Hindustan Unilever (HUL) uses a hybrid distribution network in Kolkata, combining direct coverage of over 1 million stores with indirect coverage through a network of over 7,000 stockists and distributors. For the Dove soap brand in Kolkata specifically, HUL relies on a central & forwarding (C&F) agent who supplies products to authorized stockists classified as U1 and U2. These stockists then distribute to around 700-900 retail outlets each. HUL closely monitors inventory levels and sales through an eCRM software system.

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.
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2. December
SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER
21, 2008
HUL’s Approach to Distribution
Direct Coverage
Indirect Coverage Streamline Distribution
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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.
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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
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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.
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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.
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