The physical product distribution disruption I had predicted is here, and it is Reliance Industries Limited that is leading the charge. I had always maintained that it is not the last mile that is the lowest hanging fruit for a behemoth with resources, and I do not mean just money, but the middle mile. Most startups I know in this field are focussing on heavy logistics (first mile) or hyperlocal deliveries (last mile). They missed out on the greatest opportunity there ever existed in the retail FMCG space: the dealer-distributor network. Some, like Udaan, who entered this market early (and became a Unicorn quickly) seemed to not get what exactly was wrong with it. Some others like Mensa focused on online distribution. The big problem here is in fact the entrenched dealer-distributor network that relies on social capital and privilege of old money, prime real estate, and caste/language affiliations and that has cornered the dealer-distributorships of MNCs, and hence the access to the retail market for far too long without adding absolutely any value except perhaps warehousing and logistics of very low quality.
I have been in this market for some time but it did not take me more than a few months to realise the opportunity here. Unfortunately, as has been borne out by history, it needed a large name to see it and put its might behind it. From what I can see, as I had predicted, the glory days of dealers and distributors, their caste/language-based guilds, their strong-arm tactics to protect their turf, their slothlike energy and complete lack of value addition, and their constant demand for more and more margins, squeezing the newcomers and kissing MNC ass, are almost over. Know it that Reliance is going to be as difficult for new brands and products to find distribution as it was earlier and remains even now. But what Reliance has done is open up the market for new, other large brand-name, entrants. And they will come. This market is being democratised as we watch. This is going to be fun!
Walmart and Amazon could still get in the game, and so could FedEx, DHL, and India Post (who, I think will kick some major capitalist ass if it does…if only they had the leadership and the mandate).
In any case, welcome to the real retail revolution in India. The best is, I promise you, yet to come.
