How Fmcg Distributors work in the e commerce world today ?

March 11, 2023March 11, 2023 Team DigitalGumma 0 Comments Digital Transformation in Retail and E-commerce, FMCG and Ecommerce, FMCG Online, Online Fmcg Product Listing Flaws to Avoid, What are the challenges inonline FMCG?

Wholesaler-Distributors Guide To Ecommerce.

Through these tough times when traditional distributors after the pandemic as well due to the modern apps.

Distributors have to understand that their existence in the capitalist market is dependent on up-gradation and the adoption of new trends. Constant waivers and support from FMCG companies are not going to help in the long run.

The present distribution infrastructure in the country is the result of a constant improvement that FMCG companies have made in line with the distributor demands so as to serve the retailers and consumers without compromise.

The response and feedback provided by distributor salesmen give the organization the much-needed ground-level insight to develop and launch relevant products in the marketplace. While adopting new technology that alienates a certain section of the channel, this perspective should not be lost.

Technology is an unstoppable evolutionary process and a short-sighted approach to select ‘app-based’ distribution may cause divisions in the trade structure, that will be very difficult to erase, if not handled carefully.

Googling the Reliance Jio Mart app throws up 1,37,00,000 searches in 0.76 secs! Launched barely a few months ago, this app has created deep disruptions in the FMCG trade dynamics. The All-India Consumer Products’ Distributors’ Federation (AICPDF) has sent out a letter to the manufacturer raising concerns over the market price disparity and instability that this app is causing.

By 2025, the online market share of FMCG (fast-moving consumer goods) is expected to be 10%. Though this number may appear small, it’s positive to see this offline-centric industry growing online.

FMCG eCommerce is particularly doing well in China (25% FMCG eCommerce sales), South Korea (24.4%), Taiwan (11.4%), Great Britain (11.4%), France (8.3%), and Japan (8.1%).

In the Asia Pacific region, the spends on FMCG were up by 5% in the first quarter, which is higher than the 3.4% increase seen in the first quarter of 2020.

Emergent FMCG Business models in B2B Distribution landscape

Initially FMCG downstream supply chain had a “distributed” channel structure. Traditional distributors covered towns or part of towns and were mostly exclusive to a particular brand, built relationships with the many thousand general trade outlets and wholesalers operating locally. Retailers in a town depended on these distributors to deliver orders or visited wholesalers to pick up required stock. This traditional distributor managed demand and working capital efficiently doling out micro-credit and also drove trade marketing initiatives for the brands.

This model was first disrupted by the brand aggregators – Modern Trade Wholesalers like Metro, Booker and Walmart. These MT outlets offered a one stop-shop for retailers across brands and categories, but did not offer door-step delivery unlike the traditional distributors. The informal credit practice was also not extended. Prohibitive freight costs in low volume towns meant direct coverage was ~50 – 60% for even the biggest of FMCG brands.

Online platform led distribution wishes to offer the best of both worlds – aggregated demand to be a one-stop shop for the retailer, amortizing freight costs to ensure direct distribution with door-step delivery and offer micro-credit with partnerships.

Comparison of operating revenues, costs and margins across business models – FY21

The traditional distribution system operates on a gross margin of ~8 – 12%, for mass market products. These wafer thin margins, drive the distributor ecosystems to have lean and efficient operations. Low inventory levels with “Fast moving” stock characterises the inventory model and hence offers the name to the industry – “Fast Moving Consumer Goods”.

Manpower productivity and optimized freight costs are critical to profitability and so is effective credit cycle and cash flow management. Companies operate with 15 – 20 days of stock and ~20 – 30 days of payable and receivable days. This working capital is usually the investment made by the distributor and if these benchmarks are maintained, the distributor can expect an RoCE of ~30%. Analysis indicates the median RoCE of the top distributors of the country is ~33% and they operate at 21 days of inventory, 20 days of sales outstanding and 15 days of payables outstanding.

The contrasts can be noted in Indiamart’s marketplace model, where the gross margins are at ~90%. The marketplace platform charges fees on the discovery and engagement between buyers and sellers, while IT & employee costs borne to manage engagement & discovery are the primary cost of services.

