Throughout the last decade, the FMCG/CPG Industry saw a large influx of digital technologies introduced into the business environment. Most of these digital technologies dealt with improvements in direct sales (eCommerce), but using it only for sales is limiting its tremendous potential. Digital technologies can be used for marketing, branding, research, planning, product design and survey, among other business needs. Developing economies are now waking up to the potential of using digital technologies, and have started using them to supplement their traditional operational models. Smartphones are getting advanced, more accessible and usable for the masses in markets such as India, Middle East and Africa. It is critical for large FMCG/CPG businesses in such markets to harness this newfound accessibility to customers.
In an emerging economy, maintaining a frontline sales team forms a significant share of the budget of any fast growing FMCG/ CPG company. This sales team would work directly with the principals (super stockist), distributors, retail outlets as well as the more traditional mom & pop stores. Unlike FMCG/ CPG giants in mature markets, the budget set aside by FMCG players in emerging markets for marketing and branding are much smaller. So bigger companies with deeper pockets get better visibility and sales, compared to smaller players. Betting on an online model alone is also not an option at the moment. Even in a strong economy like India, despite a strong growth rate in retail, e-commerce is just 2.5% of the total retail sales.
Disrupting the FMCG/CPG Business Models
Digital technologies are primed and ready to disrupt the current FMCG models in emerging markets. How exactly would it unsettle the current FMCG sales models, is still up for debate. Even though the wholesale distribution model is preferred in emerging markets, new forms such as cash and carry and direct B2B selling models are getting adopted slowly. In India, companies such as Marico, Dabur, Britannia and Godrej Consumer Products are seen to focus on direct distribution channels and even cash-and-carry accounts in order to bypass wholesale traders. The newer models are costlier (in the short run) but more efficient than the wholesales model. What they lack currently is a strong link to the retailer. In future, other new models will evolve that are efficient, while maintaining a strong link to the retailer.
What would such a model look like?
Imagine a scenario where frontline sales orders are placed directly by the retailer using a mobile application, similar to e-com sites. A retailer would be able to browse the catalogue, select, order and pay using their mobile phone. A sales executive/manager would be able to manage all orders using his mobile app. He then would be able to dedicate more time to stores which need special attention rather than divide his time between stores equally.
A sales executive/manager can service 2 to 3 times more retailers than he would in the traditional business model. This means that a lion’s share of the business’ budget for a frontline sales team can then be used for marketing and branding the company’s products. With a bigger marketing push, companies can generate organic sales without a salesman pushing for it at the retailer end.
Are such digital solutions available?
Presently there are a not many qualified choices for such a solution in the emerging markets. Most of the solutions that are currently available are provided by Mobile Sales Force Automation software providers who retrofit different business models onto their software. One of the notable solutions currently available in the market is FieldMax® developed by Black Rock IT Solutions , an accomplished player in the retail software development sector. Experion, an enterprise software development services company, develops custom software solutions for customers across the globe.
The FieldMax® Retail variant was exclusively developed from the ground up, keeping in mind emerging trends in the FMCG sector. The solution caters to both large and medium size corporations in the CPG space, whose products have high market demand. It can be downloaded and used by even small retailers to order and interact directly with the business without any intermediaries. The workflow of this solution when used by retailers is as given below.
Conclusion
The IT sector, contrary to common perception, will be the main driver of innovation in emerging markets such as India. Adopting newer technologies and techniques will help businesses keep abreast with ever changing scenarios within such growing markets. The opportunities are many, and businesses should use technology as a catalyst in developing better and more efficient business models.
Increasing competition means the industry has to find better and newer ways to keep costs down while finding and engaging with more customers. The retailer app model is one of the many ways FMCG industry can increase efficiency while meeting customer demand. It is definitely a model to look out for in the future. Let us keep our attention focused on such a scenario.
blackrock has been working with world-class businesses in the FMCG/CPG sector to help them grow sales, engage the field sales teams, grow market reach and enhance the connection with the retailer. To know more about how blackrock uses digital technologies to boost FMCG sales, write to us today.