FMCG Brands on ONDC: How to Win General Trade Without a Distributor Network

Building a general trade distribution network in India is a multi-decade project. A brand typically needs a stockist for every district, a distributor for every region, a sales representative for every cluster of kiranas, and a trade marketing budget to run schemes across each layer. By the time the chain is fully operational, 18–22% of the product's value has been consumed by the distribution stack — before the brand earns a single rupee of profit from the consumer.

ONDC changes the economics of this calculation in ways that are only beginning to be understood by FMCG brand managers. India's General Trade ecosystem, comprising over 1.4 crore kirana stores, accounts for nearly 75–80% of FMCG sales in India — yet much of the channel continues to operate through fragmented ordering systems, limited inventory visibility, and manual sales processes, resulting in inefficiencies for retailers, distributors, and brands alike.

The open network doesn't eliminate general trade. It restructures who has power in it.

The Real Cost of Traditional FMCG Distribution

Every FMCG brand manager knows the commission percentages in isolation. Few have added them up to see the full picture.

A typical general trade distribution chain moves a product from factory gate to kirana shelf through at least three intermediary layers: a carrying and forwarding agent (CFA), a distributor, and a stockist. Each layer extracts margin — typically 5–8% at the distributor level, 3–5% at the stockist level, and an additional 2–4% for the sales force that services the trade.

Add trade schemes, in-store visibility costs, damaged goods allowances, and return freight, and the true cost of general trade distribution lands between 18–22% of the MRP — and that's before the brand spends anything on consumer advertising.

General trade and kirana networks retained their dominance as the rural backbone, underscoring the sector's hybrid distribution reality even as modern trade regained traction in metros. But the problem isn't that general trade is dying — it's that it's expensive to operate at scale, opaque in execution, and slow to respond to market signals.

Brands struggle to forecast demand, track secondary sales, and measure the effectiveness of promotional campaigns through traditional GT structures. A distributor scheme launched in Mumbai may take three months to show up in secondary sales data — if it shows up at all.

This is the structural friction that ONDC directly addresses.

What ONDC Actually Changes for FMCG Distribution

ONDC doesn't replace kiranas. It gives both brands and kiranas a direct digital connection that bypasses the inefficiencies between them.

Think of it as UPI for product distribution. UPI didn't eliminate banks — it gave money a more efficient pathway between them. ONDC does the same for goods. Brands can now connect their product catalogue directly to kirana buyers and consumer buyers on the same open network, choosing which layers to include or bypass based on what makes operational and commercial sense for each SKU, city, and channel.

For FMCG brands specifically, ONDC creates three distinct opportunities:

1. Direct-to-Consumer (D2C) via ONDC Buyer Apps A consumer opens Magicpin, PhonePe, or any of 100+ ONDC buyer apps and orders your product. It's fulfilled from your nearest warehouse or distributor node. No marketplace commission above 12%. No mandatory ad spend to maintain visibility. E-commerce accounted for 17% of FMCG consumption among affluent buyers in 2024, with average spends of ₹5,620 — and that share is growing rapidly, especially in health, nutrition, and personal care categories where consumers research before buying.

2. Direct-to-Kirana via DigiDukaan (B2B ONDC) This is the more structurally significant opportunity for most FMCG brands. DigiDukaan is an ONDC-powered initiative launched by DPIIT that aims to digitise B2B procurement for India's kirana ecosystem. The platform connects retailers, distributors, and brands through a common digital network, enabling neighbourhood stores to place orders, access promotional schemes, and manage procurement more efficiently.

In practical terms: a kirana owner in Hyderabad can now browse your full product catalogue, see current trade schemes, and place a restocking order — digitally, directly, without waiting for a sales rep visit.

3. Distributor-Augmented ONDC The most nuanced approach, and the one Costbo is built to support: using your existing distributor network as fulfilment nodes within ONDC rather than replacing them. Your distributors become digital warehouses. Orders flow through ONDC. Your brand maintains the distributor relationship but gains digital visibility and direct buyer connection.

Real Brands, Real Results: What FMCG Pioneers Found

The ONDC FMCG story is no longer theoretical. Leading consumer goods companies have already run pilots — with measurable outcomes.

Hindustan Unilever (HUL) played a pioneering role in FMCG engagement with ONDC. Through its B2B digital ordering app Shikhar, HUL onboarded approximately 1.3 million kirana stores onto ONDC via a Shikhar Seller module, initially piloted in Delhi and Bengaluru. The initiative lets local retailers place orders directly on ONDC-based buyer apps, streamlining access to HUL's entire product portfolio.