Assessment of cost drivers indicate the need for lean business operations to drive profitability

The traditional distributor is not too worried about revenues. The margin and the “fast moving” nature of the merchandise are more critical factors in deciding the SKUs to stock and volumes to purchase. Higher the premiumness of the merchandise, higher the gross margins. To drive profitability, the distributor from hereon, effectively utilizes assets – warehousing infrastructure, logistics network, inventories, sales & distribution manpower. Four key metrics – SKU throughput, freight cost per unit, manpower productivity and inventory days – are measured and optimized for religiously. An analysis of one of P&G’s largest distributors – Chamadia Group (Fig 4) – indicates how razor thin profit margins look when compared with product revenues. But, a comparison with the gross margins indicates a reasonable 9% profitability before tax.

FMCG industry growth in Ecommerce

The FMCG industry flourishing online as a result of the convenience this retail model offers. The three prominent factors that provide this irresistible convenience are:

Ease of digital payments to consumers

Digital and mobile wallets are a leading choice of payment globally. During a measured period of time, Worldpay estimated that digital and mobile wallet payments accounted for 44.5% of worldwide online transactions. And in the Asia Pacific Region, online wallets account for 60% of online transactions.

Increasing desire for free door delivery (shipping)

According to a customer survey, 96% of the respondents said that free shipping is an important factor when shopping online. This makes free shipping almost a norm in the online retail industry. Faster shipping options also add to the convenience of shopping for FMCG products online.

Competitive Low online prices

Around 64% of online shoppers wait for sales to buy products online and about 59% search for discount coupons before making an online purchase. Usually, products sold online come at a discount during specific days of the week or month, this stimulates online purchases.

Modern tech-savvy distributors reached out to retailers through WhatsApp when the traditional distribution workforce could not (due to social distancing). This accelerated the advent of an omnichannel system like never before. The explosion of ‘data-enabled smartphones’ (420 million in the country) led numerous retailers to embrace apps and use them for multiple purposes. The availability of real-time data enabled better and faster decision-making across the supply chain.

Working Capital Discrepancy – Over 90 percent of FMCG trade in India is still unorganized and any technology intervention results in its differential adoption across urban and rural, thus leading to working capital variances. Those with access to the apps, benefit by way of more frequent stock supplies and hence can afford to service their customers (retailers) without stockouts. Their lower inventory levels also mean less working capital, leading to better ROI (return on investment). The scenario is quite the opposite for those who are not tech-savvy and hence unable to download the app. They hold larger inventory to make up for the less frequent supplies, thus leading to fewer returns on their investment. So, in this case, there is a steep difference in the returns gained by the two sets of distributors and this creates discontent.

Last Mile Coverage – There has always been a problem with last-mile coverage for the traditional distributors. Given the heterogeneity of our country and the difficult access to many parts, numerous geographical locations are out of the coverage zone. But technology has somewhat leveled this. 31 percent of rural people use the internet; 61 percent of them have smartphones (2021 data).

This has been well tapped by the modern distributors. They now get orders from smaller Kirana stores that otherwise had to go to nearby cities or to the big bazaars to buy the goods for their shops. Direct last mile coverage also improves brand visibility and better retail control and communication. Overall, the consumer benefits through regular stock availability and service.

Online Fmcg Product Listing Flaws to Avoid

As an eCommerce seller, you need to be vigilant of some product listing errors that can lead to declining consumer traffic and low sales. If your in-house staff members do not have expertise in listing products, you can seek professional product data entry services. Outsourcing the task ensures critical errors are avoided since professionals are well-versed with the right techniques when creating listings.

Nevertheless, every online store seller should be aware about the following common product listing mistakes and ensure that these are avoided.

What’s up with online storage facilities canceling auctions and re-listing 2-4 weeks later?

Storage facilities have to follow a ton of rules in order to auction off units. Either they realized they missed a step in the process, or the unit owner made some forward movement in trying to get caught up on rent. Then once they either made sure they’d completed all the necessary steps, or the unit owner failed to get caught up on rent, the unit goes back up for auction.

