Distribution business in Delhi and Mumbai

by varun · Published September 29, 2020 · Updated December 24, 2021

Distribution is a backbone of any company dealing in FMCG or consumer durables items for their requirements. It acts as a great deal of convenience for both retailers and big corporates. Let us discuss some important features of distribution business-

Convenience – Distributors supply products to retailers at retailer’s own demand. They also tend to be near retailers and hence acts as a great source of comfort for retailers. Otherwise, retailers would have to go to the market to purchase their products.

Responsible behavior – Companies tend to form great relationships with distributors as they tend to put their own money, time and space for company’s products. Distributors have a specific knowledge related to a distribution business within a specific area. This can be leveraged by a company for its own advantage.

Geographical area – Most of the distributors work in a pre-defined geographical area and they are the sole supplier of end products to retailers within an area. They tend to form strong relationships in the same geographical area.

Flexible payment terms – Most of the distributors offer 1-15 days of credit period to retailers. This helps retailers in maintaining their cash flow balances to a great extent.

Financial requirements for distribution business – Financial requirements for a distribution business can be divided into following categories-

Rent for office and warehouse
Office hardware
Vehicle for transportation of products
Manpower
Initial deposit and inventory
Working capital

Sales oriented approach – A distributor needs to have a sales oriented approach all the time. He needs to calculate the future demand of old and new products 3-6 months in advance. He acts as feet and eyes on the ground for companies. He also needs to maintain great relationships with retailers and companies. This is a low margin business in which the distributor needs to put initial months or years to get his investment back.

Needless to say that if you want to be good at the distribution business then you need to have a number oriented mindset along with keen attention to detail. Meanwhile, you can read more business related articles here.