‘CASH
AND CARRY’-The name itself defines the business. Pay the CASH and CARRY the
goods. This is a unique retail business model. For simple understanding, we can
define it as a wholesale model. A wholesaler stocks and sells the goods in
bulk. Cash and carry also follows the same. It also stocks and sells the goods
in bulk. The one of the difference between the two is a wholesaler gives credit
period but a cash and carry won’t. Another major difference between them is in
assortment. Cash and carry assortment is wider than a wholesaler assortment. Assortment
means width and depth. Width refers to the number of brands eg., if you take a
shampoo, they will have various brands like Garnier, Sunsilk, Pantene, Head and
Shoulder, Clinic Plus and so on. Depth refers to the number of SKUs (Stock
Keeping Units) eg., In Head and Shoulder, they will have various kinds like
Menthol, Black, Pink, Silky Smooth and so on. This kind of assortment you can’t
find in a wholesaler. This is not only in shampoo but in all the categories
like Staples (rice, wheat, ghee, oil etc.,) Home products and care (Fairness
creams, perfumes etc.,) Food and drinks (biscuits, soft drinks etc.,) Frozen
food items (fish, ice creams etc.,) Fruits and vegetables, Textiles (towel, bed
sheets etc.,) Home improvement (Furniture) Media (TV, Mobile phones etc.,)
Apparel, Foot wares and Home Appliances. It is impossible to find a wholesaler
to have these entire assortments.
Normal
customers like you and me can’t enter these cash and carry stores and purchase
the goods unless you are registered customer. It is a B2B (Business to
Business) model. They will sell only to the business customers like small Kiranas,
Mom and Pop stores, hotels, restaurants and caters. And also these business
customers should register themselves with the cash and carry. Once they get
registered, they will get a Customer Identification Card. There is one more
thing is there, a business customer cannot come inside the cash and carry store
and buy items worth of 100 or 200 rupees. They have to have a minimum buy of
1000 or 2000 rupees depends on the cash and carry store.
In
India, some of the players playing in the Cash and Carry game are the Germany giant
Metro, Bharati-Walmart, Carrefour and Reliance Market. The basic fundamental
thing in this cash and carry model is High Volume and Low Margin. If we see the
supply chain it will be like this Manufacturers-->Distributors (in cases agents)-->Dealers-->Sub-dealers-->Retailers-->Consumers. This cash and carry model
eliminates the intermediaries. It directly procures the goods from manufactures
and selling it to the retailers. Here the supply chain will be like this Manufacturers-->Cash and
Carry-->Retailers-->Consumers. It reduces the cost, lead
time, damages and so on.
The most
important benefit provided by the Cash and Carry model to their business
customer is play with the retailer’s Working Capital. There is a Mom and Pop
near my home. The daily average sales in that Mom and Pop store is around 1000
to 2000 thousand. For every three days the owner of the store purchases goods
worth of 5000 thousand rupees. If he wants to do the purchase after three days,
he has to sell all the goods which he bought. So, he will be too cautious in
selecting the goods. He won’t buy 5 or 6 items for those 5000 thousand rupees. He
will buy 15 to 20 items for those 5000 rupees. He does not want to take risk. He
always wants to be in the safe side of the game. The risk here is, out of 5
items, if one of the items is not moving well, he will inquire a loss of around
4000 to 5000 rupees. But in the later part, out of 20 items if 3 items is not
moving well, he will inquire a loss of around 500 to 1000 rupees. At the same
time, he will be flexible in changing the assortment of his store whenever he
wants. Instead of buying the goods from different distributors or dealers, he
can find everything under one roof. The only disadvantage is he won’t get
anything for credit. But the other benefits provided by the cash and carry
completely screen the credit period demerit. Some of the cash and carry stores
are also providing some credit, if a customer buys goods for a very large
amount.
In
India, this cash and carry model already created some changes. Let’s see the
other changes in the coming days.