Weakly Optimized Listing

It will have a limited response if you upload general content as your product description. It happens because your description doesn’t fit into the search algorithm. Maintaining informative and quality content is equally important to optimize your product listings. Use targeted keywords in your title and description; however, do not overdo it; maintain balanced proximity. If you find the process complex or cannot devote time to this task, try engaging in eCommerce product listing services.

Found the smallest shrink-flation in Coles today: Gippsland products used to be 720g. They’re now 700g. Website still uses image with the old weights while listing the new weight. Would’ve loved paying the same for more

No Product Research

A lack of product research can be devastating for an eCommerce business. If you ignore product research, you are likely to miss a crucial detail that can lead to the failure of the product in the market. It helps present a better product and create an attractive description that will allure buyers. Sellers can hire competent eCommerce product listing service providers to research the product, its technicalities, demand, and value-adding features. Once you have researched data, curate your description content accordingly.

Poor Product Images

Product photos play a vital role in converting leads on an eCommerce platform. Advanced editing and photography techniques can turn your normal product images into a strong sales pitch. Sellers often underestimate the effect of high-quality, informative, and gripping images. This mistake can be a major cause of your listing’s failure. It is crucial to get a competitive edge in the market too. Ensure that uploaded photos meet the minimum required specifications based on your online platform’s guidelines. Your product photos should be accurate, uncluttered, focused, and informative. Professional eCommerce image editors are well-acquainted with the market’s needs; sellers can use their services for better results.

Failure to Define the Target Audience

Similar to product research, analyzing your target consumer base is crucial to creating a good product listing. Working on your target customers helps in sketching the buyer’s persona. According to the concluded buyer’s persona, you can create a description content that will satisfy customers’ queries. If you write a product description that is not aligned with your target consumer, it can result in bounced leads.

Bad Pricing

Your product’s pricing needs a lot of groundwork before you perform the listing task. It should be competitively priced for the buyers. It will be a huge mistake to price your products without balancing them with the market prices. It is challenging to manage when you have listed products across multiple platforms. Consistency and transparency are crucial when deciding the cost of your products. If your product listing shows different prices across various marketplaces, it will build doubt and affect your credibility.

Lack of Reviews

Ignoring review generation is a mistake that affects your brand image and authenticity. Consumers find it hard to trust products that do not have reviews. It works like social proof, driving the buying decision of many incoming leads. You can request reviews from consumers as the product gets delivered. Request it with a thank you email after the purchase or send a note with the product itself. You can seek professional help to obtain innovative ideas for review generation.

Lack of Media

It would be a mistake not to include trending media and graphic styling in your product listing. Elements like infographics, video, 360-degree images, and 3D shots can help the customer better understand your product. The key is to make your listing more informative and attractive. You can add a video about product usage and basic functions. The infographics can be used to explain various parts and their role or key features. Media can be used to build trust in consumers and give them a real feel, as it is in physical stores.

Ecommerce Glitches

Product listing is not just a mere step of launching your eCommerce store. It requires a focused, strategized, and goal-oriented approach. As a seller, you might be overwhelmed with many core responsibilities, which could make you focus less on the crucial aspects of the accurate product listing. In such cases, outsourcing the task to eCommerce product listing service providers can be considered an efficient and cost-effective option. It will save you time and capital, and the expertise and experience will improve visibility and customer engagement.

FMCG, Retail, & E-commerce

The current decade may be marked by significant changes in the CPG, retail, and e-commerce sector as innovations, mobile penetration, new competitors, diverse strengths and unforeseen challenges emerge. Worldwide e-retail revenues are projected to grow to $5.4 trillion in 2022. With the consolidation of players, mergers and acquisitions, evolving government regulations, and improved infrastructure, the retail and e-commerce sector is on everybody’s watchlist.

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Digital Transformation in Retail and E-commerce

While the sector’s finance and accounting division has been significantly disrupted as a result of Digital Transformation, the responsibility for providing financial information to regulators and monitoring productivity and progress has changed significantly. The CPG industry is deploying big data analytics and AI to focus on direct distribution, keeping consumer convenience in mind.

fmcg-brands-and-food-industry.

