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Traditional distributors face challenge from Reliance JioMart, threaten to disrupt supplies to kirana stores

Key issues that have to do with JioMart’s e-commerce model spell fresh trouble for traditional distributors.

Distributors of household goods of major companies have threatened to disrupt supplies to kirana stores if the companies continue to provide products at lower prices to Reliance's JioMart, a letter sent by the All India Consumer Products Distributors Federation (AICPDF) to Hindustan Unilever, Colgate, ITC, Reckitt, and other FMCG companies revealed. Kirana stores currently account for over 80 percent of India's retail market and they are increasingly turning away from traditional company salesmen and towards Reliance to buy their stock due to the low prices offered by JioMart. JioMart is intent on disrupting the e-commerce market by taking on Amazon and Walmart-owned Flipkart, but the threat the company poses to distributors sheds light on the new set of challenges that the traditional retail model faces. Why are distributors frustrated? In November, Reuters published a report shedding light on the challenges faced by distributors because of JioMart's entry: Lower prices on JioMart: Kirana stores that were once-loyal customers of distributors were now buying from Reliance because the JioMart Partner app offers prices up to 15 percent lower, one distributor told Reuters. In one example, a retailer was able to buy a two-tube combo of Colgate MaxFresh toothpaste for about ₹115 from JioMart whereas the traditional distributor paid ₹145 for the same product from the company and offered it to the retailer at ₹154, which is nearly 34 percent higher than what JioMart offered. Reliance is able to offer these low prices because of the bulk buying power and the negotiating power it has due to…

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