How Challenges of FMCG Distributors are resolved by top salesmen

July 24, 2023 Team DigitalGumma

What are major challenges faced by the salesman of the FMCG company?

The job of FMCG salesman is very challenging.

To keep himself motivated in tough times when he is not able to do his targets on various parameters.

Day to day handling of retailers in market, where retailer will not be satisfied on many aspects e.g. damage/expiry/credit/scheme/freebie etc. A salesman has to counter the retailer & maintain relation with him.

Placement of new product on target outlets in market. Now a days most of the FMCG companies are either entering new categories or developing new products. At the end of the day its salesman who has to go n convince the retailer to keep the innovations. At times there can be a new launch every month.

Other than this there are many regular challenges like being in market everyday irrespective pf the weather condition. Have food mostly outside in market even though he is carrying it from home. Driving bike everyday to take orders from market. Managing high profile visits frequently etc.

So a salesman lives a challenging life & he is the most important person in the entire chain. Retailers know a company because of him. He is the face of the company.

FMCG Distribution Network Challenges- 21 St Century.

FMCG Distribution Network is Critical for General Trade Let us See the Challenges Companies face in appointing a Distributors to Distribute their products.

There is no Such thing Called Readymade network even if you are a Experienced Sales professional.

Distributors for General Trade – Challenges

Distributors Cannot Sell in the market without the Support of Company Salesman.
Distributor Contribution to Secondary Sales Will be not great if your products are not Category leaders.

High profile Distributors with High turnover Companies will not take up Small Companies for Distribution.

Distributor trust in Companies post Covid are not great. ( Nil Loyalty to the Company)

Distributor manpower Attrition is very high because of gig Companies. ( Swiggy )

Distributor do not think & work long term.

Distributor does not follow uniform pricing in the market .

Distributor buying on Advance Payment
and giving credit in the market a big Challenge.

Distributors command the Company.

Distributors cannot be removed for the Whims & fancies of the company people

Companies have to manage the Distributors investment ( 35 Days of Sales. – Stock / market Credit / Sec Claims / All inclusive)

Distributors ROI is critical to be looked into by the company. Distributors margins are very Stagnant. for a long period of time.

Payments from the retailers to the Distributors are not in time.

Appointing Distributors in Short time is a Very big Challenge.

Distributors are wired. Companies need to build trust on Distributors by delivering Secondary Sales to them .

Distributors have become more Smart Because of adapting to technology. If the Distributors believe that their future Is Safe then he will go flat out in investing on the Company .

Distributors attrition has to be decimal For the progress of the Company.

Distributors does not believe in more Coverage and Distribution.

Distributors are more of financiers ,Companies need to accept the fact.

Change of consumer groups

The main consumer groups have experienced great change at present. Youth has been the major force whose consumption concepts and modes are far more different from the traditional ones. Neither brands nor prices are their priority, Sometimes senses count.

Furthermore, FMCGs such as luxury goods have experienced a time of change generated by the youth. It is exactly under this circumstance that youth has become mainstream for many brands’ promotion.

Change of retail channels

Over recent years, we witnessed the slowdown of a number of offline retail stores, from department stores, shopping malls to convenience stores.

Due to the rise of online shopping channels, some retail companies have faced a slowdown in visitor flow. The popularity of online shopping has captured more and more market shares from traditional channels. Consequently, the challenges of channel revolution are great.

Consumption upgrades

Economic improvement has accelerated the upgrade of consumption.

The improvement of life quality is what people always seek. The rapid development of the economy not only speeds up consumption levels but also generates new consumer groups. Consumers are not so sensitive to the prices currently. More advantages and selling points shall be discovered for the FMCG market.

Product knowledge- if you work as a sales executive in FMCG industry or any other sector then you have to be knowledgeable about company’s various products or services specially in which you are dealing with.

Communication- communication gap between you and customers would be one of the major problems ever faced while you are in the marketplace. So u have to work on that and gap should be removed.

Fatigue or unwillingness- from my personal experience I consider tiredness or unwilling to do hard work as a major problem. It will comes due to many reasons like-

Given a big geographic area to survey within certain time.

Huge target given by the management to the sales executive which is beyond his capabilities.

Any personal reasons or unwillingness to do work.

Being demotivated when client reject to take products or services.

What tips would you give to an FMCG Distributor/ Startup, who doesn’t have money to hire a salesman because they’re short financially?

FMCG as a sector is quite competitive as it is easy to get into and there are lakhs of people doing business in the same either as a small scale manufacturer or via branding. And all the big multinationals are also there with budgets and great marketing.