With F&B accounting for over 50% of the market segment in the CPG/FMCG space, there are clear indications of which way the market is headed. Many organizations find it difficult to track the effectiveness of trade promotions and understand the distributor’s real profitability. The sector has unique challenges that require specialized intervention.

Inventory-Management-with-Fork-lift

The stockist, distributor, retailer are handicapped with limited visibility of inventory and stock-outs in the distribution chain, where constant availability and high-quality service are expected by customers. Compounding the problem, the manual forecasting mechanisms cannot accurately predict demand, causing an inability to effectively implement stock levels and credit limits for your distributors.

An FMCG distributor is a person who serves as a link between the poducer and the retailer. An individual’s job is to promote the products of a certain FMCG firm that has chosen to distribute their products in specific areas. The distributorship chances in FMCG differ depending on the type of retailer a company picks

A distributor typically works with multiple manufacturers and multiple downstream entities. For each manufacturer, the distributor serves as an agent that enters into an agreement with the manufacturer to sell its products to retailers, VARs or wholesalers.

Fmcg-Van-Salesman

Challenges in FMCG eCommerce

While the FMCG industry works in a similar way to other industries in eCommerce, it is still unique. This is because it is more like a collection of industries. There is a wide range of unrelated (or semi-related) product groups under this segment from cooking oil to shampoos and conditioners, groceries, over the counter drugs, paper products, confectionaries, and more.

As a result, brands, distributors, and warehouse operators catering to the FMCG industry mainly face challenges revolving around large quantities and diversity.

Let’s deep dive into the primary challenges to understand the obstacles FMCG products unleash in eCommerce.

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Difficulty in coordinating inventory with demand

The number of products managed under the FMCG vertical alone is more than most industries. Due to this sheer volume of products, it’s difficult to manage them and coordinate their inventory with small quantity eCommerce orders.

Moreover, FMCG products are fast-moving items because they are purchased on a regular basis. If stocks run out for these products, consumers tend to panic. This puts more pressure on brands, distributors, or warehouses to ensure the steady availability of these goods.

Logistics-and-Fmcg-goods.

Inability to serve online and offline demand simultaneously

There is a clear split between online and offline consumers for electronics, appliances, cosmetics, and even clothing. But with FMCG products, people don’t really mind where they shop for these products. That means, most consumers are comfortable with online as well as offline options.

However, managing online and offline retail isn’t a pain-free process for FMCG. Both these retail models function independently, making it challenging to synchronize them for better sales and inventory visibility and performance data. This negatively impacts stock management efforts, inventory availability, and the general fulfillment of online and offline demand.

Logistics-and-Fmcg-supplies

Product listing delays and mistakes

Unlike fashion, FMCG goods don’t need a lot of assets (product images and videos). Here, it’s okay to have one or two product images per listing. But the sheer volume of FMCG products managed by a brand or distributor is where listing becomes tedious.

Additionally, new FMCG products are continuously being launched, which means more catalogs and listings are required. These must include the correct nutritional information, price details, and expiry and batch information.

If there is any manual aspect of managing product listings, it will create a major bottleneck while launching these products on different sales channels. And given the volume of FMCG products managed by brands or distributors, there are high chances of errors while manually uploading or updating product listings for campaigns, nutritional information, and expiry and batch details.

Limited capabilities to manage perishable or frozen products

Many of the products in the FMCG market are perishable items, which makes it essential to incorporate stock rotation practices. These rotations could include first-in, first-out (FIFO) or first-expired, first-out (FEFO) to reduce expired stockpiles.

However, it’s a massive task sifting through millions of products from thousands of categories to ensure items nearing expiry are sent out first. Maintaining a sheet of all product batch expiries is a great effort, but a sheet won’t sound an alert when product batches are close to expiring. Similarly, it will take a great deal of time to go through a long FMCG product sheet every week or month to stay on top of inventory perishability.

Merchandising-and-fmcg-brands

Inability to maintain accuracy and customer experience

FMCG products move in and out of stores and warehouses at crazy speeds. As they are continuously consumed and used, the supply chain for these products is always active. This means less time to pay attention to details, making it challenging to maintain accuracy.

