Hi all,
We have a wholesale grocery shop in hinterlands of M.P. and have been doing that business for quite some time 100+ years. When we read any interview of big retailers, they always talk about bottle necks in supply chain and over head costs etc..
I was trying to understand how and where this supply chain is broken. And what do they really mean when they say supply chain is broken?
I can give examples on many front:
if we compare prices: Prices at my shop of best quality products compared to Big Bazaar, Spencers are 25% lower then the after discount prices of these retailers on most of the products except (CPG: uniliver, RB etc..) we don’t get those discounts.
If we compare hyperlocals, likes of Grofers, Papper Tap they are 50% costlier on almost all grocery items after discounts.
I would like to show a quick example here,
We buy Sugar from Maharashtra and in less then 10% over head cost we are able to sell it in MP. Difference between purchase price at Maharashtra mill and sales price in MP is less then 15%. (this includes logistics, last mile delivery, operating margin and packaging etc.). Also all of these operations get done in less then 3 days of order booking at Maharashtra mill (3 days include advance payment, arranging for trucks, travel time, packaging time etc.). Now i want to understand where this supply chain is broken? This is just one example.
Current retail sugar prices of at my shop are Rs 27 to Rs 27.5 depending on the quantity you buy. This is for high quality sulfur free sugar. Cost for same Sugar in Big Bazaar is Rs 31-45 depending on the way you want to buy it (from the container or in a packet). And Grofers prices are Rs 45.
I don’t understand where these people are facing problem? Is it sheer scale they are unable to manage? Or the way people operate in unorganized sector i.e. on paper and they have to manually enter the bills? Or is there something I am missing? If so, please highlight?
