Distribution Glossary

A distributor is a channel partner appointed by a brand owner to buy goods on principal-to-principal basis and resell them to retailers within a defined geography. In India, distributors typically operate under FSSAI and GST registration, hold inventory in their own warehouse, manage a fleet of delivery vehicles, and run a sales force that books orders from kirana stores, modern trade, and HoReCa outlets.

PTR stands for Price to Retailer — the net invoice price at which a distributor sells a SKU to a retailer after all standard trade discounts but before any scheme benefits. PTR is one of the three pricing tiers (PTD, PTS, PTR) that determine where margins sit across the channel and is the basis for most trade scheme calculations.

Primary sales refers to the dispatch of goods from a manufacturer or CFA to the distributor — essentially the distributor's purchase. Secondary sales refers to the onward sale from the distributor to retailers. Brands track secondary sales separately because it represents true sell-out (consumer demand) rather than channel filling.

OTIF (On-Time, In-Full) measures the percentage of orders delivered both on the promised date AND with the full quantity ordered. It is stricter than fill rate or on-time-delivery individually because both conditions must be met. Modern trade chains penalise OTIF below 95% with chargebacks, making it the single most-watched distributor KPI.

FIFO (First-In, First-Out) dispatches the oldest stock first, regardless of expiry. FEFO (First-Expiry, First-Out) dispatches stock with the nearest expiry date first, regardless of when it arrived. For dairy, bakery, and other short-shelf-life categories, FEFO is mandatory under FSSAI norms — FIFO alone can cause expired stock to sit in storage.

A beat plan (also called a PJP — Permanent Journey Plan) is a structured schedule that defines which outlets a salesperson visits on each day of a recurring weekly or fortnightly cycle. A good beat plan groups outlets geographically, balances workload across days, hits each outlet at its preferred ordering time, and is built around the distributor's delivery frequency.

E-invoicing requires registered businesses with turnover above ₹5 crore (as of 2026) to generate a unique IRN (Invoice Reference Number) from the government IRP portal for every B2B invoice. The IRN must be embedded in the invoice along with a QR code before sharing with the buyer. E-invoicing is mandatory for almost all FMCG and dairy distributors above the threshold.

FOC stands for Free Of Cost — goods supplied to a retailer or distributor without invoicing. FOC is the most common form of trade scheme payout in Indian FMCG (e.g. "buy 10, get 1 FOC"). FOC goods have GST implications: they must be declared as supplies in the GST return and the proportionate input tax credit must be reversed.

A super stockist is one level above a distributor. The super stockist holds bulk stock for a region, ships to multiple sub-distributors below them, and earns a thinner margin (typically 2-3%). Distributors carry primary stock, run a sales force and service retailers directly. Super stockists are common in upcountry markets where brand reach is limited.

HoReCa is short for Hotels, Restaurants and Catering — institutional channels that buy in bulk on credit, expect specialised SKUs (5kg ghee, 20L milk pouches), and require dedicated key-account servicing. HoReCa is a high-volume, low-margin channel critical for dairy, beverage, and bulk-food distributors.

Channel stuffing is when a brand or distributor pushes more inventory into the next channel level than it can sell through, usually to inflate primary sales numbers near month-end. It is a major audit red flag because it inflates revenue, creates stale inventory, and leads to high returns in following months. SEBI treats severe channel stuffing as a reporting irregularity.

A credit note is a document issued by a supplier to reduce the value of a previously issued tax invoice. Distributors issue credit notes for sales returns, post-supply discounts, rate corrections, and approved scheme claims. Under GST, credit notes must reference the original invoice and be reported in the GSTR-1 of the issuing month.

Route adherence is the percentage of planned outlets that a delivery vehicle or salesperson actually visits in the right sequence on a given day. It is measured by comparing the planned beat (from the DMS) with GPS or check-in data captured by the SFA/delivery app. Best-in-class operations target 90%+ route adherence with drop-sequence compliance above 80%.

A return goods pass (RGP) is a document that authorises returnable assets — crates, pallets, dispensers, coolers — to leave the warehouse without being treated as a sale. RGPs are reconciled when the asset is returned. For dairy distributors with thousands of crates in circulation, RGP-based reconciliation prevents asset shrinkage from quietly destroying margins.

General Trade (GT) refers to traditional kirana stores, paan shops, and standalone retailers — typically family-owned, cash-led, and serviced by a beat-plan salesperson. Modern Trade (MT) refers to organised chains like DMart, Reliance Smart, More, and Big Bazaar — characterised by listing fees, OTIF SLAs, central billing, and structured trade terms.

Numeric Distribution (ND) is the percentage of outlets in a defined universe that stock a brand. Weighted Distribution (WD) weights those outlets by their sales potential. A brand can have high ND but low WD if it is present mainly in small outlets, or low ND but high WD if it is present in a few large outlets that drive most of the volume.

Scheme leakage is the gap between what a brand allocates for a trade scheme and what actually reaches the retailer's pocket. Common causes are double-counting, unauthorised FOC, off-invoice schemes claimed twice, and salesperson collusion. Distributors prevent it with rule-based DMS engines that auto-calculate scheme entitlement at billing time.

Yes — SpireStock is built around the same vocabulary used in this glossary. Beat plans, PJP, FEFO picking, OTIF tracking, scheme engines, e-invoicing, e-way bills, credit control, claim settlement, RGP reconciliation and DSR analytics are all native features. Start a free trial to see them in action.