Sales & Distribution (S&D) is simply a process involving all the things
from taking a finished good from a factory to the customer.
Sales & Distribution (S&D) involves various departments such as Warehouse,
Logistics, CRM, Salesforce, Business development team, Product training team,
Trade marketing team, Etc.
Let us understand S&D with this simple flowchart.
Terminology of Sales & Distribution
It is a place where the company stores their finished goods. Goods are then dispatched from such depots to various places.
Ideally, a company should keep multiple warehouses to improve wait time for order delivery.
Carrying & forwarding agents:
The party that provides logistics solutions to companies in dispatching their goods to various locations are C&Fagents. They charge on basis of distance as well as delivery speed. Also, charge may increase if your product needs a specific temperature condition
Modern Trade :
Organized trade stores such as Bigbazaar, Dmart, More, etc. are called modern trade. Companies directly provide them goods, thereby eliminating distribution margin charges
This allows them to pass on distributor margin to customers by means of discounts &schemes. The disadvantage of MT is that it lacks the convenience of neighborhood stores.
Stockist or Distributor operates in Urban geographies. They provide goods received from the company warehouse to various retailers.
They also sell bulk quantity to wholesalers to increase their distribution reach & save logistics cost for serving low-value outlets.
Usually, such distribution works in rural geographies where 1 big super-stockist provide bulk quantities to various rural distributors/Wholesalers.
Super stockist helps company reach deep rural areas. Various incentives such as freight charges are paid extra for extended geographies.
They usually operate with multiple brands & hence they can afford to provide service to smaller outlets & remote markets.
Companies discourage the wholesaler concept as it reduces Market Operating Price(MOP). MOP is what retailer pays to distributor
Concept of Margin :
Every channel involved retains a specific margin so each stakeholder earns a profit out of it.
E.g. Fevikwik costs 5 Rs. at a retail store. C&F agent gets 1% margin of 5 Rs. = 0.05 Rs.
Distributors/Stockist get 2% margin of 5 Rs. = 0.10 Rs.
Retailers get 5% margin of 5Rs. = 0.25 Rs. (Sometimes in form of an extra unit). So total money earned by them = 0.05 + 0.10 + 0.25 = 0.40 Rs. earned by all collectively