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The Fast Moving Consumer Goods (FMCGs) are the daily life usage products sold more quickly and at a lower price. The worth of the global FMCG market is estimated to reach $15,361.8 billion by 2025.
In this growth and rapid development of the industry, the distribution channels play a central role. The FMCG distribution channel is a pathway from which the product travels and reaches the consumer.
The goods, information, and finance of the FMCG companies travel from the channel. The entities of the channels varied from country to country.
The distribution channel functions through planning, efficient process, and huge investment. The distribution channels secure a central position in the global business market and also a source of multiple job opportunities.
The distribution channels are getting advance and upgraded with time; each step of advancement is given a different name. The recent plan for the advanced FMCG distribution channel in the near future is named FMCG 4.0 that has been projected since 2020.
Here, I’ll provide you with a complete elaboration of the distribution channel of India and UAE. The countries are located in Asia; one is the biggest nation with a growing economy, and the other is the oil-rich land. See the following illustration that depicts the difference between the countries.
Entities in FMCG Distribution Channel
To acquire complete awareness regarding the distribution channel, it is necessary to learn about the channels involved.
The channel consists of different independent businesses that work in a sequential manner to complete the FMCG market, which is growing at a rate of 5.6%.
Though, the business involved in the channel varies from region to region. Let me elaborate to you about entities in the UAE and Indian distribution channels.
India
In India, the FMCG distribution channel with an immense growing trade rate of almost 20.25% consists of three main entities. The whole market depends on these three entities for the deliverance of the product from the manufacturer to the consumer. The chain consists of producers, Wholesalers, Retailer,s, and Consumers.
The above mentioned are the main entities of the supply chain, whereas, the functional units are presented below.
- Agents: they are responsible for promoting the company’s brand. They never purchase or stock product by themselves.
- Merchants: these merchants are also known as a wholesaler in simpler words. They order a bulk quantity of a product from manufacturer store it and supply it to other retailers.
- Facilitator: they are the transporter of the products. They transfer manufactured goods from manufacturer to consumers at different locations.
UAE
The distribution channel in the UAE is different from India. The country is mainly dependent upon imports from nearby Asian countries mainly from India and Pakistan.
The total import of the country is counted to be almost $18 billion in 2020. The country’s channel does not have agents or wholesalers; rather, every manufacturer has its warehouse or facilitators.
The main functional units are;
- Manufacturer: they are the industrial firms that produce goods. If they do not have a plant in UAE, they import it from a nearby country and stock it.
- Retailers: these are generally the larger supermarkets that purchase a product from the manufacturer and sell it to consumers.
FMCG Distribution in India
India is a vast land with a total area of 3.287 million km2. Therefore, the nation has different kinds of distribution channels, including different entities.
Despite the governmental efforts in upgrading the distribution model, the majority of companies are using the older traditional model.
There are basically two models that are being used in India, the Urban model and country model. Don’t worry about the complexity of the models; I have elaborated both the product routes in the separate headings below. The following illustration is the complex form of both the channels merged together.
Urban Product Route
The urban distribution model of the modern hi-tech area is based on five major entities. The product is manufactured in the industrial plant.
From there, products are transferred to hubs or warehouses, located near the main market. After passing the clearing and forwarding specialists, finally reached the distributors.
See the following image it is the simplified form of the modern FMCG distribution channel in Urban India.
Country Product Route
The country product route is not that much different from the urban product route; just a few more entities are involved.
The manufacturer supplies the product to the hub, and from here the product is supplied to the C&F specialists. In the next phase, the super stockists are the additional entity in the route. The stock product of specific manufacture to further supply it to other smaller stockists or retailers.
The product routes or distribution channels are widely used in the country. According to a lot of essay writers, the organizations having manufacturing plant located far from the mainstream market uses the country product route.
FMCG Distribution in UAE
The product route of FMCG in the UAE is much simpler in contrary to India. The basic difference is the exemption of the middle man in the UAE.
The Arab nations do not include any middle man for product promotions or stocking. The chain is directly connected between the producers and consumers.
The nation import goods from nearby Asian countries, from where it is directly stored into the organization’s official warehouses or distribution center.
In the case of unprocessed goods (Raw Material), it is processed in the country and ship to the warehouse
From these official distribution centers; retailers, private agents, and mobile markets purchase goods at wholesale rates. The mobile market is the largest consumer of the wholesaler with an annual sale of $41.5 billion.
The core advantage that UAE has due to this simple FMCG distribution channel is that the products are distributed faster with lesser complexities for both; manufacturers and retailers.
The channel is also supportive because of the concentrated populations of the region. The desert has focused populations located at a distance that enables this supply chain to work adequately.
India V.s UAE in FMCG 4.0
The FMCG 4.0 is the 4th wave of modernizing and digitalizing the FMCG distribution channels. The basic aim of 4.0 is to make the distribution more effective and efficient in the country.
India and UAE have different 4.0 planning for their country. The basic difference in the planning is due to multiple reasons the most authentic one is the financial condition. The oil-rich countries are stronger in finance and have planned more advanced features; whereas, the Indian dream of 4.0 seems to be a far gone target to be achieved.
The Indian FMCG is considered to be the 4th largest sector serving the economy. The modernization process in India is mainly focused on industrial digitalization.
This is due to the fact that almost 1/3th FMCG consumption is in rural areas. Rather than focusing on increasing logistics and other processes, the government is focused on increasing production capacity.
The net worth of the whole industry is counted to be $49 billion.
Plan 4.0 of India will work in different tiers. In the first tier, the latest transportation system will be installed in metropolitan cities.
In the second phase, one-stop shops will be introduced in different regions. The one-stop-shop will increase convenience and also reduces the efforts of the supply chain.
The installation of Cobots and IoT in stores and factories is the third phase of development which is already in trend.
The Cobots are intelligent machines adapted to human nature and speed up the process in industries. At the store, they would help place products and guide people through the aisles, like the ones that are consumed to find the best dissertation writers.
UAE 4.0 is a bit different from the Indian one. The basic focus of UAE digitalization is on creating fully automated warehouses.
The nation is more focused on storing products for a longer period of time due to extreme weather. These warehouses will increase the speed of the logistic process throughout the region.
Further adding, the nation is also focused on self-driving trucks. This is not a science fiction movie; it is reality, as the self-driving cab is already on the roads and more than 50% of the population is willing to buy it.
Who Will Win?
The FMCG functions as the central part of the complex business process. The majority of the food chain in many countries are dependent upon this chain.
The major working entities in these chains are; manufacturers and retailers, they are the core responsible for the on-time delivery of products to the consumer. It is difficult to conclude which country has a better future and effective FMCG distribution channel.
I believe India and UAE are opposite nations and have different needs. Therefore, both the country’s FMCG is adequate at their place.
Author’s Bio: Stella Lincoln is currently working as Assistant Editor at Crowd Writer, the organization famous for their write my dissertation services. She is an expert writer and has a keen eye for identifying grey areas in the content. She is a passionate lady, and her passion for writing is visible in her blogs.\
Feature Image Credits: Source
source https://nrinews24x7.com/india-and-uae-fmcg-distribution-from-1-0-to-4-0-a-complete-review/?utm_source=rss&utm_medium=rss&utm_campaign=india-and-uae-fmcg-distribution-from-1-0-to-4-0-a-complete-review
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