Growing domination by trading monopolies over distribution of consumer goods

In recent years, there has been growing domination over retail trade by business to business distribution companies such as Jiomart, Walmart, Metro Cash and Carry, Booker, Elasticrun, Udaan etc.

These business to business distribution companies source their products from fast moving consumer goods companies (FMCG’s) and deliver them to the kirana stores – the local retail shops from which people buy these goods. In order to make the Kirana stores source their products from themselves, Reliance’s Jiomart offers massive discounts to the kirana store owners across the country, aggressively attracting them to order their goods digitally from Reliance’s JioMart Partner App. The same method is used by other business to business distribution companies as well.

This has led to ruination of many traditional distributors of consumer products. It is threatening the livelihood of lakhs of salesmen working for different distributors. Many distribution companies have reported that they been forced to cut down their expenses on vehicles and staff, as their business has been going down, because they cannot match the prices offered by JioMart and other such monopolies.

Retail stores popularly known as kirana stores, account for 80% of the nearly Rs 68 lakh crore ($900 billion) retail market in India. It is reported that at this time about 300,000 such stores in 150 cities all over the country order their goods from Reliance. Reliance has set a target of 10 million partner stores by 2024.

By establishing control over such a massive and growing retail market, Reliance Jio Mart and other such companies are able to force FMCG companies to offer their products at massive discount. They can do so by threatening to stop marketing the products of those companies which do not fall in line.

In this situation, the All India Consumer Products Distributors Federation (AICPDF) has decided to raise its voice of protest. The AICPDF is a body that represents about 4 lakh dealers and distributors of fast moving consumer goods (FMCG’s).

The AICPDF has written an open letter to FMCG companies highlighting that the massive discounts offered by Reliance JioMart and other such companies are leading to ruin of the existing distributors of consumer products. The letter has been sent to such large companies like Hindustan Unilever Ltd., Marico, Dabur India, ITC Ltd., Britannia Industries, Godrej Consumer Products Ltd., Nestle India, etc.

The Federation has demanded that the FMCG companies offer them their products at similar terms and conditions, and same price that they offer to Reliance Jio Mart and other such companies.  In the letter addressed to these companies, the Federation has said “We are authorized channel partners of your company in our designated area. We have earned reputation and goodwill amongst our retailers by giving them good service for many years. We understand that Jiomart and other B2B companies are offering them the same products of your company at a lesser price than what we offer them and this is adversely affecting our reputation and goodwill. Hence, our demand is that we also receive those products at prices at which we also can offer the same prices as Jiomart and B2B companies”.

AICPDF has called upon the FMCG companies to ensure that no preferential treatment is given to Jiomart and other B2B companies. It has threatened a countrywide action beginning January 1, 2022, in which it will boycott the distribution of consumer products of those FMCG’s which do not agree to its demands.

The demand of the distribution companies and their affected salesmen reveals how the monopoly capitalist companies dominating business to business trade are ruining small distributors and workers employed by them. These monopoly capitalist trading companies are working step by step to establish their control and domination over wholesale as well as retail trade. They decide from which FMCG company and at what price they will source their products, thus establishing their control over wholesale trade of these products. Simultaneously, they are establishing their control over retail trade through the Kirana stores they tie up with.

In sum, what is going on is the growing control and domination of all aspects of trade by monopoly capitalist companies.

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