Patanjali Ayurved is introducing a performance-based incentive structure for distributors and retailers. It will roll out a monthly incentive scheme vs the uniform margin structure that it has been offering so far.
The margin structure will be tweaked across product categories. Retailers and distributors will get lower margins for products with high transportation costs.
Higher margins will be offered for products that require high warehousing and storage costs. Currently, retailers are offered margins in the range of 12-20% across categories while distributors' margins are in the range of 4-5%.
Patanjali has also been looking at building deeper networks through direct distribution.
As of now, the company distributes to over 5 lakh kirana stores. It is aiming to reach 50 lakh kirana stores in 2-3 years.
Patanjali Ayurved told cnbc-tv18, the rate structure is being synchronised on win-win basis to provide products at lowest possible rate to consumers.
The company is ensuring distributors and retailers get fair margin for their contribution to the supply chain.