1 Behavior of the Channel
Credit facilities to customers –In some districts, credit sales account for as high as 60 to 70% of the total rural business, while in others it is only 15 to 20%. Consumers usually have a running account, a part of the outstanding dues is cleared every month but the final settlement takes place at the harvest time.
Pricing by the channel –Sometimes retailers in interior villages sell at a price higher than the maximum retail price. They justify doing this on the ground that they spend time and money to fetch the products from town wholesalers. A town wholesaler may deliberately cut the price of a fast-moving brand to increase his business.
Reason for stocking a product/brand –Rural retailers stock a particular item usually because consumers demand it and to a lesser extent because of because a competitor stocks the item too.
Seasonal pattern of stocking –Seasonal pattern is probably because the main buying season for rural consumers is during the harvest and retail stocking of toiletries, cosmetics, ribbons, bangles, clothes, fertilisers, seeds also follows this pattern.
Information source and influence –Wholesaler is the most important source of information and also most important influence on the retailer.
Purchase source –Retailers in interior areas are not visited by agents of distributors; retailers go to the nearby town / large feeder village once or twice a month to buy their stock.
Chanel credit –Small retailers and retailers in the interior villages must buy in cash, while large retailers in feeder markets are offered credit.
Purchasing cycles –In high turnover feeder villages, rural shopkeepers often visit then neighboring urban wholesale market for their purchases, sometimes as frequently as three to four times a week. In other areas, where rural shopkeepers depend only on counter sales and not on wholesale purchases, they may buy once a week or once a fortnight.
Prevalent Rural Distribution Models
Rural distribution can broadly be categorized into two models: Smaller companies adopt the wholesale activation route owing to a lack of viability, whereas companies with sizeable product baskets adopt the retail route to reach rural markets.
Stockiest from nearby urban markets cover four to five rural markets per day. A distance of 60-70 km is covered per day.
They operate mostly on cash basis as per the desired frequency. They provide better control over distribution.
Gets stock from super stockiest appointed in the district.
Super stockists typically cover 10-15 sub stockiest in the district.
The sub-stockiest covers all the outlets in his rural market like the regular stockiest, by extending credit and services.