Innovative Distribution Channels of Fmcg in India
1. Innovative Channels are being experimented with by F.M.C.G. Majors? Please discuss their role in future?
In recent years the various innovative channels that are being experimented by FMCG majors in India are:
Partnering with Self Help Groups in Rural India.
Internet based Rural Kiosks/Hubs
Direct Selling
We will discuss in detail each of these channels in terms of their current reach and its future growth potential and the role they play in the future of the FMCG distribution.
Partnering with Self Help Groups in Rural India
As Hindustan Unilever Limited (HUL) sought to reach rural markets, they faced two hurdles. The first was size: rural markets were scattered over large areas, and per capita consumption rates were low. Thus, while the aggregate rural potential was massive, the potential of each of the 638,000 scattered markets was very low. The second was reach: rural markets were not connected to urban centers and road connectivity was poor. Even when feasible, accessing remote markets meant additional costs.
HUL found an innovative solution. Hindustan Lever partnered with micro-credit recipients by offering them opportunities for micro-enterprise. Thus Project Shakti was born. A member of a Self Help Group (SHG) in each of the chosen villages was appointed a Shakti entrepreneur. As Shakti brand endorsers known as Shakti Ammas they borrowed money from their respective SHGs and with that capital purchased HUL products to sell in their villages. The Shakti brand endorsers are underprivileged rural women trained to manage businesses, to communicate the benefits of the brands and to effectively engage with consumers. Partnerships with NGOs and support from state governments facilitate these efforts of training.
Now there is a network of 35,000 entrepreneurs reaching 100 million rural consumers in 100,000 villages. This effort makes a lot of business sense: it means a significant increase in penetration and market shares for HUL
In recent years the various innovative channels that are being experimented by FMCG majors in India are:
Partnering with Self Help Groups in Rural India.
Internet based Rural Kiosks/Hubs
Direct Selling
We will discuss in detail each of these channels in terms of their current reach and its future growth potential and the role they play in the future of the FMCG distribution.
Partnering with Self Help Groups in Rural India
As Hindustan Unilever Limited (HUL) sought to reach rural markets, they faced two hurdles. The first was size: rural markets were scattered over large areas, and per capita consumption rates were low. Thus, while the aggregate rural potential was massive, the potential of each of the 638,000 scattered markets was very low. The second was reach: rural markets were not connected to urban centers and road connectivity was poor. Even when feasible, accessing remote markets meant additional costs.
HUL found an innovative solution. Hindustan Lever partnered with micro-credit recipients by offering them opportunities for micro-enterprise. Thus Project Shakti was born. A member of a Self Help Group (SHG) in each of the chosen villages was appointed a Shakti entrepreneur. As Shakti brand endorsers known as Shakti Ammas they borrowed money from their respective SHGs and with that capital purchased HUL products to sell in their villages. The Shakti brand endorsers are underprivileged rural women trained to manage businesses, to communicate the benefits of the brands and to effectively engage with consumers. Partnerships with NGOs and support from state governments facilitate these efforts of training.
Now there is a network of 35,000 entrepreneurs reaching 100 million rural consumers in 100,000 villages. This effort makes a lot of business sense: it means a significant increase in penetration and market shares for HUL