People can order on JioMart Partner with a commitment to deliver within 24 hours.
Sangli:
For eight days in a row, home salesman Vipresh Shah has failed to sell a single pack of Dettol soap to the storekeepers who have purchased from him since he took over the family business as a teenager. teenager, 14 years ago.
Mr. Shah is the official distributor for UK Reckitt Benckiser in Vita, near the city of Sangli, about 200 miles south of Mumbai. But he said once-loyal customers now point to an app – JioMart Partner – on their smartphone displaying up to 15% lower prices, instead of placing an order.
Mr. Shah said: “As a distributor of Reckitt, I used to be the king of the market. “Now buyers say to me, ‘Look how much you cut us!'”
The 31-year-old said he lost $2,000 of his own money discounting products to match prices on JioMart, the app launched by billionaire Mukesh Ambani of Reliance Industries in an effort to revolutionize distribution retail in India.
Up and down in India in places like the small town of Vita, retailers that account for four-fifths of the nearly $900 billion retail market – more than $700 billion – are increasingly turning to JioMart to stock up on water. foreign and domestic brands.
Just as Mr Ambani, India’s richest man, has disrupted the country’s telecommunications industry, the tycoon is intent on starting retail distribution, reaching the US e-commerce giants like Amazon and Walmart Inc, expanding rapidly in India.
India has around 450,000 traditional distributors, whose sales staff serve every nook and cranny of the vast country, encompassing 600,000 villages. They typically make a profit of 3-5% on product prices and mostly take physical orders once a week, shipping to retailers within a few days.
But Reliance’s model created a key to that supply chain: retail stores, known as ‘kiranas’, could order on JioMart Partner with a commitment to deliver within 24 hours. Reliance also provides ordering training, credit facility and free product samples to customers of affiliated kirana.
That means hundreds of thousands of salespeople representing consumer giants such as Reckitt, Unilever and Colgate-Palmolive, face an existential threat to their businesses, according to reports. Interviews with sales staff, 20 distributors and a group of traders with members all over India.
Many of the distributors contacted by Reuters said they had cut their workforce or fleet, as sales from door-to-door dealers fell 20-25% last year as store owners partnered with Reliance. .
At Vita, salesman Mr. Shah said he had to lay off half of his four employees. He worries the 50-year-old family-owned company may not survive the next six months.
‘Guerrilla tactics’
The scale and speed of the disruption has caused tension between traditional distributors and Reliance, leading to actual confrontation in some cases.
In Maharashtra – Vita’s home town – and Tamil Nadu, traditional sellers have organized a blockade of some JioMart delivery vans.
“We will use guerrilla tactics,” said Dhairyashil Patil, president of the All India Confederation of Consumer Product Distributors, which represents 400,000 dealers of consumer companies at home and abroad. know. “We’re going to keep agitating,” he told Reuters, “we want (consumer goods) companies to realize our value.”
Reliance remains undaunted in pushing Mr Ambani’s “new commercial” retail venture, first announced in 2018.
Last year, it raised capital from major investors including Silver Lake Partners and KKR & Co Inc as it sought to integrate retail stores into what it has touted as a more holistic approach to with digital commerce. That push is widely seen against Amazon, which has faced for years – and denied – claims in India in favor of select big sellers at retailers’ expense. less.
A source close to Reliance said the company is determined to continue expanding its business into retail stores. It believes their model can coexist with a traditional approach in one of the world’s largest retail markets, the person said, who declined to be identified because of a lack of regulatory authority. reveal the company’s plans.
Mr. Ambani in 2018 said he eventually wanted to connect 30 million small merchants to the Reliance network. To date, it has 300,000 merchant partners in 150 cities ordering consumer goods from Reliance, but the conversion will be multiplied if it achieves its goal of adding 10 million partner stores by 2024 .
Reliance did not respond to a request for comment for this article.
Colgate declined to comment, while Reckitt said customers and distributors are an integral part of the company’s business but did not comment on relationships with them. Unilever’s India subsidiary, Hindustan Unilever, did not respond to a request for comment.
Which channel?
Traditional distribution methods remain important for manufacturers of consumer goods, even amid disruptions, industry watchers say.
Himanshu Bajaj, former head of retail and consumer Asia at consulting firm Kearney, said CEOs of consumer companies he met in September raised concerns about Reliance’s strategy upsetting the chain. traditional distribution.
“Companies don’t want to kill their own distributors,” he said. Worry is real.
When asked about Reliance’s model and concerns among distributors, Sunil D’Souza, CEO of Tata Consumer Products, India, told Reuters in an interview last month that they “don’t” could sit back and ignore” any major distribution channel, but Tata managed to minimize the conflict and strike a balance.
Jefferies in March estimated kirana would “steadily increase its share of procurement” from Reliance “at the expense of traditional distributors”. Jefferies estimates such sales of Reliance could grow to $10.4 billion in 2025 from $200 million in 2021-22, Jefferies estimates.
An executive who works for rival Reliance said Mr Ambani “spanned very quickly” in serving kirana and had an advantage in negotiating prices, given his longstanding relationships with manufacturers. Good consumables have charged Reliance and it for many years. 1,100 supermarkets are a big customer.
With kirana partners, Mr. Ambani is adding another vertical. “Brands can’t afford to ignore Reliance, it’s just their sheer purchasing power,” said the executive, who declined to be identified because he was not authorized to speak to the media.
All about the price
Many kirana are cramped stores in old buildings, where branded products are placed on wooden shelves and small packages dangle from the ceiling. Such retailers are using Reliance as a means to increase profit margins.
When Reuters accompanied Anuruddh Mishra, a Colgate sales agent, on a field trip in Mumbai’s Dharavi area, he struggled to convince Shivkumar Singh, the 50-year-old owner of a dilapidated store , Purchase. Dharavi is home to 1 million people and is considered one of the largest slums in the world.
Mr. Singh opened his JioMart app and offered a much lower price than the asking price. “How can I order from traditional distributors?” he say. “The price difference is huge. Now I order mainly from Reliance.”
A Reuters review of purchases on the JioMart Partner app found that retailer Dharavi can bulk purchase a combo of two tubes of Colgate MaxFresh toothpaste for around 115 rupees ($1.55). Mr. Mishra’s Distribution Company salesman received it for 145 rupees, and his final offer to retailer Dharavi was 154 rupees – still a third more than the price of Reliance.
Back in Sangli, traditional distributors said they had repeatedly chased Reliance vehicles and confronted drivers, alleging unauthorized deliveries.
Sunil Pujari, who works in the city for a JioMart delivery agent, said he was warned by his supervisors to warn them immediately if angry distributors stopped their vehicles.
But the business is still growing rapidly.
“The price JioMart offers is second to none,” he said, making another delivery in the middle of a crowded market.
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