JSW Shoppe- A unique

distribution model for

branded steel
Case Presentation
Group 5
About the company
• JSW was founded in 1982 by Om Prakash Jindal.
• JSW Steel is India’s leading private sector steel producer & among
world’s most illustrious steel companies.
• It is one of the fastest growing companies in India with a footprint in
over 140 countries.
• Product portfolio – Steel, Hot-rolled products, Cold-rolled products,
Galvanised products, Pre painted products, TMT, Wire rods.
• As of 2017-18 it has a revenue of US$9.9 billion.
Case background
• JSW Ltd., owned by Jindal Group, manufactures various steel products.
• The company wants to change the common perception of steel as a B2B
product & want to create a distinctive impression in minds of end users.
• Earlier JSW sold products through its dealer network. However in order to
enhance their brand & increase market penetration JSW management
decided on a new business model.
• To overcome the loops of the present distribution model the company
came up with the unique concept of JSW Shoppe.
• Under JSW Shoppe model the company partnered with their existing
dealers as well as sent invitations to new dealers.
 Why JSW needed a new
model / strategy?
Market Scenario Competition

• Push strategy Loosing market share to other players

• Availability of Steel at • TATA Steelium (2002) Opportunity to increase market penetration

retailers and dealers in a growing market

• Quality Assurance Intense Rivalry, new entrants ( Arcelor Mittal)

• Customisation of products • Essar Hypermart
Power of buyers
• Production planning (2006)
• Asymmetry in relationship
between manufacturer,
wholesaler and retailer
Actual Market share of TATA steelium in 2006-2007 was 23 %
Difference between Old and new distribution channel of JSW Steel

OLD NEW
1. Generic Distribution System Branded Distribution System
2. No Cost Sharing Cost Sharing
3. Business. To Business Business to Consumer
4. Middle Men Trained Dealers
5. Order in direct Customization
6. Manual Management Information System
7. Generic Exclusive
8. No dealer’s development Dealer’s Development
9. Standardize Through Channels
Challenges in the new model
• Need to onboard the sales and marketing workforce with the new business
strategy
• Obtaining dealer’s acceptance for the model
• Branding the supply chain
• Ordering process for a steady supply of material
• Negotiating cost-revenue sharing model with the dealers
• Designing the floor layouts and standardized elements for Shoppe
Challenges in partner management
• Dealers view,
• Skepticism- The dealers feared their own obsolescence and question
JSW’s investment needs
• Custom made products- dealers needed custom products which JSW
wouldn’t provide till phase II of their channel implementation
• Management- dealers felt supervision unnecessary, also did not like
products being pushed to them
• MIS-Lack of IT knowledge made it difficult for dealers to maintain MIS
• New franchisee dealers were seen as competitors by the existing ones
• Unclear dealer evaluation system till third phase
• Company’s view
• Parallel shops by dealers
• Lack of discipline in dealers’ cultures
• Lack of trained executives in the Shoppe, underutilization of trained workers
• Refusal of dealers to work with JSW in training and hiring of executives to
save their own costs
• No fixed measure to measure dealer performance.
Suggestions
• JSW need to establish their branding most powerful and separated for effective
supply chain management.
• JSW need to implement system in place to measure the performance of the
dealers, and therefore no basis upon which to determine their incentives.
• JSW need to make proper balance between dealer distribution supply and
Shoppe distribution supply.
• JSW needs to establish lithe hub-and-spoke model for the inorganic growth of
steel industry.
• JSW needs to implement a strong distribution network in growing cities.
Thank You