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December
                         SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER
                                                                                        21, 2008




  Sales & Distribution Network of Hindustan Uni Lever (HUL)-
              DOVE bathing Soap (Region: Kolkata)
A marketing channel performs the work of moving goods from producers to consumers. It
overcomes the time, place, and possession gaps that separate goods and services from those
who need or want them. Members of the marketing channel perform a number of key
functions like forward flow of activity from the company to the customers(goods) & backward
flow from customers to company (order, Payment).

FMCG major HUL is the subsidiary of UNILEVER with a market capitalization of $ 14 billion. HUL
owns 35 of India’s 150 most trusted & powerful brands and is Market Leader across categories
          • Fabric wash, Personal wash, Dish wash, hair wash, skin applications, Talcum
              powders, packet tea, Jams
          • Number two: Toothpaste, instant coffee, ketchup


The sales and distribution challenge of HUL

HUL caters to Seven million distinct outlets across India (one for every 29 households) and 59%
of these stores are in rural India. HUL directly services over 1 million stores and has a network
of over 7000 Stockists and distributors.




                                                                                                    1
December
                    SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER
                                                                          21, 2008

HUL’s Approach to Distribution




Direct Coverage




Indirect Coverage                          Streamline Distribution




                                                                                     2
December
                         SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER
                                                                                        21, 2008

S & D of HUL in Kolkata

Hindustan Unilever in Kolkata covers the consumers mainly with the combination of C&F and
stockists who indirectly deal with the Retail outlets. The company which is headquartered in
Mumbai has appointed M/s Mitra Logistic Pvt. Ltd as the C & F agent for Easter region (West
Bengal, Assam, Orrisa & Bihar). C & F agents can be classified into 2 types, one with investment
and the other without investment. The without investment C&F agents are mere Forwarding
agents and act as the transporter to the company. M/s Mitra Logistic Pvt. Ltd is a forwarding
agent on behalf of HUL. The C&F agent then supplies the goods to the authorized stockists .
These Stockists are also classified into 2 categories called U1 and U2.

U1 & U2

The stockists are classified as U1 and U2 stockist on the basis of the products that they stock.
E.g. U1 stockist generally stocks products like surf and ponds whereas the U2 stockist deals with
high profile products of HUL like Lakme and Dove. The stockiest is HUL system are commonly
referred to as Re Stockist (RS). In Kolkata there are approximately 7 U1 Stockists and 5 U2
Stockists. These are appointed for a particular region of the city. Each Stockist is then
responsible for distributing the goods to the retail counters in his region. On an average Each
Stokist caters to 700-900 retail outlets of the city. The retailers then provide the goods to
consumers.

The depending upon the type of products, sales, turnover and the number of retail counters a
stockist is dealing with, the company has classified the stores into

       Super Value Stores
       Smart/ FLO
       Unicare
       Vijeta
       U2


The stockist is also responsible for dealing with Modern retail outlets like shopper stop and
pantaloon. The stockist also supplies the goods to CSD Canteens and bills them for the same
and the difference in the amount is reimbursed by the company. The Stockist which I visited
was supplying to the CSD Canteen Fort William of Kolkata.




                                                                                                    3
December
                          SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER
                                                                                         21, 2008

‘Direct-to-Consumer’ Distribution

Project “Sangam Direct”- a non-store home delivery retail business - was conceptualized (2001)
and test marketed by HLL in Mumbai. Sangam operates a dedicated call centre with trained
personnel in Mumbai. The centre after procuring orders from customers passes them on for
execution to a network of re-distribution agents. This model, which does not call for owning a
physical warehousing or selling facility, offers the twin benefits of convenience and value to its
customers. HLL, after understanding and analyzing consumer response, wanted to take the idea
across the country.



