Rural distribution methodologies

1. Supervised Hub and spoke (HUL, P&G, Marico, Nestle)

The hub and spoke network is a centralized, integrated logistics system designed
to keep costs down. Hub and spoke distribution centers receive products from
many different origins, consolidate the products, and send them directly to
destinations. In case of supervised Hub and spoke, the principle organization
keep strict supervision on the distributors and all the products are billed a
common billing platform. The CFA or the carrying and forwarding agent is
responsible for managing big bulk orders from the factories and dispatching
them to the hub and spoke distributors.

2. Unsupervised Hub and spoke (priya, lehar foods etc)

This distribution is more significant in smaller FMCG companies or products

which have lesser order volumes. The distribution model is the same as
supervised hub and spoke, but the level of supervision from the principle
organisation is till the superstockist stage and not in the distribution aspect. The
billing methods are also manual instead of an electronic billing. The volume of
transactions are much lesser in this cases

3. Distribution through wholesalers:

Wholesale distribution is the most common method used in the rural

markets. It entails no extra cost for the company since existing channels are
used. Wholesalers load the goods in a small vehicle and send them to nearby
villages. The driver delivers goods to village retailers and collects payments.
Alternately, village dealers make weekly trips to the town and collect goods
from different wholesalers, piling them up in their pick-ups, and collect
goods from various sources for selling back home.

4. Distribution through sub-dealers:

In this system, the wholesalers or the parent company appoints local sub-
dealers for distribution. Wholesaler commission is shared with these sub-
dealers, who take up the task of supplying to rural retailers through their
own salesmen. This model ensures high penetration rate in the rural areas as
the local dealers distributes the products via their own existing channels and
are able to reach deep into the market.

5. Direct Channel (Rural salesforce) :

 Companies appoint their own dealer and retailers in the rural markets to
remove their dependence on the wholesalers and omitting the commission
costs. This is an expensive option since the company has to add a large
number of sales people on its payroll. The advantage is that the company
can serve the areas it wants to cover and is not dependent on the wholesaler
or the sub-dealer.

6. Local haats/Shandi’s:
The oldest form of distribution that has been going on since ages is the local
haats where periodically a multiple villages come together in an open
market to sell and buy products. 10-50 villages come together to the
common haat and there is an average footfall of 3000 people in these
gatherings. Wholesalers, dealers and direct sellers : all are participants of
this channel along with local sellers. Big fmcg giants like Colgate has also
tapped into this type of distribution model.

7. Mobile distributor:
Individual distributors or subdealers cater from house to house on cycles or
small vehicles and cover 30-40 houses per day in this type of distribution.
This is mainly an unorganised method of distribution, commonly used by
local dealers or sub-dealers who work for wholesalers.

***Reference***
https://www.researchgate.net/profile/Dev_Narayan_Sarkar/publication/320035356_Conce
ptual_Framework_for_designing_a_Rural_Distribution_Model_for_FMCG_products_in_Indi
a_A_Situational_Guide/links/59ca1aab45851556e97deefe/Conceptual-Framework-for-
designing-a-Rural-Distribution-Model-for-FMCG-products-in-India-A-Situational-Guide.pdf