India's distribution reset: why direct coverage is replacing wholesale dependence

Indian consumer goods distribution has long relied on wholesale to reach the long tail of general trade outlets. That dependence is being unwound as manufacturers expand direct coverage into smaller towns.

Direct distribution costs significantly more per outlet. What it buys is control: assortment decisions, planogram compliance, price discipline and visibility on secondary sales, none of which are reliable through wholesale channels.

The trade-off

The cost-to-serve maths only works where outlet throughput justifies the servicing frequency. Companies are therefore segmenting outlets aggressively, taking the top tier direct and leaving genuinely marginal outlets on wholesale supply.

Digitised distributor management systems have made that segmentation practical for the first time, which is why the shift is happening now rather than a decade ago.