Marketers new to business in India are often confused by the fact that India is too large a market to reach through a single distribution network. India should be treated as, at least four different zones for supply chains to work. This treatment makes it strategically difficult for global businesses to build structured relationships with distributors and vendors in India.
Challenges of Distribution Networks in India
Back in 2012, Apple CEO, Tim Cook had opined how, despite India’s promise, its multi-layered supply structure was making it too costly to get products to market. Unlike markets in America or Europe, there is no single large logistics or retail partner in India who can make doing business easier. Rural markets are still fragmented and difficult to reach for both startups and established companies from abroad. This presents a significant bottleneck for product delivery chains.
Another common concern is the unavailability of market intelligence to target specific buyers. In the absence of consumer information, strategies tend to be very broad. Market overtures tend to get lost in the crowd and often fail to capture shortening consumer attention spans. However, technology and digital distribution channels may be changing this picture.
Is Technology Improving the Market Significantly?
The impact of technology is most felt in urban markets where town planning and commercial spaces are statutorily allocated. Metropolitan cities such as Delhi or Mumbai are relatively easier to target because of organized retail. However, most people shop for daily needs via local stores. Local establishments provide the advantage of familiarity, convenience, credit and personalized delivery. Retail is now being modernized with greater personalization as a value add.
Digital channels offer a traceable and verifiable path to the customer. The reach of logistics delivery networks is expanding through services in Tier 2 and Tier 3 cities. According to the Internet and Mobile Association of India (IAMAI), India had 451 million active monthly internet users at the close of 2019. This amounts to about 36% of India’s population. But with 66% of the population possessing access to television, TV marketing has a distinctly wider reach.
The distribution of internet and TV users is still dis-favorably skewed against the non-urban consumer. However, it is the non-urban consumer who forms part of a huge underserved market. With growing education and rising aspirations, the rural segment is deemed to be the consumer market of the future.
To take advantage of India’s market opportunities, foreign investors need a local partner to serve as a guide in the absence of reliable market intelligence. Forming a local distribution partnership in India can also help you save costs in getting your product to market. But selecting a local partner is tough. Any miscalculations could lead to damaging impact on brand reputation. Delays in project implementation could also be costly.
Given below is the process for setting up a distribution network in India.
Setting up a Distribution Network in India
Assessing the Strength of Different Distribution Channels:
Determining which distribution channel will reach your target consumer most effectively is a function of geography, population concentrations, and local customs. You need a local distribution firm that is alive to these challenges and can embed local agents where required.
Select a Partner:
When you call up prospective partners to set up a delivery channel you should be able to thoroughly verify claims regarding reach and efficiency. There should be alignment of strategic goals and the partner should have demonstrated financial stability over a significant period in the immediate past. The partner should also own a respectable clientele and have experience in handling go-to-market strategies successfully. There should also be scope for price and contract negotiation without unnecessary delays in fulfillment.
Adapting to Changes:
While you’re busy in reaching your target consumer, consumer preferences will be subject to change in a dynamic environment. You and your partner must be ready to change tack, shift between channels, use multiple vendors, and make other impromptu decisions.
Be Ethical to Run a Sustainable Business:
Ensure that distribution commitments and standards are strictly adhered to across the business entity. Apply only legally enforceable contracts and feasible commitments. You will then be able to transfer best practices seamlessly and build your India reputation.
Your India strategy requires extensive and informed research and an experienced eye to identify and work with partners successfully. Tecnova can help you implement a distribution strategy that connects you to your customer with targeted precision. Having successfully assisted 1500+ clients in over 60 different industries, Tecnova has the experience you need to reach your market’s full potential. Explore your options with a Distribution Network Expert today.
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