 Let's now spend a little bit of time on the two most important components of a sales channel. The first is the distributor and the second is the retailer. Let's start with the distributor. A distributor is a person who distributes, which basically means he takes product from one or two sources and distributes it, spreads it over many, many retailers or consumers, which means that he buys in bulk. A distributor may buy a full truck load, large global distributors may buy a container load, a very big distributor, let's say for cars. A distributor of cars, a Ford, a General Motors, a Maruti or Mahindra or Hyundai, may buy a shipload of cars and he buys it from the manufacturer. And what it does then is to take those large lots of soaps, detergents, cars, phones, PCs, laptops and sells it in small, small lots to retailers or sometimes individual units to consumer. So a car or a truck distributor may buy a hundred truck or a thousand truck from Tata Motors or Ashok Leland or Ford or General Motors or Toyota. So they may buy thousands of trucks, but maybe sell 10 trucks to a B2B customer, which means a corporate customer. Or they may sell one truck to the driver and same with phones or soaps or detergents. So that's why they are called distributors and what it does it, it allows the company to not worry about distribution because a company, a manufacturer should manufacture and they spend a lot of time developing new products and packaging them, making them, assembling them, etc. without having to worry about how they should reach you and me. So that's the role that distributor plays. It allows the manufacturer to reach a large number of retailers and consumers. Distributor management is a very good career option for those of you who want to join a manufacturer and manage the supply chain or the retail network or the distribution network. Or you want to become a distributor yourself. It's something that you should be aware of and learn. If you join a manufacturing company like ITC or Goadridge Consumers or Tata Tea or Tata Coffee or Unilever and if you join in the sales function, chances are you spend a lot of time managing distributors. So what does distributor management look like? First of all, distributors are independent legal entities. So they're independent businesses versus the manufacturer. So the first thing is that the manufacturer and the distributors have to sit together and agree on what is called a sales target or a revenue target or a profit target. So a large company like Marico or Dabbar will probably sit down with their distributor network every year, every six months, every three years or three months and then jointly agree and say, you know, these are the targets you should go for. So if there's a distributor in Mumbai or Maharashtra, that distributor will sit with the manufacturer and agree on certain sales targets and revenues based on past trends, new product launches and so on. Once the distributor has done the planning with the manufacturer, distributor also has to plan which are the retailers that you will sell to and how will you cover them? Will you go and sell them once a week, once a month, once in six months, every day? So that's retail coverage planning. Distributors are also collecting orders from the retailers and placing them on the manufacturers. So he receives goods from the manufacturer and then he supplies them to the retailer. So in all of this, there is an order management process. Distributors have to collect orders from retailers and give it to the manufacturer here. So collect goods from the manufacturer and give them to the retailer. So that's called order management. As the goods are flowing from manufacturer distributor retailer, remember cash, money is also flowing in the reverse direction. So goods are flowing downstream, manufacturer, distributor, retailer, consumer. Money is flowing reverse upstream, consumer to retailer, to distributor, to manufacturer. That is cash management and distributors management, which means how much credit needs to be managed. And then of course there's this whole thing about infrastructure and people planning because distribution is a people game. Many, many, many people are employed who are collecting orders, servicing orders in terms of delivery of goods, running trucks, running warehouses. There's a lot of people and there's a lot of infrastructures, trucks, material handling, warehouses, go downs. All of this together constitutes distributor management. Now let's look at some physical examples. So this is a distributor warehouse. An example. What you will see here is that there aren't many products. But there are few products, in this case maybe one or two products, but in large quantities. They're in pallets, which is those wooden shelves on the ground on which the product is placed. And they are stacked one of the other. So this is a distribution warehouse or a distributor warehouse because you see few products, large numbers. From the warehouse goods will flow into downstream distributors, retailers, et cetera, in trucks. And that's a distribution fleet. So you see here a Coca-Cola distribution fleet because in summer Coca-Cola or Pepsi-Cola or any of the soft drinks sells very quickly. And it has to be replenished every day. So you've got a huge amount of trucking which carries goods from the distribution warehouses to the retailers or the malls or the restaurants where you and I can go and buy from. So that's the distribution fleet. Downstream they can also be smaller lots. You saw a big truck, but the big truck cannot enter into every lane and cannot get into every small Kirana store. So you also have small trucks. Sometimes it's a cycle rickshaw. Sometimes it's an auto. And next time you go out onto the roads, please look out on this kind of small trucks which are giving product into the store where you're buying from. And that's called a distribution fleet. Retail outlet. You will not