Starting an FMCG distribution business can be an exciting and lucrative business venture
Fast Moving consumer goods or FMCGs leverage a strong position in the global economy. As the name suggests, FMCGs are those products who have a short shelf life and will sell quickly. If done correctly, FMCG holds a great business opportunity. FMCG caters a wide array of products, ranging from beauty, soft drinks, food etc.
FMCG is the 4th largest sector in the Indian economy where the urban segment contributes about 55% to the overall revenue generated by the sector. However, with internet penetration, growing awareness, increasing income and changing lifestyles, the FMCG market has seen faster growth in rural India as compared to the urban counterparts. FMCG products are reported to account for 50% of the total rural spending which is proof of the rapid growth in the semi-urban and rural consumers in the industry.
Therefore, starting an FMCG distribution business can be an exciting and lucrative business venture. You can consider becoming a wholesale supplier to retail stores, other wholesalers and exporters, and can even sell the goods directly to consumers.
Below are some things you should consider before starting an FMCG distributorship business.
Decide your Product
FMCG is composed of various products. Before venturing into this business, plan for the FMCG products you want to distribute. You could focus on a specific product or offer a variety of items. Your decision could be based on a passion or on a product that is hard to find in your own personal experience. Make sure conduct thorough research about the product demand and future.
Try to target products which are always high on demand or are essential in daily lives for e.g. Biscuits, wafers, detergent, soap, cold drinks, chocolates, etc.
Business plan is the foundation of any successful business. Design a business plan that lays out the full vision of your FMCG distribution business. It allows following a direction and helps in managing your business. Make sure your business plan includes the type of distributor you will be, the target customer, management strategy, marketing plans, logistics & supply chain etc.
Licensing & Registration
It is of utmost importance to get your business registered first. Make your business official through registering it and gaining your license. Check with your state regulations for the documents to get your business registered. Also check, if you need to create an operating agreement or another type of founding document.
Location is another important factor which will decide the success of you distribution 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 don't need inventory space for drop-shipping). 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, such as a distribution warehouse.