Majority of the 70 crore rural poor earning less than R3,500 per month pay higher price for perishable and non-perishable retail consumable goods than their urban counterparts, says a research paper of centre for development finance(CDF), IFMR.
The paper titled as ?The base of pyramid distribution(BoP) challenges? says that 128 million households in 6.36 lakh village pay higher price than urban compatriots for consuming same basic products and services. For example, a packet of a basic commodity such as iodized salt which costs R8 a kg in urban centres is dearer in rural areas, ranging anywhere between R12 and R25 a kg, due to inefficient distribution which creates local informal and uncompetitive monopolistic economies.
Sachin Shukla, senior consultant, Strategy Advisory Group, CDF-IFMR said the distribution of products and services in rural markets is relatively expensive and a demanding proposition due to various reasons such as insufficient retail infrastructure, highly fragmented markets, inadequate transport and warehousing facilities. ?To circumvent these challenges corporations have toyed with various distribution alternatives. Building a proprietary-distribution network is one such alternative. However, few manufacturers/producers choose to develop and own dedicated retail distribution networks due to the complexities and prohibitive costs related to channel development, control monitoring and management?, he said.
Co-researcher Sreyamsa Bairiganjan highlights that the spate of distribution channels such as SHGs, MFIs, NOs, co-operatives make them suitable distribution partners for different product classes. ?In our research we found many new-age experiments in rural markets involve creation of hybrid distribution models where companies are trying to combine the strengths of existing channels to increase their outreach with no additional costs,? said Bairiganjan.