For example, with thousands of orders from different channels, it’s easy to deliver the wrong quantities or products. In other cases, due to the large volume of orders, it’s easy to lose track of what’s out of stock and accept orders for these products. This often leads to poor experiences for customers.

Additionally, without a firm grip on your supply chain, it’s impossible to split orders and fulfill the ones you have the stock for and postpone the ones that are out of stock. As a result, you’ll need to cancel out-of-stock products.

fmcg-consumer-and-retail-therapy

Disorganized B2B and B2C order processing

Employing B2B and B2C workflows is cumbersome as they both function differently. B2C orders require picking and fulfilling by piece while B2B orders are picked, packed, and fulfilled by the pallet. This difference and the number of orders for each business model can be problematic to support simultaneously.

You need to be able separate the orders conveyed to your warehouse and fulfillment partners. Without a proper breakup, the chances of errors increases.

fmcg-consumer-and-retail-therapy

Lack of meaningful consumer data and business insights

It’s unfeasible to leverage real-time data and insights from all FMCG sales given the number of orders flowing through different channels and tiers of distributions. It usually takes time to collect this information and interpret it. This translates to delayed corrective actions, which hampers customer experience.

Fmcg-Retail-Store-a-top-view.

Solutions to manage the challenges in FMCG eCommerce

To overcome the problem areas of the FMCG market, there are different solutions you can try. The most effective ones involve technology, restrategizing, and adopting blended retail models. For a clear understanding of why these work, here are a few proven solutions aiding brands and businesses dealing in fast-moving consumer goods.

Inventory management system

In the FMCG industry, inventory is tough given the volume of inventory that needs managing. And, when your retail model is meant to accommodate online and offline purchases, handling your vast inventory and orders is even more stressful.

To overcome these obstacles you need an inventory management system to track stock movements. It will keep you updated on the stock quantities entering and leaving the warehouse, stores, or distribution centers.

It will also play a key role in stock replenishment. Restocking is one of the hardest tasks in the FMCG industry. If you have a system that offers inventory visibility and stock quantity alerts, it will be easier to manage inventory levels.

Omnichannel integration

With an omnichannel presence, you can be available wherever customers are comfortable making purchases. But to manage these channels and the inventory they need, you require technology like an OMS or order management system.

This dynamic system will integrate all your sales touch points into a centralized ecosystem. That way, you can monitor sales, inventory levels, and take action to ensure stocks are replenished in time.

Catalog automation

To push past the bottlenecks that arise when launching a multitude of FMCG products on multiple channels, consider catalog automation and sales platform integrations. For this, you’ll need a tech system like a PIM (product information management) system or an OMS, or an OMS with PIM capabilities.

These tech solutions allow you to launch your products on different retail platforms in a matter of minutes. All you need to do is save your product information and related assets to these systems and they can be shared with the respective marketplaces of stores to create listings.

You can also grant access to your authorized distributors and retailers so they use these products in their listings. That way, your products are represented uniformly across all retail channels.

Batch and expiry management

An ideal way to stay in tune with batch expiry is to take on another layer of stock management called stock rotation. With an advanced WMS, it is easy to implement this feature and identify stock items that have expired and are nearing their expiry dates. Moreover, it ensures that all items closest to expiry are sold first when orders come in.

Flow through distribution

Flow through is a distribution method that ensures products move quickly through the eCommerce supply chain. Consumers are looking for fast fulfillment today, and flow through offers this speed.

You can increase order processing speed and directly move goods from inbound to outbound. Flow through also allows you to further.

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Optimize your warehousing

Distribute or supply goods from the supplier to the consumer with limited storage or handling time)

Receive products through an inbound door then transfer it directly to the outbound dockQuickly sort, screen, and unload inbound products to identify their end destinations

Fulfill partial orders

Move correct products while incorrect ones are being processed for returns

Order splitting technology

When a shopper orders multiple items from you at a time, it’s not uncommon that you might have run out of one of the products that they ordered. In such a situation, order splitting technology can help you fulfill all the items that are in stock and ensure that the pending item is fulfilled immediately once stocks are replenished.

Another way to deal with this situation is with a Warehouse Management System. Through these tech stacks, you can immediately identify which are the other warehouses or stores nearest to the customer to fulfill their pending order. This avoids delays, cancellations, and poor experiences.

