After telecomms and e-commerce, Mukesh Ambani is now shaking up traditional retail distribution in India.

The billionaire’s e-commerce venture JioMart has started selling consumer packaged goods like toothpaste and soaps to retail stores through an app — JioMart Partner — at a 15% discount compared to the traditional distribution channels. Reuters estimates that 300,000 stores across 150 Indian cities have partnered with JioMart , which wants to grow this network to 10 million outlets by 2024. 

The JioMart Partner app is disrupting a system that has been around for half a century. Consumer goods giants such as Nestlé, Godrej, Colgate-Palmolive, and others do not sell to retail stores directly in India. They rely on middlemen who procure items from large brands, store them at their warehouses, and employ salespeople who sell the products to kiranas or mom-and-pop stores. There are around 450,000 such distributors, who employ thousands of salespeople to service the length and breadth of India, reaching even the remotest parts.

But over the past eight months, retailers are steadily turning away salespeople as they have found a cheaper, more convenient way to place orders in the JioMart Partner app.

The middlemen, who were making a 3-5% margin, are getting squeezed out. Retailers have started accusing distributors of “looting” them all these years, Dhairyashil Patil, president of the All India Consumer Products Distributors Federation, told Rest of World. He argues that the price and distribution have always been governed by big brands, and there was little say for distributors in pricing products. (The entire order booking is monitored through a centralized SAP system).

JioMart is able to afford the 15-20% discount because consumer goods giants are offering cheaper prices to the company, given its massive buying power, Patil said. His association has now threatened non-cooperation if brands do not remove the price disparity between traditional distributors and other organized business-to-business distribution firms, including JioMart. 

Reuters reported in November that door-to-door sales have dropped by up to 25% in the past year, causing many traditional distributors to slash their workforce and vehicle fleets. The frustration caused distributors to block some JioMart delivery vehicles. “I’m pleasantly surprised that there’s a pushback,” said Ashutosh Sharma, vice president, research director at Forrester Research. “That means what [JioMart] is doing is making a serious impact on the way the business is being done.” 

So, is this disruption good? That’s the wrong question to ask. It doesn’t matter if you view this as a good or bad thing; what matters is that there’s no turning back to the traditional model anymore. Distributors may not like what’s happening. But unless the government steps in to save them through regulation, they’ll have to adapt and evolve — or disappear.