only see Kirana store or grocery store or malls. You could also have vendors who are actually pushing this cart and selling in this case Coca-Cola. So the supply chain that I showed you was the distribution warehouse. Lots and lots of Coca-Cola. Then the big truck, then the small truck, up to maybe a cycle rickshaw and auto which comes and gives the Coca-Cola stocks to this small warehouse and that person is selling to person like you or me. And that's called a distribution network in this case for a soft drink. In India now, there are also online distributors. So Iran is one of them where a retailer, a Kirana store can actually place a product because a Kirana store may have 5,000 products, 10,000 products. And he will not be able to manage many, many, many, many orders because he's got so many products and so many suppliers. So there are now online distributors like Iran and Geo which will collect all the orders from the retailers and supply it to the retailers. So this is an example of Geo Mart. So you can as a consumer can go and buy from Geo Mart but retailers can also buy from Geo Mart and open what is called a business. And by the way, if you're a restaurant or an office, you can also buy from Geo Mart because you'll buy in slightly larger loads. So they are online distributors. Now let's go to the next link, a very important link of a retailer. So we've got a company which is probably a very big business entity. Then we've got distributors who are probably big or medium size. And then we've got retailers and retailers are many kinds. I'll show it to you later on. But remember that the retailers are also independent businesses. If it's a Kirana store, it's just owned by the owner who you see sitting in the store when you go to buy and shop from that store. So it could be a person who owns that store. But if it's a big retailer like Chroma or VJSAs or any of the chain stores, it could actually be a big company. But the key thing is that they're independent businesses. So retailers are independent businesses, thousands of them, sometimes across India, millions of them, across the world, tens of millions. And they've got distributors who are independent business entities and they've got the manufacturers who are also large companies. They're all buying and selling from each other. The difference between a distributor and a retailer is that the retailer will buy in even smaller quantities from the distributor, which may be in cartons. And sell to consumers like you and me in single pieces. When you and I go to buy, we may buy one packet of biscuit, one soap, one detergent, one pencil, one pen and so on. So you've got a manufacturer who makes in very large numbers, gives it to distributors who buys in smaller lots. Then the distributor gives to retailers who buy in even smaller lots. And the retailer that probably sell one or two pieces each to consumers like you and me. So the size reduces unless of course you're Amazon or food cart. But the numbers work in different lots. So you may have one Samsung in the world, one Tata T in the world, one Dabur, one Imami, one ITC. Distributors can be in thousands and retailers can be in millions. So as the size decreases, the numbers increase. And that's the beauty of a channel. Remember, neither distributors nor retailers make the product that they sell. That's made by the manufacturers. But manufacturers will make only their own products. Distributors may buy from 5 or 10 or 20 manufacturers. A retailer may buy products of thousands of manufacturers or hundreds of manufacturers. So retailers sell you in small lots, one piece, two piece. But they will give you a choice of many, many kinds of products. 10 shampoos, 20 detergents, 50 biscuits. If it's electronics, 10 kinds of phone from 10 different manufacturers. And that's what you and I want as a consumer. Retail management is also a very good career option. Whether you're working for a company or you want to open up your own retail store. And therefore, if you're interested to get into retail management, you should be aware of the components of retail management. I've tried to capture some of the essence of retail management in the chart that you see on the screen. So it starts with category management. Category management means it essentially means that the retailer, whether it's a small store or a big store in a big mall or an online retailer, they have to first of all decide what categories to sell. Should I sell electronics or soaps? Should I sell cars or scooters? Should I sell food or should I sell creams and lotions and beauty care products? So that's category. Which category should I sell? That's called category management. The next part is shelf management. Now most retailers are small and the biggest retailer may be a few thousand square feet. Of course, you can have a Walmart or a star bazaar or a big bazaar, etc. And they may be 50,000 square feet or 100,000 square feet. But it's still limited shelf space. So you have to figure out what do I put in my shelf? Which consumers can buy from? So category management and shelf management, I'll show you some examples in a minute, are driven by demand that you and I have for that product. And retailers have to understand the demand because if you and I as consumers want ABC and retailers are stocking XYZ, we will not be happy as consumers because we want ABC. Retailer doesn't have it. And retailers will not be happy because they can't feed our demand. So it's very important that category management and shelf management is taken care of. Then you get into the operations of retail management. Supply chain management, buying the product daily, weekly, monthly, and then making sure that you're ordering on the distributors, be it on Iran or Jomart or any of the distributors that's giving you the product. Supply chain management, order management. But retailing is also about cash and people. Because if you walk into a store, if