Margins remain a pain point for organised FMCG supply-chain cos

Experts say gross margins are low, with the last-mile supply chain and retailer not making money

- SHARLEEN D'SOUZA & SHIVANI SHINDE

Jiomart B2B is the latest among organised supply-chain companies to bite the bullet, shutasking its employees to leave.

Why are companies finding it difficult to sustain the supply-chain business? Experts point out that gross margins in supplying fast-moving consumer goods (FMCGS) are very low.

While it does look attractive because it is the largest part of the consumption market, the last-mile supply chain and retailer are not making money.

"FMCG brands have ensured high margins for their businesses by streamlining and smoothing their supply chains over decades and making them cost-efficient," said Anshuman Singh, founder and managing director, Stellar Value Chain Solutions.

Singh said in rural markets, the costs of supply chains were proportionately high due to lower volumes.

He added: "The low margins in the last leg of the FMCG rural supply chain make it difficult for new-age rural distribution players to offset the high costs."

Devangshu Dutta, chief executive officer, Third Eyesight, a consultancy firm, said modern B2B (business-tobusiness) players had tried to step in to replace the traditional links in supply chains with price incentives and a large selection of products.