Not all eCommerce and inventory management systems offer these facilities, so ensure you thoroughly review them before making a choice.

Unified processing of B2B and B2C orders

In the FMCG market, there is a higher demand to process B2B and B2C orders from the same system. This requires supporting both operations simultaneously. In such a case a versatile WMS is ideal. It will be able to classify B2B and B2C orders separately even though your product inventory is centralized.

Every time an order is received, the system will identify the kind of order (B2B or B2C), the product required, and the quantity. This information will be sent to a picker in the warehouse closest to the product. For a B2B order, they will be informed that the order fulfillment requires the picking of complete cartoons and not individual product pieces. Similarly, with B2C orders, they will be given the precise number of pieces needed per order.

Uniform experience even with niche products

Organic foods, whole foods, and premium consumer goods are niche products in the FMCG industry. Established brands are focusing more on these products of late to plump their eCommerce margins.

However, even though these are niche category items, inventory management, availability, and fast delivery are crucial. Centralizing your inventory for these products will allow you to offer them across sales channels with the same level of experience as regular products.

Consumers are looking for immediate consumption irrespective of how niche a product is. So, treat these products like the fast moving goods that they are and ensure they are fulfilled quickly.

To manage these nice items, their inventory, orders, and promotions effectively invest in inventory centralization technology like an OMS with WMS capabilities.

Trends to look out for in the FMCG industry

The FMCG industry is evolving continuously to set new standards and keep up with consumer demands. The industry is largely run offline, but even physical stores are now incorporating online strategies. The objective for this is to refine the shopping experience and stay connected with the pulse of consumers.

Other notable trends in the FMCG industry include:

Using D2C to control customer experience

According to Hugo Harris, a Director at PwC, many FMCG brands are looking to create or expand a direct-to-consumer (D2C) channel to gain access to their consumers so that they can own the delivery of consumer experience.

In addition to this, FMCG brands want to get to know their consumers better so they can improve their product demand, develop new products for different life-stages. That way, they make the most of the customers they already have.

“FMCG companies long to know more about their customers. Specifically, customer demographics. They want to know the age, location, gender, marital status, and spending trends,” says Vishal Desai, Country Head for Malaysia at Anchanto.

All of these details are lost when using a traditional tired distribution model. But with a D2C strategy, knowing where and whom the demand is coming from is so much simpler. Moreover, it ensures insights needed for the next strategic business steps like launching a new store.

What does this mean for brands?

A greater edge over competition

Another sales channel requiring management

Agility to make decisions at a microsegment level

Fmcg-online-consumers-buying-factors-FMCG-Industry

Blending online and offline efforts

When it comes to FMCG products, consumers don’t think too much about cost as these are low-cost items as opposed to electronics, accessories, and luxury goods. Consumers are more concerned about convenience, fast delivery, and less time wastage when they buy FMCG products.

To heed this demand, FMCG brands are integrating their online and offline retail efforts. Some FMCG firms are considering hyperlocal channels as they promise speed and assortment of local stores along with the safety and convenience of eCommerce, claims Aditya Malik Director at Strategy &, part of the PwC network.

Others are also using the click and collect method also known as “curbside pickup” or “buy online pick up in store.” This model of retail allows consumers to have their purchases ready for them before they even enter the store or set out to collect them. It saves time, allows consumers to check their purchases before taking them home, and they can also buy more from the store if they forgot an item.

Fmcg-online-consumers-buying-factors-FMCG-Industry

What does this mean for brands?

Order processing and fulfillment complexities

Sorting commissions for online and offline channels and distributors

Analyzing customer fulfillment expectations and demand

Growing expectations for express delivery

Approximately 61% of online shoppers are willing to pay extra for same day delivery. And a majority of people looking for same day delivery options expect their orders to be delivered within one to three hours. This is a growing demand, especially with online FMCG products. Consumers are used to quickly purchasing toiletries, groceries, and other FMCG products from offline stores and expect a similar experience online.

Online shopping removes the inconvenience of driving to the store and waiting in line to pay for purchases. And, with quick deliveries, consumers appreciate this form of retail even more for everyday purchases.

