🛢 Dabur and Indian Oil: Match Made in Heaven?
Thanks to strategic partnerships, PSUs could now get a fresh lease of life. Here’s how. (Reading Time: 3 mins)
If you feel Pineapple on Pizza is a weird combination, we wonder what you will think about the partnership of Indian Oil and Dabur.
Yes, the two brands have signed a distribution agreement.
Wondering how this strategy will work out?
ReadOn!
Leveraging the Power of Gas
No matter if you are an introvert or an extrovert, there is one person whose monthly visits you won’t mind at all: the gas cylinder installation personnel.
Now if they are already making such visits, why not make them grocery delivery personnel as well?
That's the idea Dabur had. And by partnering with Indian Oil Corporation, it can grow its customer base by 143 million households!
The plan is simple: the next time delivery personnel go to deliver a cylinder at your home, they will also drop in a booklet featuring Dabur goods.
You can then place orders as and when you like, and the goods will be delivered.
Okay, but in this day and age where tech is ruling everything, why go back to this old-fashioned model?
Because tech, especially e-commerce tech hasn't been able to fully penetrate India's rural sector till now.
But even those living in the rural areas want grocery delivery and this is a great way to achieve this.
And the model isn’t going to be so archaic. The two companies are also thinking of developing an app to make ordering easier.
The move comes at a time when Dabur is facing stiff competition from up and coming D2C brands, which are fast gaining the attention of folks in urban cities.
So, focusing on the rural sector (a move that helped the company immensely during Covid times) makes sense.
Plus, as LPG consumption continues to grow at an 8.4% rate annually, Dabur will also see its customer base grow without any added expenditure.
Okay, but what's in it for IOC?
Since a lot of IOC distributors are delivering cylinders to the rural sector, especially to those who receive gas subsidies, their commissions are pretty low.
But delivering Dabur items can help boost their commission.
Plus, IOC already has a huge warehousing and delivery network, so the partnership doesn't really come at a huge cost for it.
In fact, if it works out, delivery services can become an additional revenue stream for the public sector undertaking.
Sounds like a plan. But obviously, there are some concerns.Â
A lot of IOC's consumers are below the poverty line and receive subsidies. So, targeting them may not guarantee a huge boost in sales.Â
Plus, the move may increase the day-to-day work of delivery personnel, with them having to visit even those houses where they don't have to deliver cylinders.
Nonetheless, the scheme has promise.
And that made us think, what if other PSUs also tie up with businesses?
Leveraging the Power of Businesses
A lot of Indian PSUs have been struggling for the last few years. In fact, the number of loss-making PSUs has been going up year after year. In 2020, India had around 84 loss-making PSUs, up from 69 in 2019. Of these 30 PSUs have total cumulative losses of Rs. 1,06,879 crores!
So such strategic deals could give PSUs a new lifeline.
And one PSU has already shown how successful partnering up with businesses can be: India Post.
Since 2015, India Post started delivering packages for over 400 e-commerce firms including Amazon and Flipkart.
The move was a hit. India Post's parcel revenue, which registered a 2% decline in 2013-14, saw a 37% growth in 2014-15 and further grew by 117% during the first half of 2015-16.
Should the government support more such tie-ups? What other PSUs could benefit from partnering with businesses?
Let us know your thoughts on Twitter.
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