To gain a respectable market share, a startup will have to do something which stands them apart. It could either be great marketing, better products, better prices, or a combination of either of them along with many others.

Salesman are required to properly market your products and do the daily grind in the long term. That would include visiting the retailers regularly, talking to customers, getting feedbacks.

But if you are on a budget and cannot hire salesman, you can still do pretty good and maybe it could be beneficial to you in the long run(more on that later).

Firstly mark a specific area you want to target geographically.

Identify the amount of volume you will need to generate so as to justify for a salesman.

Calculate the volume you can probably generate per retailer. Be realistic and not over optimistic.

You will now arrive at the number of retailers you will need to cater for such volume.

Multiply this number by at least 3.

Make a schedule for visiting these shops on regular basis.

Please keep in mind that you are visiting shops managed by local people in there neighborhoods.

So plan your pitch accordingly, that means no fancy lingo, just you and your product.

Try to make a connection with them and provide great service.

But do not get trapped in there unreasonable demands.

Believe in your product and market it as if it is the best in the market.

And grind…good luck.

As and when you can, get a salesman so that you can cater a bigger area.

Don’t go to appointing distributors as you will not have the capital for that kind of volume and if they did stock returns for whatsoever reasons, you will be in trouble.

And benefits of visiting the shops yourself

You get to know your customer firsthand

You get to know the response to your products directly

You make a personal connection with the retailers and they will most likely place an order just because you meet them personally.

You can improve your product because you are getting direct response of buyers and the information is not getting lost in between. It will help exponentially when it will time to go big.

What are the challenges faced by FMCG companies while selling through salesmen or distributors?

Fast-moving consumer goods (FMCG) companies that sell through agents or distributors may face several challenges, including:

Limited control over the sales process: FMCG companies may have limited visibility and control over the sales process when using agents or distributors, which can make it difficult to ensure that their products are being marketed and sold effectively.

Difficulty in building strong relationships: Building strong relationships with agents or distributors can be challenging, as they may represent multiple brands and have competing priorities.

Difficulties in managing inventory: FMCG companies may have difficulty managing inventory levels when using agents or distributors, as they may not have direct control over how and when products are sold.

Limited ability to gather market intelligence: When selling through agents or distributors, FMCG companies may have limited access to valuable market intelligence, such as consumer insights and competitor information.

Risk of channel conflict: FMCG companies may also face the risk of channel conflict if they sell through multiple channels, such as directly to retailers as well as through agents or distributors.

Payment delays: FMCG companies may face payment delays from agents or distributors for the goods sold.

Training and Support: FMCG companies may have to spend more on training and support for agents and distributors.

Margin pressure: Agents and distributors may put pressure on FMCG companies for higher margins, which can impact profitability.

Disruption in Product Line: Embracing Niche Markets

#cadbury India Ltd. in 2001, the entry price of our popular chocolate Dairy Milk was Rs. 5/- and surprisingly, in 2023, it remains unchanged.

In recent times, many companies are re evaluating their strategies to enter niche markets, and this shift is driven by various factors.

Adapting to the challenges posed by rising costs of #rawmaterials , labor, #logistics , taxes, and more, companies are finding #innovative ways to maintain consumer-friendly prices. One such #strategy involves reducing the weight of #products rather than increasing their #prices . For instance, #dairymilk ‘s weight decreased from 16 grams to 9 grams, and yet, it continues to be one of the #company ‘s fastest-selling brands.

#customers tend to be more receptive when products align with their psychological #price range, and exceeding this threshold may lead to a loss of #market share. Hence, #companies are now exploring alternative approaches to cater to specific customer segments, resulting in #disruptive changes to their #product lines.

Various recent examples illustrate how companies are embracing this disruption.

For instance, Asafoetida (Hing) can range from ₹ 2000/- to ₹ 20000/- per kg, but branded companies offer sachets priced at just ₹10/-. Similarly, #namkeen (Chakna) costing ₹250/- per kg is available in smaller packs for ₹5/-. Companies are also introducing #branded soaps that typically cost ₹40/- to ₹50/- at a reduced price point of ₹10/- with smaller pack sizes. Though the #profit #margins for these products are modest, the companies compensate with high #volumes , targeting lower-middle-class #consumers who are now influenced by #digital and #socialmedia platforms, leading to increased #brand affinity and product #desire .

While adopting disruption #techniques to tap into #nichemarket s can yield positive results, careful analysis and #strategicplanning are crucial to avoid potential losses. #organizations must thoroughly study and understand their #target #audience and the market dynamics before implementing such #strategies .