Distributors of fast-moving consumer goods (FMCG) have sought a “level-playing field” with the leading B2B retailers from the makers, failing to which they have threatened to drop products from their portfolio.
All India Consumer Products Distributors Federation (AICPDF) has written to FMCG companies against the price disparity between traditional distributors and other organised business-to-business (B2B) distribution firms, both online and offline, which have entered the sector in the last few years.
The federation had said it has decided to call for a ‘non-cooperation’ movement against FMCG companies from next year if B2B retailers such as Jiomart, Walmart, Metro Cash & Carry, Booker, ElasticRun, udaan etc.
“If the companies are not able to give us a level-playing field then we will drop the product sold by Jiomart/ B2B companies from our portfolio,” said AICPDF.
Speaking to PTI, AICPDF President Dhairyashil Patil said rates and schemes given to the retailers are governed by the FMCG companies and the distributors have no say in the entire process.
“If the brands are the same, then how could the same products lands in the market in two prices,” he said.
According to him, sometimes discounts are even lesser than the landing price of distributors. “We need a price parity in the market,” he said.
B2B retailers are offering FMCG products to the retailers and local shops at lower products, what they offer and it is now “adversely affecting” their reputation and goodwill.
“Hence our demand is that we also receive those products at prices at which we can also offer the same prices as Jio Mart /B2B companies,” the association said in an open letter to FMCG companies, a copy of which was also shared on their Twitter handle.
Moreover, they would also “not launch any new product of the company” unless they get an undertaking from the FMCG makers that the said product is not available with B2B retailers.
According to them, they would not be able to able to take primary targets from the company as B2B companies are selling the same products in the same area.
Moreover, they have also decided not to take back expiry and damaged product for replacement as they were not in a position to distinguish the product sold to the retailers by B2B or by their network.
“Considering that overall scenario, to address the issue of distributors, we urge the company to call for a joint meet with your company distributor and the representative of AIDPDF to sort out the issue amicably,” it said.
While in another letter, AICPDF said the distributors’ fraternity is in danger as B2B companies are flaunting laws using unethical and predatory tactic to establish a monopoly by destroying age old system.
In FMCG, the distributors have a margin of 3.5 to 5 per cent and retailer gets 12 to 15 per cent margins.
“While B2B channels are offering 15 to 20 per cent margins to retailers,” Patil added.
Some FMCG companies as Nestle has confirmed receipt of such letters from the association.
“We are in receipt of the letter that has been issued to all FMCG companies. Our focus has always been to maximize our channel coverage to ensure our products are easily accessible to our consumers. All our relationships across the value chain are based on fairness and respect,” said a Nestle India Spokesperson.
Formed in 2019, AICPDF has approximately 4 lakh members pan India.