it's a small store, you'll find the owner plus five or six people or two or three people or maybe one other person who is servicing you when you walk into the store. If it's a mall or a supermarket, you go to a star bazaar or DMart, there will be maybe 20 people, 30 people, 100 people, 200 people. Those people have to be managed. And then, of course, continuous flow of cash. So goods are flowing in from manufacturer, distributor, retailer to consumers like you and me. Cash is flowing the other way. We give the cash to the retailer, retailer gives the cash to a distributor, distributor gives the cash to the manufacturer. So let's look at an example of DMart, which is a well-known retail chain, popular in West, India mostly and some part of South. But then every part of India and every country outside of India will probably have a supermarket like this in Walmart or Costco or Tesco outside India. And India may be star bazaar or big bazaar or reliance retail. But let's look at a typical case like this. So you walk into a store like this. This is what the store will look like. And this is what shelf management is all about. Those shelves have to be replenished because consumers and shoppers are continuously coming, buying, sometimes you're taking something out and putting it back, sometimes you're not putting it back. So those shelves have to be full of goods. If it's empty, the consumer like you and me cannot buy. So shelf management is extremely important. If you look at the shelves here, you've got the big boxes and the unit packs below. So if you and I go and pick up one or two bottles or one or two packets, someone has to come back and replenish and fill up that shelf from the stock on top of the store or top of the shelf. You can look at the picture there. Category management I talked about. So what's category management? Category management is the products that you store, the categories that you store. So here you find there's a whole row of a real, which is a detergent for washing clothes. And they've got surf. So the first two columns or rows of shelves are filled with detergents. But then after that you get into other products if you look at the pictures. There may be shampoos or soaps and so on. So both shelf and category management are driven by demand. What you and I want or the shoppers want is the essence of what the retailer has to put on the shelf and has to offer to us. This is cold storage. This is a large supermarket cold storage where you get milk or cold drinks, juices, chicken or fish or eggs or frozen food. So this is cold storage and many stores, small, small stores will probably have an ice box for ice cream or kulfis. So that's cold storage. Shelf replenishment, as I said. So look at this person. He's coming in a trolley and if you look at that orange soft drink, it's in a pack of six or twelve. And what this person will do is he will break up, tear up the pack of six and put in individual pieces. Because when you and I go, we'll probably not buy six of that large bottle there. We'll probably buy one or two pieces. So here's a person who is replenishing, which means filling up the shelves. It is another lady and filling up the biscuit packs, checking where the shelves have got empty and she goes and fills it up. So that's shelf replenishment. It's also important that the pricing is visible in the store because when you and I go, we need to know what the price is. So sometimes in an unbranded commodity like rice or sugar, there's no price marking. So you have to put a sticker there and says, this rice is 40 rupees a kilo or 70 rupees a kilo. It's very expensive rice, maybe 100 rupees a kilo. If it's not that expensive, maybe 20 rupees a kilo. And you can see the price marking. And then sometimes you promote products and you say, here's a special discount for you. And in the store, and you can see the demand sign out there that this is the discount on most of the products or all the products or some of the products in the store. So that's a promotion. And then you have to manage a point of sale, which is where you check out. So if you go to a small store, the owner is sitting there, you buy a few products and you give the money to the owner and you walk out. In the supermarket, there are hundreds, sometimes thousands of shoppers who go in every day. So you'll find that there's a lot of checkout counters. And there you give all your products, the person at the counter builds you, you pay the money, cash or UPI or credit card and then you walk out. But either way, it's a point of sale. Whether it's an owner in a Kirana store or a checkout counter in a supermarket, you have to manage your point of sale. So that's about not so expensive goods in maybe Kirana stores or supermarkets. Now let's look at a different category. Electronics. So Chroma is a chain store for electronics. There are others like Reliance Electronics and so on. And you'll find these stores in big cities, towns or district headquarters. So a store will look like this, there's a starter chain. And because it's electronics, it needs some extra time. You're not buying an electronic product every day, a washing machine or a fridge or a laptop or PC. You'll probably buy it once a year, once in two years, once in five years, maybe once in 10 years. But the prices will be high. So you're not like buying a biscuit packet. You know what biscuit to buy, you go there, buy it and it's over in a minute. But when you buy a washing machine or a phone or a laptop, you're spending a lot of money. So you want to be sure what you're buying and you need time to decide. You may want to have a look at all the different laptop models or refrigerators or TVs or machines, etc. So you have to manage the in-store display. So see the display in that store. And sometimes you want a demonstration. When you're buying a smartphone, you probably want to take it in your hand and checkout. How does it work? What's the look