured by the sales representatives from the Sub Distributor during the visit. The derived sales data is used as an indicative number and not used for any action or decision.
Fulfillment: While the orders are captured by the company/distributor salesperson in the rural market, the visibility of what has been serviced against the orders is not visible to the company. In some cases, even the orders captured in the market are not visible to sub-distributors. It is important to the companies that to know the fulfillment of orders that are captured.
Adoption: Among the many challenges, one of the biggest challenges is the adoption of new systems by sub-distributors. Reasons like handling of multi-brand distribution, lack of infrastructure, lack of manpower to manage, and viability to deploy a solution are key reasons for the adoption of new systems.
The advent of low-cost internet, and smartphones, is fuelling the growth of the organized FMCG sector in the rural markets. We can use the prevalence of mobile phones and the familiarity with handheld devices to empower rural and semi-urban distributors.
A solution that leverages smartphone penetration/usage to empower the sub-distributors to manage distribution easily and smartly will help to bring visibility to the rural market. As a result, brands can build a better picture of sales and stock in the rural markets.
Botree’s Stocky Mobile DMS (SMDMS) solution was designed specifically to leverage the prevalence of mobile devices and for the challenges companies face in getting visibility in their rural market. Stocky Mobile DMS (SMDMS) enables small distributors to perform business operations with companies and retailers more efficiently and effectively. The robust product provides the necessary information to distributors to fulfill their business in a better and more organized way. To learn more about our full suite of Distribution Management Systems that can be customized for different business needs. Contact us to learn more about how we can help you address your distribution challenges.