ITC Ltd. began limited integration with ONDC in Uttar Pradesh and Karnataka to pilot B2B sales of its personal care and food products. The ONDC network layer helped bypass traditional CFA-distributor structures and facilitated dynamic pricing and direct order fulfilment via third-party logistics partners onboarded on the network. Business Standard reported a yield of 7–9% cost saving on average per unit sold in rural clusters, as well as a 15% increase in fill rates to small retailers.

These aren't pilot-phase anomalies. They reflect the fundamental economic advantage of removing intermediary layers from a transaction that the open network now makes technically possible.

On June 12, 2026, DPIIT and ONDC convened the Bharat Commerce Chintan Shivir, bringing together leaders from HUL, ITC, Coca-Cola, Nestlé, CavinKare, Marico, Bikano, L'Oréal, Anmol Industries, and Kirana King to accelerate the digital transformation of India's General Trade ecosystem through DigiDukaan. The participating organisations expressed interest in engaging with and supporting the DigiDukaan initiative as founding partners.

When HUL, ITC, Nestlé, and Marico are in the same room with DPIIT making founding partner commitments to a platform, the direction of travel is clear.

DigiDukaan: The B2B Layer That Changes General Trade

DigiDukaan operates as an unbundled network. For kirana retailers, it allows direct, real-time B2B procurement. Shopkeepers gain immediate visibility into multi-brand catalogues, dynamic promotional schemes, transparent volume pricing, and automated inventory refills.

For FMCG brands, this solves four problems simultaneously:

• Scheme visibility: Your trade promotions are displayed in real time to every participating kirana, instead of filtering through a distributor who may or may not pass them on accurately.
• Secondary sales data: Every DigiDukaan order generates a digital record. Brands gain actual sell-out data at the retailer level — something most FMCG brands have never had from general trade.
• Coverage without headcount: A distributor on DigiDukaan can reach 3x more retailers without adding field sales staff. Your effective reach expands without a proportional increase in sales force cost.
• Fill rate improvement: ITC's pilot demonstrated a 15% improvement in fill rates. In FMCG terms, better fill rates mean fewer lost sales, better retailer trust, and stronger brand presence at the point of purchase.

DigiDukaan has already established an early presence in Hyderabad, where more than 10,000 retailers and over 35 brands have joined the platform through Qwipo. Expansion is planned across Jaipur, Mumbai, Bengaluru, and Delhi-NCR in the coming months.

How Costbo Powers FMCG Distribution on ONDC

Running an FMCG business on ONDC requires more than a seller account. It requires an operating system that understands the complexity of multi-SKU, multi-warehouse, multi-channel FMCG distribution — and handles it without adding operational overhead.

Costbo is built specifically for this challenge. Here's how the platform supports FMCG brands at each stage of the ONDC journey:

Distributor Network Integration Brands that already have a distributor network don't need to abandon it. Costbo connects your existing distributor nodes as fulfilment points within ONDC. A kirana order placed on DigiDukaan routes automatically to the nearest distributor warehouse, is picked and packed there, and is fulfilled by an ONDC-integrated logistics partner. Your distributor remains in the chain — but the ordering, tracking, and settlement happen digitally.

Multi-Warehouse Management FMCG brands don't sell from one location. Costbo's multi-warehouse dashboard handles up to 50 fulfilment points — including brand warehouses, CFA locations, and distributor godowns — from a single interface. Orders route automatically based on location proximity, SLA requirements, and stock availability. This means a kirana in Coimbatore gets the product from the nearest distributor node, not from a central warehouse in Mumbai.

Catalogue Management at Scale FMCG catalogues are large, variant-heavy, and change frequently with new pack sizes, reformulations, and seasonal SKUs. Costbo's catalogue tools support bulk uploads, variant management, and HSN code mapping — reducing the administrative burden of maintaining an accurate ONDC presence across hundreds or thousands of SKUs.

Real-Time Inventory Sync One of the failure modes FMCG brands discover quickly on ONDC is stockout cancellations — an order placed but unfulfillable because inventory wasn't updated. Costbo syncs inventory across all fulfilment nodes in real time, preventing overselling and protecting your seller rating on buyer apps.

Analytics and Secondary Sales Visibility Costbo's dashboard aggregates order data across all ONDC buyer apps into a single analytics view. For FMCG brands, this means access to city-level demand patterns, SKU-level sell-out data, and time-slot analysis — the secondary sales visibility that traditional general trade has never been able to provide.