                   Diagrammatic representation o the Distribution Channel

                                          HUL




                                         C&F




                                       STOCKIST




  CSD CANTEENS                           RETAIL OUTLET                         MODERN TRADE




    CONSUMER                                    CONSUMER                             CONSUMER



                                                                                                     4
December
                          SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER
                                                                                           21, 2008

Sales force behind the Distribution channel

The distribution channel cannot be successful without a good sales force. In the case of HUL
Kolkata the sales were co-ordinated by Area sales manager (ASM), Activation Manager (AM),
and a Territory Sales Incharge (TSI). These people were working on behalf of HUL and were a
Link between the stockist and the company. The goods moved to the stockist’s godown by the
company’s Truck. The stockist then appointed a (Re Stockist Salesman) RSSM who was
responsible for collecting the orders & payments from the retail outlets. The Stockist which I
visited had 11 sales man, 6 people in the warehouse, and 11 delivery man. The delivery was
made by either cycle or through a van depending upon the size of the order. The sales were
monitored by the way of MOC . They had 12 MOC’s per annum and the stockist has 3TDP’s
(21st-30th/1st-10th/11-20th of a month). The lead time for delivery from the company was 1 day.
The orders were placed online using the CRM software of unilever called “UNIFY”.



Evaluation/ Selection of Channel Members

The stockist were selected with a proper evaluation on the factors like the investment capacity,
Number of retail stores covered, Appropriate Sales force, and Infrastructure. I also noticed that
the company’s policy is to work in advance payment mode. To ensure this the company
maintained a stock of signed blank cheques of the stockist and these cheques were presented
to the bank upon the receipt of order and generation of the bill. Normally 20 cheque leaves
were maintained by the company and any decrease in this level was communicated to the
stockist.



Ecommerce Marketing Practices

The company heavily relies on Electronic means of communications for running the business.
The entire Sales and distribution channel is integrated through eCRM software called “UNIFY”
which are installed in every PC system of the C&F, Stockist. The company has up to date record
of the inventory position of all the stockists. A stockist is required to maintain a minimum level
of inventory. If the stock position goes below a critical level order is automatically triggered and
the company sends the goods to the stockist. All operations thus take place online.




                                                                                                       5
December
                          SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER
                                                                                         21, 2008

Unconventional Marketing Channel
Looking at the booming retail sector of India and the success of retail business of Pantaloon and
shopper stop I would like to suggest a distribution channel on similar lines. I would suggest that
HUL opens a specialty store which houses all the brands of HUL under one roof. These stores
should be located near the strategic locations so that the people do not have to cover a long
distance to reach the store. Since HUL has a diverse product line it will a huge success and it
would be commercially viable also.




                                                                                                     6

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Sales & Distribution Hindustan unilever

