400,000+ Salesmen Will Stop Supplying Goods To Protest Jiomart, Reliance Discounts
India’s household goods salesmen are threatening to disrupt supply of goods to mom-and-pop or kirana stores.
Discounts Result In Falling Sales
They are fighting against consumer companies providing products at lower prices to Reliance Industries.
Salesmen representing companies such as Reckitt Benckiser , Unilever and Colgate-Palmolive have reported a 20-25% drop in sales in the last year.
A direct cause of this may be the growing number of partnerships between kirana stores and Reliance.
Livelihoods At Stake
Reliance’s strategy of offering deep discounts encouraged stores to order digitally from the JioMart Partner app.
This threatens the livelihoods of more than 450,000 company salesmen who, for decades, made their living by going store-to-store to take orders.
The All India Consumer Products Distributors Federation (AICPDF) has reached out to consumer companies demanding a level playing field.
Actions It May Take
It demands that they get products at the same prices like other big corporate distributors such as Reliance.
The group has threatened that its salesmen members will stop distribution of products to mom-and-pop stores if the pricing-parity demand is not met.
Traditional distributors offer retailers margins in the range of 8-12 per cent compared with 15-20 per cent offered by big-box B2B stores and online distributors.
Further, it will also no longer supply newly launched consumer goods if such partnerships continue beyond Jan 1.
Reputation On The Line
The letter written by AICPDF calls its threats a “Non-cooperation movement” which it sent to Reckitt, Hindustan Unilever, Colgate and 20 other consumer goods companies.
It added that its reputation and goodwill with customers is at stake since it cannot offer the same level of discounts that other B2B companies can.
Mom-and-pop stores, or “kiranas” have a huge contribution to India’s retail market, accounting for 80% of a near-$900 billion market.
At present, 300,000 such stores in 150 cities order goods from Reliance.
The industry giant aims to increase the figure to 10 million partner stores by 2024.
Monopoly And Unemployment
Unable to compete with Reliance’s pricing, traditional distributors say that they are forced to cut vehicle fleet and staff due to dwindling business.
AICPDF president Dhairyashil Patil said that they are not against benefits to the consumer, but the “predatory pricing” offered to retailers is driving up unemployment.
It is also creating a “monopoly” which threatens to “destroy the traditional trade”.
Jefferies estimates that kiranas will “steadily increase the share of procurement” from Reliance “at the cost of traditional distributors”.