Lack of merchant engagement is costing FMCGs billions in lost sales opportunities.

The FMCG industry in emerging markets depends heavily on an interconnected distribution network where brands must work closely with distributors and retailers to move products to the end consumer.  However, this distribution model means brands are disconnected from the very retailers that are essential to driving sales and brand growth, as marketers lack visibility across the value chain, and cannot directly engage merchants access collated data at POS.

Consequently, the contribution of top FMCG companies to category growth has declined as consumer consumption patterns have changed rapidly, with much of the industry growth coming from smaller, more agile brands that can better engage channel partners.

For instance, in the food and beverages sector, the largest FMCG brands account for 45 percent of sales, but only 3 percent of growth. This puts larger brands at a disadvantage when negotiating with retailers as billions of dollars worth of growth opportunities are lost.

To maintain competitive advantage, drive growth and capture market share, marketing leaders of large brands must devise new strategies to engage merchants directly and increase visibility at POS.

Lack of direct merchant engagement is hurting FMCG brands

The fragmented nature of the traditional FMCG distribution chain leaves marketing teams unable to engage directly with merchants. Manual communication and data collation methods means marketers can only reach and engage large distributors and tier 1 retailers, leaving tier 2 and 3 retailers with sub-optimal engagement levels. However, the insights required to make data—driven decisions such as:

  • which products are in high demand?
  • where, geographically, the demand for their products is?
  • what types of retailers are buying their products?
  • which of their marketing campaigns are working?

Are only accessible when marketers can engage directly with smallest retailers and have insights to real-time data collated at POS.

The inability of marketing teams to engage their merchant network directly across multiple channels leads to lower sales, with industry reports showing that marketers that use 3 or more channels to drive campaigns had a 287 percent higher purchase rate than those using a single-channel campaign.

Without direct merchant engagement, marketers are also unable to react to rapidly changing demand patterns as there is no real-time visibility into consumer behavior. This leads to loss of market share to nimble, digital-first startups that can authentically target and engage tight segments to win over channel partners.

Increase visibility and drive engagement with RedCloud

Syndicated data and direct merchant engagement allow marketers leverage on existing demand to upsell, and cross-sell their products with personalized campaigns, with studies showing that personalization, when executed well, can increase retailer satisfaction by over 600%. For example, if an FMCG brand discovers an increase in demand for one of their products, (say baby food), this valuable insight provides a great opportunity to target that specific retailer segment with a personalized campaign for a related product, say baby diapers to increase the average order volume and value and drive sales.

Increasing direct merchant engagement leads to improved brand loyalty and retailer retention, which increases revenue as a 5 percent increase in retailer retention can increase revenue by over 25% and the top 10 percent loyal customers have an lifetime value worth over 6 times the industry average.

To increase direct merchant engagement, FMCG marketers need a solution that provides access to real-time, actionable data collated at POS while also enabling direct engagement with all the merchants in the distribution chain. While many FMCGs have attempted to launch digital platform or apps to engage with retailers, adoption remains low as retailers do not want to engage with multiple apps from multiple brands.

This is where RedCloud, the world’s first open commerce platform excels. We unlock the full value of the traditional distribution chain, directly connecting FMCG brands, distributors, and retailers on a single platform that preserves industry connections while providing powerful digital capabilities. With brands and their merchants on the same platform, marketing teams have real-time visibility across the value chain, and can access collated data at POS. In addition, the open commerce platform allows marketers directly engage merchants with personalized, targeted campaigns that take advantage of the micro-consumption patterns in the market to increase sales velocity and order volume.

In my next blog, I’ll explore how marketers can increase app adoption to further enhance merchant engagement, increase customer retention and generate brand loyalty.

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