FMCG distributors raise concerns against deep discounting by Jio Mart
The All India Consumer Products Distributors Federation has complained to Marico against JioMart for deep discounting.
The retail industry and FMCG distribution in India have been largely unorganised and offline. However, in the past few years, players such as JioMart, which was launched only a couple of years ago, have now gained a massive market share in the Indian grocery e-commerce market.
According to Dhairyashil Patil, National President, All India Consumer Products Distributors Federation, JioMart is allegedly indulging in deep discounting. He explained that JioMart is offering massive discounts, often even more that the landing distribution price.
“Our margin is approximately 5 per cent, JioMart ends up offering a discount of at least 10-15 per cent even below our authorised distribution margin. This is hurting the ecosystem,” he explained.
He said that specifically in Maharashtra, JioMart has been offering heavy discounts. Patil claimed there are over 100-plus distributors of Marico products in Maharashtra. This was brought to notice by local distributors in Maharashtra. To combat this, the association has written to Marico.
“In response to the complaint, we have heard back from Marico, stating that the company has stopped billing to JioMart till such time when they do not stop deep discounting. So far, we have spotted this issue in Pune. If we find this issue in other circles, we will inform the company about the same, too.”
Both Marico and JioMart did not comment. Patil said that on Sunday the association had also complained to Hindustan Unilever Limited against JioMart. However, BusinessLine was unable to confirm the same with HUL immediately.
He further added that the association is monitoring other players such as Metro Cash and Carry, and might take action against them as well.
However, sources in JioMart refused that Marico had stopped billing the Reliance Retail-owned grocery giant. The person said: “It is nothing but a pressure-building tactic. It is natural for different scales of companies to be able to negotiate a better distribution pricing. JioMart has not offered any discounts beyond the stipulated band by the FMCG company.”
The Confederation of All India Traders (CAIT) another trader body is in support of AICPDF.
National Secretary General Praveen Khandelwal explained that there are over 8 crore traders in India, of which, there are over 4.5 lakh distributors and over 90 lakh retailers, leading to approximately 1 crore people in the FMCG distribution business.
Khandelwal explained that deep discounting is a tactic which overthrows small players from the market. “Today, there are lakhs of people who will end up being out of business if only a handful of companies 10-20 large players with deep pockets are going to keep offering discounts like this.”
If not stopped, this, according to him, will not only lead to cartelisation but also impact an entire ecosystem. “There is a lot of money, which is rolling in the market due to these small and medium distributors. It is important to stop them now. Eventually, this is going to hamper the customers as well. The government must intervene.”
May 08, 2022