From warehouses to shelves: How FMCG companies reach every corner

India's fast-moving consumer goods (FMCG) sector stands at a critical juncture where traditional distribution models are being tested by the demands of modern retail, evolving consumer expectations, and the constraints of serving one of the world's most geographically diverse markets.

According to IMARC Group, India’s FMCG market was valued at USD 245.39 billion in 2024 and is projected to reach USD 1,108.48 billion by 2033, reflecting a CAGR of 17.33% from 2025 to 2033. As FMCG companies push deeper into tier-2, tier-3 cities and rural hinterlands, the complexities of last-mile delivery have emerged as a defining challenge that separates market leaders from followers.

The market remains largely dependent on approximately 12 to 13 million kirana stores that account for the vast majority of retail transactions, with traditional kirana stores serving 70-80% of rural demand. These neighbourhood stores form the backbone of India's retail ecosystem, yet reaching them efficiently and economically has become increasingly complex. The challenge is no longer just about moving products from warehouses to stores; it's about doing so with precision, frequency, and cost-effectiveness while navigating infrastructure gaps, manpower constraints, and shifting market dynamics.

The report by IMARC Group mentions that India’s last-mile delivery market reached USD 6.50 billion in 2024 and is expected to grow to USD 24.00 billion by 2033, registering a CAGR of 13.7% during 2025–2033.

The multi-dimensional challenge of direct distribution
For established FMCG players like Godrej Consumer Products (GCPL), the push toward increased direct distribution brings its own set of complexities. Krishna Khatwani, Head of Sales – India at GCPL, identifies the fundamental tension: “As FMCG companies look to increase direct distribution, this brings increased costs for channel partners. Therefore, choosing the right towns to build coverage and reaching the right stores becomes both critical and challenging.”

“Jumbotail’s ability to deliver daily with no minimum order value makes our platform especially attractive to kirana owners who operate with limited working capital and lower sales throughput.”
Kamlesh Kumar, Jumbotail

The challenge is compounded by the human element. Khatwani adds: “Retail outlet coverage is also driven by a large fleet of off-roll agents (sales representatives), where there is a high churn in manpower. In rural areas, one of the key challenges is building and tracking reach across the right set of villages in a country as geographically dispersed as ours.”

He explains how GCPL manages this complexity: “GCPL has 1,000+ channel partners of varying sizes across the country. We are continuously working with them to ensure they maintain the required inventory levels based on market demand and can fulfil retailer orders effectively. We have created a framework to grade the quality of our channel partners on these two key fundamentals. We also leverage technology to enable accurate stock replenishment for them. Additionally, we have adopted a multi-model approach to improve both the profitability and market serviceability of distributors to better serve our retailers.”

Urban complexity and rural gaps
The dichotomy between urban and rural last-mile challenges presents FMCG companies with fundamentally different problems requiring distinct solutions. In urban markets, the challenge isn't scarcity of options but rather an overabundance of competing channels. Khatwani explains: “In urban markets, multiple models coexist to serve the last-mile retailer. Apart from the traditional distributor, retailers today are serviced by wholesale channels, cash-and-carry formats, and several organised players, all of which impact the reliability of retailer purchases.”

This proliferation of distribution channels creates unpredictability in demand patterns and makes it harder for brands to maintain consistent on-shelf availability. Urban congestion, narrow lanes in older neighbourhoods, and time-sensitive delivery windows add operational complexity that drives up costs and affects service reliability. Rural markets present the inverse problem.

“In rural markets, while companies have built hub-and-spoke models, there remains a shortage of quality business partners to service areas beyond the top 8,000–10,000 villages in India,” says Khatwani.

This leaves vast swathes of rural India either underserved or served inefficiently, creating both a market access challenge and a cost conundrum for FMCG brands. Rural India accounts for about 37% of overall FMCG spending, according to data from BeatRoute. This share reflects the region’s stronger growth momentum, which has outpaced urban markets by 3–5%.

The tier-2 and tier-3 paradox
Kamlesh Kumar, Vice President - Supply Chain at Jumbotail, highlights specific challenges that become acute in smaller markets: “In smaller markets, FMCG companies face low customer density and significantly smaller order sizes compared to larger cities. The large number of small retail stores makes regular servicing challenging, as many are either too remote or place orders that are not economical to fulfil. Poor infrastructure in these regions further complicates last-mile delivery and drives up operational costs.”

Kumar explains the paradigm shift: “At Jumbotail, we have designed our network to address the core challenges of traditional distribution systems. Our supply chain is built around the nature of kirana demand, which is high frequency and small ticket sizes, making us ideally suited to serve these markets.”

“At Godrej Consumer Products, we have made rapid strides, especially in rural markets, which continue to be a key growth driver for us.”
  Krishna Khatwani, Godrej Consumer Products 

Jumbotail is India’s major business-to-business (B2B) e-commerce platform, supplying groceries and FMCG products to Kirana stores through a digital marketplace across the country. Its ecosystem comprises four proprietary platforms: a B2B online marketplace, an integrated supply chain and logistics network, a fintech arm for small and medium enterprises (SME) lending, and a retail platform that powers its J24-branded convenience grocery stores. The company recently raised USD 120 million in a funding round led by SC Ventures.

While tier-1 cities remain the largest contributors, fueled by the overall e-commerce sector, tier-2 and tier-3 cities are expected to grow faster. According to a Boston Consulting Group (BCG) report, nearly 600 tier-2 and tier-3 cities together account for 36% of India’s FMCG consumption.