and feel? How's the size? How's the speed? And so on. So you also have to manage the in-store demo or demonstration. So with that again, let me take a pause here and encourage you to think and write down in a course journal different products that you have bought. Biscuits, soaps, detergents, pens, pencils, laptop, phone, bicycle, scooter, or when you bought probably a car for your family and you went out with your parents or you bought it for yourself. Try to take five or ten such examples of different categories. As I said, if you have a car, a car, a bicycle, a scooter, if you have a phone, a phone, laptop, PC, if you have a pen, pencil, biscuit, soaps, detergents, atta, flour, rice, cooking oil. In your course journal, try to write down what you think is the supply chain. Where do you think they were manufactured? Try to do an internet search and think about if you have a Hyundai car, where was the Hyundai car manufactured? If you have a Maruti car, where was the Maruti car manufactured? If you have a Bajaj scooter, where was the Bajaj scooter made? If you are buying a Samsung phone, where was the Samsung or LG or OnePlus or Vivo phone made? If you are buying Parle G biscuits or if you are drinking Pepsi Cola, where were they made? Try to think, who would have distributed these products? The distributors are there, except you don't probably think about them and don't go looking for them because only go to the retailer. So try to find out and do an internet search and look around when you are next in a big wholesale market. So there will be wholesale markets. If you are in Delhi, plan a visit and note down what you see in the wholesale market of Delhi. So the Bara Bazaar in Kolkata, Crawford market in Bombay or whichever are the wholesale markets. Think about how you think the products got transported. If it's a 10 kilo pack of rice, how was it transported? If it's a small USB drive or a small power bank or a charger or a phone or a laptop or a biscuit packet or a soft drink, how do you think they were transported? Trucks, planes, ships if it's a foreign product, an auto rickshaw and who are the different retailers? You may have bought it from a retailer. Think about where else could you have bought it from? You bought it from a mall. Think about online or a small store. You bought it from a small store. Think about a big store or a mall that could have bought it from. Basically reflect and write down on a course journal what you have heard so that you remember and you are ready to do it for yourself. Let me also talk to you finally about what are the retail management skills. You may want to join a retail company. You may want to join let's say a Tata Chroma or a Geo Mart or a Reliance retail. You may have a small store of yourself or set up a small store for yourself. So what are the skills that you need to develop? First is leadership and teamwork. If you are setting up a small store in a small town, you will still need maybe 1%, 2%, 5%, 10% in your store. And you as the owner have to lead those 4, 5, 6 people. If you join and start becoming a store manager for a large D Mart store or a large Star Bazaar or a large Chroma store, you may have 100 people in that store. Abroad if you go for a very big store, there may be 500 people in that store. You have to be able to lead those people and you have to build a good team in your store. Second, remember that the job of a retail is to sell to consumers. And for that you have to have a very strong customer focus because hundreds and thousands of customers or shoppers, people like you and me are walking into stores every day and you have to have as a retail manager customer focus. You have to understand what the customer wants. You have to therefore be able to manage your categories and shelf based on the demand like I said. You have to be able to manage the supply chain. So if you have a small store in a small town with 5 people and let's say 500 square feet, you still need to manage your supply chain because products are coming, products are going. You have to manage the supply. It's coming in big boxes, you're breaking it up, putting up in small lots, selling it, packing it. You need to manage your supply chain and if you're managing a big store or if you're managing an online store, you have to manage the supply chain. So if you go to a next time you walk into a mall and you all you walk into a big supermarket or hypermarket or a DMART for example, a star buzzer, you typically will go from the front end. Make it a point to go to the back end where all the products are coming in and you'll find there's a big warehouse next to the super large supermarket and you'll find a lot of cartons of goods, sacks of goods and you'll get to know how supply chain is managed and a lot of big, big trucks coming in and giving goods. That's supply chain management and above all you have to manage cash and finance because as a retailer you're buying and you're selling. You're buying the goods and selling out the goods but you're collecting the cash and paying your supplies. So you have to be able to manage your cash and your accounting. Finally I should say that retail is a very large sector of the economy. Of a country's GDP, a country's total gross domestic product, retail as a sector is very, very big. It employs lots and lots of people from the store manager to the person at the checkout counter to the self-employed which means the store owners, the small, small millions and millions of small stores which are owned by the store owners and employing maybe 1%, 2%, 5%. So it's a very large sector of a country's economy and GDP and I encourage each of you to think about retail, distribution management as a career choice which can be very enriching, whether it's your own business or it's a small retail network that you join or it's a very large retail network that you join. So with that we come to the end of this module. Namaskar. Thank you.