Lack of data analytics spells death for FMCG distributors

Today, wholesalers and distributors in emerging markets face intensified battles over shrinking margins, increased competitive pressures from e-commerce platforms, fluctuating market demand, and supply chain issues. FMCG manufacturers want faster and cheaper ways of getting their products to the retailer’s shelves, and retailers want to buy products at lower prices and still increase their profits. This leads to considerable margin reduction and a threat of stagnation for distributors, as brands and retailers attempt to work together.

If distributors in emerging markets do not embrace digital technologies and leverage data analytics to reduce costs, increase visibility across their distribution chain and provide specialized offerings to merchants, they will become less relevant to both brands and retailers, which spells death to their business.

FMCG distributors must adopt data analytics to survive.

For decades, FMCG distributors have relied on existing relationships to penetrate the fragmented retail markets in emerging economies, but that is no longer enough. The traditional sales model that relied on the gut instincts of sales reps to maintain business relationships is not scalable and has made it increasingly difficult for distributors to compete effectively and grow their businesses.

Every business day, large volumes of data are created by wholesale distributors as they buy from manufacturers, receive orders from their customers, and fulfil the orders. This data can help business leaders understand what is working and what can be improved, but only when it is analyzed to generate actionable insights. A survey of leading distributors shows that 75 percent of high growth wholesale distributors have developed advanced demand planning and forecasting capabilities by adopting data analytics in their processes. They are also 31 percent more likely to have real-time visibility across the organization and the broader supply chain.

Adopting data analytics also allows distributors to uncover challenges in the products they carry and the services they provide. By understanding these challenges, sales teams can provide solutions that cement customer loyalty and increase market share. For example, if a distributor notices a pattern of customer complaints about a product spoiling before the expiry date, the sales reps in the field can be instructed to educate retailers on how best to store the products to lengthen its shelf-life and reduce the resources lost. However, without a data analytics system, the sales leader might not realize the problem for months and can eventually lose customers.

Unfortunately, many distributors in emerging markets lack any basic data collection or analytics system. Without these capabilities, they cannot understand the micro-consumption patterns in the market and miss significant upselling or cross-selling opportunities that can be leveraged to drive growth.

Developing analytics capabilities allows wholesale distributors to collect and review every piece of data generated across the distribution chain to make smarter, timelier, data-driven decisions. In the pursuit of consistent growth, knowing how to leverage accurate and relevant data to create a more efficient distribution chain is an edge that every distributor needs.

How distributors can leverage data analytics to drive growth

For many distributors, the most significant barrier to successfully adopting digital technologies is the fear of disruption to their business. However, for those willing to embrace change, there is still a hurdle – how to begin. Without clarity on the exact steps to take, many distributors waste time and resources on data analytics programs that do not provide the needed growth.

The first step to successfully implementing an analytics system that drives growth is to identify the areas where you can make the smallest change for maximum return on investment. We have identified three main areas that distributors must optimize with data analytics to see the consistent, outsized growth. They are:

  1. Market visibility: For distributors in emerging markets, market visibility is key. Better visibility across the entire distribution chain is essential to making smarter decisions, driving operational efficiency, and improving the overall customer experience. With a data analytics solution that captures real-time syndicated data at POS, you can detect where the demand for certain products is, identify who is buying the products, and directly engage with those customers to maximize upsell and cross-sell opportunities.
  2. Supply chain: The supply chain is one of the crucial parts of a distributor’s business, and a failure to optimize it can significantly affect the business. With the right analytics tools, you can optimize your delivery network to minimize stockouts and unfulfilled orders, effectively manage retailers and merchants in your network and create a streamlined, failure-proof delivery process.
  3. Customer engagement: Under the traditionally fragmented distribution model, wholesalers cannot directly engage every customer in their network and must settle for a one-size-fits-all approach. However, by leveraging data analytics, you can engage each retailer directly and offer them a customized promotion that increases sales and drives growth. For example, by analyzing locations with high demand, you can identify underserved retailers with high order frequencies in specific geolocations and offer advanced supply chain financing to increase their average order volume and drive growth in that location.

With the knowledge of the critical competencies that must be developed, distributors can now select the right data analytics tools that provide the needed capabilities in the organization. 

Grow your distribution business with RedCloud

RedCloud is the world’s first open commerce platform that unlocks the full value of the distribution chain by providing distributors with a powerful yet easy-to-use tool that collates POS data across the entire chain in real-time and analyzes the data to provide actionable insights that can be leveraged to drive growth. Our powerful market intelligence solution displays these insights on a customizable dashboard in an easy-to-understand manner, so distributors do not have to spend valuable time deciphering complex data.

We have solved the biggest problem in the traditionally fragmented retail market in emerging economies by empowering distributors to directly engage with every single retailer across their network on a single platform. With this increased visibility, distributors can easily create data-driven promotions that take advantage of the micro-consumptions patterns in the market to drive growth. We have also built the world’s largest local payment network with over 2 million pay points in 100 countries and provided distributors with an easy way to collect digital payments from merchants of any size, even if the merchant does not have a bank account. This will eliminate the high costs of cash handling and provide another vital data source that can be analyzed to identify underserved merchants and provide them with the credit facilities they need to grow their businesses.

Book a demo today to see how you can leverage RedCloud’s open commerce platform to drive growth in your business.