Hindustan Unilever (HUL) is reshaping its distribution model by directly supplying products to kirana stores in Mumbai, with plans to expand to Delhi and other major cities.
This shift is part of a broader effort by the FMCG giant to streamline its supply chain and cut delivery times from three days to under 24 hours, while also addressing the credit limitations faced by the kirana stores, which account for about 75% of its sales.
HUL’s New System
In the new system, HUL will take full control of the back-end logistics, including warehousing and delivery, leaving distributors to handle only the orders and payments from local stores. Arun Neelakantan, executive director for customer development at HUL, explained that this model will ensure quicker and more reliable service for kirana shops, many of which struggle with maintaining large inventories due to financial constraints.
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“We’re focused on providing the best possible service to kirana stores,” Neelakantan said. “They often can’t afford to keep a large stock on hand, so they need frequent deliveries and don’t want too much capital tied up in inventory.”
India’s Largest Distribution Network
HUL’s vast distribution network, the largest in India, reaches over nine million stores, including three million outlets directly. The company first tested this new distribution approach, named Samadhan, near Chennai nearly two years ago, aiming to compete with B2B online platforms like Udaan and Flipkart Wholesale, which offer next-day deliveries and serve multiple brands.
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Kirana stores remain the backbone of FMCG sales in India, controlling about 80% of the market. While online platforms and large wholesalers like Reliance and Udaan account for only about 5% of FMCG sales, their larger scale gives them an edge in terms of supply and pricing power.