A country with a varied culture, rich heritage and the second largest population in the world is known to have coined the concepts of trade, wholesale and market structuring for the world. Talking about the wholesale markets in India, from the pre-independence times, India has been ahead in trade and wholesale marketing. Spices and cotton made India one of the biggest wholesalers for the European countries and since then India’s wholesale markets have thrived by leaps and bounds.
The Indian Wholesale Market: Overview (Post Independence)
Back in the 20th century, maintaining low costs with high turnover, with typical FMCG and wholesale product margins anywhere from 4-5% was enough for a wholesaler to have a clear-cut pie in the market share. However, the scenario has changed with the coming of an economy which is entirely online.
- Wholesaling was profitable until the digital world made it easy for the final buyers to connect with the distributors or producers directly. Because of this, many wholesalers have already left the wholesale markets (due to low profits).
- In urban areas, the more enterprising/business retailers provide better facilities to the final consumer by getting better deals from the distributors.
- Also, with the advent of shopping malls, the Indian wholesale market is in a situation of “do or die,” the market either has to upgrade and come online or leave the game.
So is the wholesale market dying in India?
To analyze the effect of globalization and online economy on the wholesale market, let us first analyze the types of wholesalers in the Indian Subcontinent.
Types of Wholesalers
Merchant Wholesalers:
Merchant wholesalers are mainly the clan which specializes in certain line/types of products or customers and they service comparatively small geographical areas.
Full Service Wholesalers:
A merchant wholesaler is the one who provides all the services inclusive of the delivery, credit extension and marketing information, all in one package. Such wholesalers are very popular in rural and suburban India where there is no scope of work division (all that is needed is a man army).
Limited-service Wholesalers:
Limited service wholesalers are wholesalers who do not provide a full package of services as the customers prefer lower prices rather than contributing to the cost of the additional services.
Cash-and-carry Stores:
A cash and carry store is different from regular retail chains and targets professional customers, who have a sort of membership.
Truck Wholesalers:
Delhi’s Azadpur is the most prominent example of truck wholesalers. They typically sell a limited line of products to a comparatively smaller number of buyers.
Drop Shipper:
The concept of drop shipper is thriving in the country. Drop shippers are those who take the entitlement of goods/products but not their delivery. The wholesalers directly deliver the products to the final customers.
Mail-Order Wholesalers:
Some wholesalers work similar to the mail-order retailers. They mail the order in the desired quantity from their location to any part of the city/state/country. These types of wholesaler are not very popular in India.
Manufacturers’ Sales Branches and Sales Offices:
Another form of wholesalers, there are a few manufacturers who have their branches and sales offices in various cities that work as wholesalers for that particular areas.
Predictions and Solutions for the Divided Wholesale Markets:
With such an enormous division within the wholesale segment of the market, it is imperative to analyze the future of the wholesale market system in India.
Do you think Indian wholesalers can compete with their successful MNC counterparts?
Policy makers are creating an adequate environment by providing both wholesalers and retailers with friendly norms to invite foreign funds and speed up the infrastructural development of the existing market system.
What the wholesalers can do?
India presents an astounding opportunity, with 1.2 billion people and 10 million Kirana store owners. Out of the 450 million internet users in the country, over 300 million are smartphone users. These trends are a simple pointer of the fact that the Indian economy is brimming with growth possibilities.
Going Online is the solution for the wholesale culture of India to survive. It is important for the wholesalers to work on the lines of e-commerce in order to hold a position in the market.
LiveSauda is here to make the age-old market, culture and traditions of the wholesale market to live in the fast-paced digital economy.