The Inventory-Less Model: Selling What You Haven't Yet Stocked

One of ONDC's most significant 2026 protocol upgrades is the inventory-less (drop-shipping) model introduced in the February 2026 v1.2.5 release. For FMCG brands, this opens a specific use case: listing your full portfolio on ONDC without pre-positioning stock in every city.

Under this model, a brand lists its entire catalogue nationally. When an order comes in from a city where the brand doesn't have a warehouse, the order routes to the nearest distributor partner who stocks the product. The brand maintains ONDC presence and reaches consumers in markets it hasn't yet physically penetrated, without the capital expenditure of establishing a local warehouse.

For emerging FMCG brands looking to test demand in new geographies before committing to distribution infrastructure, this is a material capability.

Building Your FMCG ONDC Strategy: Three Modes

Based on brand size and existing distribution maturity, there are three practical ONDC entry points:

Mode 1: D2C-First (Emerging Brands, ₹10–100 Cr revenue) Start with Costbo's standard ONDC seller integration. List your top 50–100 SKUs. Focus on consumer buyer apps (Magicpin, PhonePe, Paytm). Build your ONDC operations muscle, customer data, and product-market fit in three to five cities before expanding. Use ONDC's lower commission structure to fund brand marketing that traditional distribution would have consumed.

Mode 2: Distributor-Augmented (Mid-Size Brands, ₹100–500 Cr revenue) Connect your existing distributor network to Costbo as fulfilment nodes. Participate in DigiDukaan for B2B kirana orders. Run both consumer (D2C) and trade (B2B) channels simultaneously on the same platform. Use the secondary sales data ONDC generates to renegotiate distributor terms, optimise scheme design, and identify underserved markets.

Mode 3: Full-Stack ONDC (Large Brands, ₹500 Cr+ revenue) Deploy ONDC as a parallel distribution channel alongside traditional GT, not a replacement for it. Use the channel to test new SKUs, serve direct consumers in metro markets, digitise your distributor network via DigiDukaan, and build a first-party data asset about your end consumers — something FMCG brands have historically never had access to in general trade.

The Numbers That Make the Case

The FMCG opportunity on ONDC is not speculative. The data from early movers provides a clear framework for expected returns:

• ITC's ONDC pilot: 7–9% cost saving per unit sold in rural clusters; 15% improvement in fill rates to small retailers
• DigiDukaan: 10,000+ retailers and 35+ brands onboarded in Hyderabad alone within the first months of launch
• FMCG on ONDC (grocery + FMCG combined): over 50% of all ONDC transactions, making it the network's dominant category
• Distribution cost differential: traditional GT at 18–22% of MRP vs ONDC operating costs under 10% with Costbo
• The overall FMCG market, valued at US$245.4 billion in 2024, is projected to expand to US$615.8 billion by 2027 — and an increasing share of that growth will flow through digital channels

The brands sitting at the table at the June 2026 DPIIT roundtable — HUL, ITC, Nestlé, Marico, Coca-Cola — are not there because ONDC is interesting. They are there because the maths of a 15% fill rate improvement and a 7–9% cost reduction across the world's largest general trade network is a material competitive advantage.

Getting Started: What to Do in the Next 30 Days

The FMCG brands that will dominate ONDC general trade in 2027 and 2028 are making their infrastructure decisions in 2026. The technical setup is straightforward. The strategic question is simply: which mode fits your brand's current distribution maturity?

If you are an FMCG brand with an existing distributor network looking to add ONDC without rebuilding your operations, Costbo's distributor integration model is designed precisely for that transition. If you are an emerging FMCG brand looking to build national reach without the capital cost of a traditional distribution hierarchy, the D2C-first ONDC approach gives you a path.

The platform is live. The kiranas are ready. DigiDukaan is expanding city by city. India's online grocery segment is projected to expand from US$4.54 billion in 2022 to US$76.76 billion by 2032, at a CAGR of 32.7%. The brands that establish their ONDC presence now will have a category-defining head start on the ones who wait.

Ready to explore how Costbo can connect your FMCG brand to ONDC's general trade network?

Book a free Costbo FMCG consultation →

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Sources: IBEF India FMCG Report 2025–26; Inc42 DigiDukaan analysis June 2026; India Shipping News DPIIT ONDC Roundtable June 2026; Advances in Consumer Research — FMCG Supply Chains with ONDC (March 2025); Swarajya Magazine DigiDukaan June 2026; Entrepreneur India FMCG 2026 Outlook; CRISIL FY2026 FMCG projections; CMI India FMCG Market Research 2025–2034

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