The Fast Moving Consumer Goods or the FMCG sector is a place where goods are sold at a relatively low price and includes products which sell out much quicker than other products. They mostly keep perishable items as opposed to durable items. For example, packaged foods, beverages, toiletries, over-the-counter drugs etc.; whereas durable items include kitchen appliances, textiles, items which can be used for many years. FMCG goods mainly compose of items which have low shelf life. Because it includes items which are required by masses in their daily lifestyle and because this sector has a huge demand, it is essential that this sector divides it work amongst various other short segments. The major segments in the FMCG sector are Manufacturer – Packaging – Sales and Distributorship – Retailer/Wholesaler.
A distributor is someone who will ensure that all your products reach the right people. Whether it is business to business or business to personal. In any emerging market, as demand for a product increases, so does the need for distributors. From everyday use items like cooking oil, packaged foods like biscuits, snacks and everything else with an expiry date, every new trend which comes up as a team of dedicated distributors hard at work to find quality manufacturers and help them bring their product to retail.
Steps to follow to become a Distributor:
- Decide what type of distribution business you will run: Distributors can be split into two categories based on who they serve. The first category is, retail distributors buy from wholesalers or manufacturers and sell products directly to consumers. The second Category is, wholesale merchant distributors buy from manufacturers and resell the products to retailers or other distributors. You need to decide which type suits you best and work upon that.
- Decide what you would like to distribute: You could focus on a specific product or offer a variety of items. You could base your decisions on a product about which you may feel passionately or any product which you think is not available much in the market. While many large companies are served by equally large distributors, these distributors are unwilling or unable to serve smaller, more specialized business.
- Estimate your start-up costs: In addition to a business plan, you will also need some idea of how much money it will take to get your business up and running. As a distributor, your major area of expense will be your inventory. This means that your start-up costs will go parallel as to what product or products you choose to sell. If you are selling a single product then the pricing will depend on how many retailers you are targeting.
- Figure out how to sell your products: This will depend largely on who your customers are and what type of products you’re selling. In any case, you have to chalk down specific goals on what methods you can adapt to sell your goods. One of the best ways to do so is to connect more and more with the manufacturers as well as the Retailer/Wholesalers. The more connections you build, the better opportunities you get. This can mean anything from advertising to personal meetings with store owners to search-engine optimization (SEO).
- Form your company legally: You’ll have to legally create the company before you can do business. Check with your state regulations and see if you need to create an operating agreement or another type of founding document. Gather any business partners you have for this venture and have them sign any legal documents you fill out
- Make your business licensed and registered: You will have to register your business with the correct places or business association as and when required. Your company should be listed in the legal list of companies. Other legal steps may be required to get your business started.
- Contact manufacturers or wholesalers of your products: You will need to find sources from which you will buy your product. To locate manufacturers and wholesalers, you will need to build Relationships and connections which will help you to define your work. Networking is the foundation of the distribution industry. You must gain a deep understanding of your target market and clients to develop stronger partnerships. Keep communication open and available.
- Purchase inventory: Once you’ve found a source for product, it’s time to place your first order. You’ll need to purchase however much inventory you need. Keeping in mind the budgetary and space constraints you will also need to buy products pertaining to the limit of your users. This is especially true of products with a short shelf-life or FMCG goods. Also, consider the logistics you will require to distribute your goods.
- Find a location for your business: The size of the space you need to hold your inventory will be determined by the size of your product and your delivery method. You should consider starting off small as your business builds a reputation. As your business grows, you can move into larger facilities that can accommodate your inventory needs.
- Create a website for your business: Creating a customer friendly website is essential in today’s business model. The website should describe prices and product offerings. This is especially important if you sell directly to consumers. You can also invest in search engine optimization (SEO) that directs potential customers directly to your website by placing it higher in search engine results.
- Market your product to potential customers. Send out your catalogue to potential customers in your area. The tools of marketing that you can find in today’s digitally marketed world are immense and of huge influence.
The distributorship business is very lucrative. To become a distributor in the FMCG sector, you must have an eye for spotting trends in their industry, as well as with building relationships with manufacturers and retailers. If you’re interested in becoming a distributor for the FMCG sector, you need to follow the FMCG model.