What does this mean for brands?

Need for seamless order fulfillment

Larger online order volumes

Integrations with last-mile delivery partners to measure delivery speeds

Convenience through subscriptions and promotions

The subscription business model boosts average spending, enables gathering and usage of customer data to better serve them, and inspires loyalty. it also provides value to consumers longing for convenience, novelty, and curated experiences.

North America dominates the subscription commerce market today, but the Asia Pacific region is also ramping up its subscription efforts. Europe, the Middle East, and Africa are similarly pushing their subscription efforts.

Promotions, coupons, and product bundles and kits are equally playing a part in keeping customers loyal. They add value to the shopping experience, boost revenue, and make it easier to launch new products.

Fmcg-Brands-and-SWOT-analysis

What does this mean for brands?

Collection of customer data to determine purchase frequency

Need for a specialized system to allocate inventory for assured orders

Requirement for a system to manage product promotions

Tail piece

Online retail has been rising consistently and the fashion and consumer electronics segments have grown tremendously. The success of an e-commerce business is dependent on high scalability and dependable partners who can share the journey. The very fact that B2C (Business-to-Consumer), B2B (Business-to-Business), C2B (Consumer-to-Business), and C2C (Consumer-to-Consumer) are all showing trends for growth, compel the sellers to configure for faster deliveries of quality offerings at affordable prices.

bordens-mix and swot analysis-for-fmcg-products.

By 2030, the traditional distributors will consolidate, differentiate with localized products and also offer value added services through partnerships

With the digital disruption in the B2B distribution space, retailers have new wholesalers & distributors to purchase from. This also opens retailers’ option to new product offerings under existing as well as new categories and additional products – Eg: financial services on one platform. Point of Sale services such as invoicing, accounting and replenishment can be integrated which makes order placement, fulfilment and GST filing simple and fast for retailers.

Traditional distributors are expected to consolidate to become multi-brand and multi-category distributors. Global multi-brand distribution operating models as seen in Electronics (Eg: Ingram, Redington), Automotive (Eg: Autonation, Penske) are soon to be replicated to compete successfully against online platforms. Traditional distributors with close proximity to their retailer network and local connections, will cater to local tastes with regional brands. Online players with centralized procurement function will be slow or unable to adequately capture localized customer preferences, thereby limiting their distribution dominance to National Brands and Larger Pack Sizes, similar to modern trade.

Fmcg-Merchandise-in-asuper-market.

Traditional distributors should think beyond working capital management for their principal brands and offer a bouquet of customer services – convenience in order management, shorter fulfilment cycles, category aggregation for basket shopping experience, financial services, inventory management and accounting support. Partnerships with fintech, logistics tech and aggregator platforms can deliver these services at optimized cost.

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Traditional distributors are also likely to backward integrate and reduce costs to pass on incremental margins to customers (Retailers). 3PL and warehousing operations for principal brands are one opportunity. Private label product introduction through contract manufacturing, leveraging the vast MSME ecosystem is another opportunity to explore. Further, this would enable Unorganised or Local brands to gain more visibility as their inability to set up penetrated distribution networks impacted retailer reach.

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FMCG companies, today depend on Nielsen’s retailer surveys to determine retail market shares and consumer purchase patterns. With technological intervention in order placement and fulfilment, real time and more accurate data would be available with Online marketplaces for brand analytics. These analytical insights will allow FMCG companies to roll out customized trade promotions, reorganize sales force, their beat plans and shorten product launch cycles.

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The net result in a decade’s time would be a more consolidated universe in FMCG distribution, with customers – retailers & consumers benefiting the most with a wider choice for purchase, consumption and business support.

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As a comprehensive industry, FMCG demands order and efficiency for smooth business. Technology has proven to be an ideal companion in this regard for several FMCG businesses and brands, irrespective of their business model. With tech stacks like a WMS and OMS, it’s easier to control inventory and orders. These systems also provide a deeper look at consumer preferences for improved strategies and support new efforts to serve clients better.

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If you’re looking to uncomplicate your retail efforts across sale channels and take on new trends with ease, technology is your key. The possibilities are endless with the tech solutions available today.