  • 1. December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 Sales & Distribution Network of Hindustan Uni Lever (HUL)- DOVE bathing Soap (Region: Kolkata) A marketing channel performs the work of moving goods from producers to consumers. It overcomes the time, place, and possession gaps that separate goods and services from those who need or want them. Members of the marketing channel perform a number of key functions like forward flow of activity from the company to the customers(goods) & backward flow from customers to company (order, Payment). FMCG major HUL is the subsidiary of UNILEVER with a market capitalization of $ 14 billion. HUL owns 35 of India’s 150 most trusted & powerful brands and is Market Leader across categories • Fabric wash, Personal wash, Dish wash, hair wash, skin applications, Talcum powders, packet tea, Jams • Number two: Toothpaste, instant coffee, ketchup The sales and distribution challenge of HUL HUL caters to Seven million distinct outlets across India (one for every 29 households) and 59% of these stores are in rural India. HUL directly services over 1 million stores and has a network of over 7000 Stockists and distributors. 1
  • 2. December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 HUL’s Approach to Distribution Direct Coverage Indirect Coverage Streamline Distribution 2
  • 3. December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 S & D of HUL in Kolkata Hindustan Unilever in Kolkata covers the consumers mainly with the combination of C&F and stockists who indirectly deal with the Retail outlets. The company which is headquartered in Mumbai has appointed M/s Mitra Logistic Pvt. Ltd as the C & F agent for Easter region (West Bengal, Assam, Orrisa & Bihar). C & F agents can be classified into 2 types, one with investment and the other without investment. The without investment C&F agents are mere Forwarding agents and act as the transporter to the company. M/s Mitra Logistic Pvt. Ltd is a forwarding agent on behalf of HUL. The C&F agent then supplies the goods to the authorized stockists . These Stockists are also classified into 2 categories called U1 and U2. U1 & U2 The stockists are classified as U1 and U2 stockist on the basis of the products that they stock. E.g. U1 stockist generally stocks products like surf and ponds whereas the U2 stockist deals with high profile products of HUL like Lakme and Dove. The stockiest is HUL system are commonly referred to as Re Stockist (RS). In Kolkata there are approximately 7 U1 Stockists and 5 U2 Stockists. These are appointed for a particular region of the city. Each Stockist is then responsible for distributing the goods to the retail counters in his region. On an average Each Stokist caters to 700-900 retail outlets of the city. The retailers then provide the goods to consumers. The depending upon the type of products, sales, turnover and the number of retail counters a stockist is dealing with, the company has classified the stores into Super Value Stores Smart/ FLO Unicare Vijeta U2 The stockist is also responsible for dealing with Modern retail outlets like shopper stop and pantaloon. The stockist also supplies the goods to CSD Canteens and bills them for the same and the difference in the amount is reimbursed by the company. The Stockist which I visited was supplying to the CSD Canteen Fort William of Kolkata. 3
  • 4. December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 ‘Direct-to-Consumer’ Distribution Project “Sangam Direct”- a non-store home delivery retail business - was conceptualized (2001) and test marketed by HLL in Mumbai. Sangam operates a dedicated call centre with trained personnel in Mumbai. The centre after procuring orders from customers passes them on for execution to a network of re-distribution agents. This model, which does not call for owning a physical warehousing or selling facility, offers the twin benefits of convenience and value to its customers. HLL, after understanding and analyzing consumer response, wanted to take the idea across the country. Diagrammatic representation o the Distribution Channel HUL C&F STOCKIST CSD CANTEENS RETAIL OUTLET MODERN TRADE CONSUMER CONSUMER CONSUMER 4
  • 5. December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 Sales force behind the Distribution channel The distribution channel cannot be successful without a good sales force. In the case of HUL Kolkata the sales were co-ordinated by Area sales manager (ASM), Activation Manager (AM), and a Territory Sales Incharge (TSI). These people were working on behalf of HUL and were a Link between the stockist and the company. The goods moved to the stockist’s godown by the company’s Truck. The stockist then appointed a (Re Stockist Salesman) RSSM who was responsible for collecting the orders & payments from the retail outlets. The Stockist which I visited had 11 sales man, 6 people in the warehouse, and 11 delivery man. The delivery was made by either cycle or through a van depending upon the size of the order. The sales were monitored by the way of MOC . They had 12 MOC’s per annum and the stockist has 3TDP’s (21st-30th/1st-10th/11-20th of a month). The lead time for delivery from the company was 1 day. The orders were placed online using the CRM software of unilever called “UNIFY”. Evaluation/ Selection of Channel Members The stockist were selected with a proper evaluation on the factors like the investment capacity, Number of retail stores covered, Appropriate Sales force, and Infrastructure. I also noticed that the company’s policy is to work in advance payment mode. To ensure this the company maintained a stock of signed blank cheques of the stockist and these cheques were presented to the bank upon the receipt of order and generation of the bill. Normally 20 cheque leaves were maintained by the company and any decrease in this level was communicated to the stockist. Ecommerce Marketing Practices The company heavily relies on Electronic means of communications for running the business. The entire Sales and distribution channel is integrated through eCRM software called “UNIFY” which are installed in every PC system of the C&F, Stockist. The company has up to date record of the inventory position of all the stockists. A stockist is required to maintain a minimum level of inventory. If the stock position goes below a critical level order is automatically triggered and the company sends the goods to the stockist. All operations thus take place online. 5
  • 6. December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 Unconventional Marketing Channel Looking at the booming retail sector of India and the success of retail business of Pantaloon and shopper stop I would like to suggest a distribution channel on similar lines. I would suggest that HUL opens a specialty store which houses all the brands of HUL under one roof. These stores should be located near the strategic locations so that the people do not have to cover a long distance to reach the store. Since HUL has a diverse product line it will a huge success and it would be commercially viable also. 6