Mamaearth distributors say company is burdening them with excessive inventory

livemint.com:

₹50 crore to ₹100 crore are stuck, according to the All India Consumer Products Distributors Federation (AICPDF). The inventory pile-up comes as Honasa, which started out as an online personal care company, builds a greater presence offline. Honasa gets a third of its business from offline channels.

Honasa refuted the association’s claims. The company sells beauty and personal care products branded Mamaearth, Dr. Sheth's, Aqualogica, and BBlunt.

However, the issue of excessive stocks is restricted to Mamaearth, its largest brand. The federation claimed distributors are saddled with 90 days worth of stocks or goods. Fast moving consumer goods (FMCG) companies typically supply stocks for 20-30 days or 45 days at the most.

Fresh orders are placed in response to how quickly products move from retail stores. Distributors then replenish the stock with retail outlets. The issue has been on for several months, said an executive at the federation.

“Once goods have been billed to the distributor, the liability is of the distributor. Distributors have done their job of product placement. However, off-take of products has not matched expectations," Dhairyashil Patil, national president of the AICPDF, told Mint.

In a statement Monday, the federation highlighted the “high-risk" of stock expiry at warehouses and retail outlets, along with "substantial" volumes of unsold inventory returned by retailers. It claimed Honasa has delayed replacing damaged, unsold, and expired stock. Patil said some products have been lying with them for over a year and could be nearing expiry.