FMCG Distribution Readiness: MOQ, Margin and Delivery
Evaluate an FMCG distribution opportunity using product facts, territory demand, MOQ, landed cost, margin, inventory and delivery discipline.
Distribution is a repeat fulfilment system, not a one-time purchase. Product-market fit, working capital, landed margin and reorder behaviour should be understood before committing inventory.
Verify the product and territory
Record brand ownership or authority, product specifications, shelf life, packaging, batch traceability, statutory labelling and applicable registrations. Confirm the exact territory and channel rights in writing.
Estimate demand by outlet type and realistic sales cycle. Samples and retailer conversations can reveal objections that a top-down market number misses.
Model landed margin and working capital
Start with purchase price, MOQ, freight, handling, taxes, storage, damage, schemes, credit cost, returns and sales expense. Gross margin alone does not show the cash required to operate.
Build base, slow and fast sell-through scenarios. Define credit limits and collection responsibilities before extending terms to the market.
Make fulfilment measurable
Track purchase order, batch, stock, dispatch, proof of delivery, return reason, payment and reorder. Reconciliation should connect quantity and money, not rely on informal messages.
Scale territory only when stock accuracy, delivery reliability and collections remain controlled.
Worked example: a 100-case pilot order
Illustrative arithmetic, not a supplier quotation or an earnings forecast. Replace every assumption with written supplier terms and actual outlet demand. All figures below exclude taxes; model applicable taxes separately with your accountant.
| Item | Calculation | Amount |
|---|---|---|
| Inventory purchase | 100 cases × ₹800 | ₹80,000 |
| Freight and handling | Quoted for this delivery | ₹5,000 |
| Cash committed before selling | ₹80,000 + ₹5,000 | ₹85,000 |
| Potential sales if all cases sell | 100 × ₹950 | ₹95,000 |
| Contribution before other expenses | ₹95,000 − ₹85,000 | ₹10,000 |
| Sales receipts at 80 cases sold | 80 × ₹950 | ₹76,000 |
| Unsold inventory at landed cost | 20 × ₹850 | ₹17,000 |
Why ₹10,000 is not your profit
The full sell-through scenario has a ₹100 contribution per case before storage, salaries, credit cost, returns, damage and tax. Selling 80 cases leaves ₹9,000 of the initial cash outlay unrecovered at that moment even if every buyer pays immediately. The unsold stock still has a cost, but it cannot pay a bill until it sells. Do not confuse the stock value with cash collected.
Turn retailer interest into a pilot decision
List each outlet, requested pack, expected first order, delivery date and payment terms. Separate verbal interest from a confirmed order. Compare the total confirmed quantity with MOQ. If demand is below MOQ, ask for a smaller pilot or a mixed-pack order rather than buying the shortfall on an assumed future sale.
Agree on exceptions before dispatch
Get written answers for short delivery, leaking packs, near-expiry stock, damaged cartons and unsold returns. Record who authorises a claim, what photographs or batch numbers are required, and when the credit note is due. A supplier saying “we will adjust later” is not a usable settlement rule.
Review the first cycle before reordering
Compare ordered, received, delivered, returned and paid quantities. Investigate discrepancies by batch and outlet. Reorder only after checking remaining usable stock, fresh demand and overdue collections. A faster sales cycle with unpaid invoices can still increase the cash shortage.
Use your own figures
Copy these fields into your planning sheet: Outlet · Product and pack · Confirmed cases · Purchase per case · Freight and handling share · Selling per case · Delivery date · Payment due date · Cases returned · Cash received · Next action. Keep private customer and payment details in your authorised workspace.
Download the blank planning sheet (CSV)Before you proceed
Is a high distributor margin enough to judge an opportunity?
No. Sell-through, working capital, freight, returns, collections and territory demand determine the practical result.
What should be tested before a large MOQ?
Test product acceptance, outlet demand, landed cost, delivery feasibility and realistic reorder behaviour.
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