Better B2B structures are crucial for India's consumer retail sector

02 December 2019 Consultancy.in

Despite the fact that a large part of the supply chain of India’s retail sector relies on business-to-business (B2B) relations, interaction in the B2B sector remains unorganized across the country, according to new analysis by Redseer Consulting. Changes to this scenario would bring significant value to the Indian economy. 

The analysis comes at a time when economic growth has hit a plateau of sorts, although Redseer predicts that India’s soaring consumer retail sector will reinject momentum into the economy in the near future. The sector is backed by a substantial population, which is growing in economic prosperity.

In recent years, this combination of factors has made retail one of the biggest drivers of economic growth in India, leading many analysts to make lofty predictions about the future of the country’s retail economy. The Boston Consulting Group (BCG) linked rising income levels to a booming consumer retail sector in 2017, forecasting a $4 trillion value for India’s consumer market by 2025.

Indian retail spending funnel

Bain & Company’s analysis at the World Economic Forum early this year was even more grandiose, forecasting a value of $6 trillion by 2030. Redseer places the current value of the sector at $900 billion, driven by more than 15 million retailers operating across various parts of the country. 

The consumer retail segment in question is the business-to-consumer (B2C) sector, where the end good is delivered to a substantial consumer base. Driving these B2C relations, according to Redseer, is a plethora of B2B relations, which currently lacks any semblance of structure.

Between the brand or producer of goods and the end consumer, the report positions four intermediary B2B operators, namely the large-scale distributors, the stockist, the wholesaler and the retailer. Relationships across this entire supply chain can have a considerable impact on the final product and consumer experience.

Traditional value chain

Distributors, for instance, are central to ensuring that products are properly warehoused and logistics are managed sufficiently. The stockist ensures the adequate amounts are distributed, while the wholesaler helps to create reach for the products in urban, rural and semi-urban areas.

Finally, the retailer ensures the product reaches the customer. Given the crucial nature of these relationships, Redseer issues a strong call for better organisation of this chain, which currently suffers from a number tangible hindrances. These create problems for buyers as well as sellers.

“Issues are a plenty for buyers (Retailers and smaller wholesalers / stockists), mostly ranging from finding easily available quality products, right pricing, getting reliable vendors on-board, credit availability, minimum order quantity requirements to getting a consistently good pricing on products,” says the report.

Traditional value chain - B2B

For sellers, “the major challenges range from understanding end consumer trends and behaviour, availability of reliable logistics partners and a large geographic presence.” According to the firm, investing in technology is one way to solve issues on both sides of the equation.

Technology has considerable value to add to the supply chain. Industry 4.0 applications such as artificial intelligence, blockchain, Internet of Things and data analytics have a large role to play in logistics. Data analytics is also increasingly being used to analyse customer behaviour, which can increase the accuracy of pricing and marketing measures.


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