The shift toward high-frequency, low-value ordering
Kumar says, “Kirana customers also seek a wider selection and more variety, and our ability to offer a large assortment at affordable prices in smaller quantities allows them to stock more choices without increasing inventory burden. As consumers increasingly prefer broader options, we are well positioned to meet this shift. Additionally, our customer-friendly return policies and efficient reverse pickup processes build trust and encourage kirana owners to try new products.”

“Jumbotail’s ability to deliver daily with no minimum order value makes our platform especially attractive to kirana owners who operate with limited working capital and lower sales throughput. With access to over 10,000 stock keeping units (SKUs) in one place, retailers no longer need to rely on multiple suppliers or manage complex capital allocations across different sources. Our supply chain is intentionally designed around solving these customer pain points, allowing kiranas to focus on serving their shoppers and growing their business,” he adds.

He continues: “By breaking bulk and supplying items in smaller quantities, enabling daily replenishment, and offering credit support, we help retailers free up working capital and manage their operations more efficiently. Traditionally, B2B grocery has been driven by low-frequency, bulk ordering, but we have transformed it into a high-frequency, low-order-value model that retailers prefer because it is simpler, more flexible, and truly customer-centric.”

On-shelf availability: the critical metric
In today's competitive environment, on-shelf availability has emerged as perhaps the most critical metric for FMCG success. Kumar notes: “On-shelf availability is critical for sustaining growth and preventing customer and market share loss. In traditional distribution systems where purchase frequency is low (once or twice a week) and delivery lead times are longer, FMCG brands often struggle with low fill rates at the kirana shelf. With our daily last-mile delivery model and no minimum order value, we are able to replenish demand far more frequently than traditional systems. This has led many brands to partner with us to improve their reach and ensure better availability of non-key value item (KVI) SKUs in the market.”

Kumar highlights another key capability: “Another key capability brands value is our ability to execute sampling with verifiable digital proof. In traditional distribution, large-scale sampling of new or non-KVI products lacks reliable proof of delivery, and customer feedback is difficult to collect in a structured way. With our national reach and digital tools, we provide brands with granular insights at a micro-cluster or customer level, enabling faster market understanding and helping new products or emerging brands access the right customers efficiently and transparently.”

Technology as the game changer
Both traditional FMCG companies and new-age platforms recognise that technology is reshaping last-mile logistics fundamentally. “Jumbotail’s technology-driven approach enables more efficient routing and a better cost structure in these markets, while also improving the customer experience through enhanced delivery visibility and proactive delay communication,” says Kumar.

Khatwani offers a forward-looking perspective: “One area where we see last mile execution evolving is infusion of tech in both go-to-market (GTM) planning & demand capture. Most companies are already using geo-spatial analytics for route planning of the front-line team. Demand capture process as well is getting enhanced through smart applications provided both to the salesman & retailers themselves. We also potentially see AI playing a key role in the future in GTM planning & demand capture, though this will entail a learning curve for most companies in the next couple of years.”

The quick commerce factor
The explosive growth of quick commerce platforms has introduced a new dimension to last-mile expectations. India’s quick commerce industry is expected to grow from USD 3.49 billion in 2025 to USD 4.35 billion by 2030, at a CAGR of over 4.5%, according to Mordor Intelligence.

Khatwani explains: “Quick commerce unlocks category learnings for GCPL at a micro-market level. Using data available through quick-commerce platforms, we can now identify portfolio opportunities based on cluster-level consumption patterns. Since availability is a key metric for these platforms, we are realigning our supply chain to meet their service-level requirements.”

According to a Motilal Oswal report, Blinkit leads India’s quick commerce market with a 46% share, followed by Zepto at 29% and Swiggy Instamart at 25%.

The standards and expectations set by quick commerce inevitably influence traditional retail as well, creating pressure on the entire distribution ecosystem to become faster, more reliable, and more responsive.

Reimagining rural reach and building resilience
GCPL's approach to addressing rural distribution challenges illustrates how established players are innovating within their traditional models. “At Godrej Consumer Products, we have made rapid strides, especially in rural markets, which continue to be a key growth driver for us. We have consistently delivered high growth in rural areas through multiple initiatives aimed at strengthening our coverage. We launched our van programme, ‘Vistaar,’ which enables us to reach three times more villages across India through a company-operated, digital-first van GTM model. This year, we also created a digital blueprint of our entire national coverage to enhance visibility and understanding of our reach,” says Khatwani.

This combination of physical infrastructure, the van network, with digital monitoring and management represents a hybrid approach that leverages technology while recognising that in many parts of India, physical presence and relationship-driven distribution remain essential.

The path forward
As India's FMCG sector continues to evolve, the last-mile challenge will remain central to competitive success. The convergence of multiple trends, the push for direct distribution, the rise of digital platforms, the growth of quick commerce, and the application of advanced analytics and AI, is creating a more complex but also more opportunity-rich environment.

Companies that can master the dual challenge of economic viability and service excellence in last-mile delivery will be best positioned to capture the immense growth potential that India's retail market offers. Whether through technology platforms like Jumbotail that reimagine distribution from the ground up, or through the innovation of established players like GCPL that are digitising and optimising traditional models, the future of FMCG distribution in India will be defined by those who can make the last mile their strongest mile.