As per our discussion with Unilever representative, trade practices for FMCGs with their

distributors are as follows:

 There is a legally binding contract with distributors. They are given certain KPIs which they
have to fulfill as part of their contractual obligation
 FMCGs prefer to work with those distributors who are active tax filers.
 Since the products of FMCG companies are highly perishable in nature, therefore it is
common trade practice that companies decide certain warehousing SOPs with distributors to
ensure that the products are stocked to retain their shelf life and freshness
 Distributors have their own sales force as well team for selling to their customers
 Use of technology is getting more common since FMCGs get more visibility into their
secondary sales.

Wholesalers:

 Wholesalers prefer buying with FMCGs on cash basis.

 Wholesalers do not have a secondary sales force since most of their customers are coming to
them for buying the products
 Most of the wholesalers are not active tax filers and they trade on the basis of loose invoices
which makes the company at a disadvantage since it becomes difficult to declare sales.
 Wholesalers are more prone to overcharge their end customers since companies do not have
visibility of sales to the end customers of wholesalers.

Technology:

Unilever Food Solutions is using software called “LeverEdge” with its distributors which adds
significant value with respect to their channel management. The first advantage with this
software is the continuous visibility of stock position of its distributors. So, UFS can easily
communicate on time with its distributors whenever there is understocking or overstocking.

Secondly, through the help of this software UFS has the visibility of the secondary sales. i.e.
those made by distributors to its customers. This helps the company to know the changing
preferences of customers with regards to its products, what type of customers contribute to