JioMart, RIL's new commerce venture, could be a new distribution channel for FMCG companies once it achieves size and scale. In its pilot stage, JioMart is available in regions like Navi Mumbai, Thane, and Kalyan. Over the last few months, JioMart has been speaking to both kirana stores as well as FMCG companies for distribution tie-ups.

JioMart aims to offer packaged goods, pulses as well it's own private brands via the kirana route. Smaller and regional FMCG brands with a weak distribution model are most likely to benefit from listing via JioMart, said sources. However, the larger FMCG players are still weighing the difference in distribution costs and exploring the possibility of innovative cost structures before deciding.

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Owing to the digitisation of kiranas, FMCG companies are expecting some decline in revenues from modern trade channels.

"JioMart will definitely open up a new distribution channel for us. Companies who work on win-win cost structures, who have the ability to adapt to change and leverage the strength of a new channel will benefit," said a senior industry person, who drew a parallel to how some companies have leveraged the power of modern trade.

Distribution costs via the traditional channel are the lowest in India. "There will not be a major change in distribution costs unless an FMCG company is completely relying on one trade channel. At this point in time, companies are cautious of putting all eggs in one basket," said an FMCG consultant who did not wish to be named.

Large FMCG companies could explore listing select products and stock-keeping units (SKUs) on JioMart to start with. "We will see what kind of demand is generated on JioMart and take a call. One thing is certain, that we want to keep all distribution channels engaged. We don't want a situation where we have to rely on one trade channel," said an industry official.

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Disclosure: RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.

First Published:Apr 28, 2020 3:20 PM IST