Across emerging economies, the traditional retail market remains highly fragmented, as over 80% of all FMCG products are sold by small retailers in roadside shops. The industry still relies on manual processes like van sales, physical visits to retailers by brand and distributor sales reps, and costly cash payments. This model is inefficient and has had devastating effects on the supply chain, as three out of every four large FMCG brands have recently had strongly negative impacts on their businesses due to supply chain disruption and plan to downgrade their growth outlooks. Smaller retailers also suffer, as reports show that they are grossly underserved by brands and are often unable to order products when they need them.
The rise of e-commerce has done little to help retailers and distributors in emerging markets. The current e-commerce model favors a direct-to-consumer approach that sidelines retailers and eliminates distributors from the supply chain. Moreover, with e-commerce, brands cannot capture point-of-sales data or leverage deep industry relationships to gain valuable insight into market consumption patterns. The result is a complicated and fragmented ecosystem that runs partially on bits of paper at the distributor and retailer level, and disjointed digital systems at the brand level.
Open Commerce seeks to unlock the full value of the traditional distribution chain by creating a ‘trade anywhere’ economy where brands, distributors, and retailers can trade freely on a single platform without undue control or restrictions from centralized entities. With open commerce, brands can finally gain end-to-end visibility across their supply chain, gather valuable data on real-time demand trends across the markets, and leverage the data to identify and maximize growth opportunities. Distributors and retailers can also access the products they need, when they need them and make digital payments, even without a bank account.
RedCloud CEO, Justin Floyd and CFO, Stan Mlatac, visited South Africa to talk to FMCG brands, distributors, and retailers in person to discover how they are extracting value from the world’s first open commerce platform. Justin spoke in detail with the officers who are in the field on the widespread acceptance that Open Commerce has received from our customers.
An edited version of the conversation follows:
Justin: You have been doing some fantastic work on the field these last few weeks, but what has the response been like from customers? What are their reactions to the prototype?
Field officer: Oh, they love it. They are fascinated by it. We offer convenience at the click of the button, which is more than they could have imagined before RedCloud. We also offer better pricing and a wide array of products to choose from, which makes every distributor and retailer we’ve spoken to very excited to test the platform.
Justin: So, it’s about price, choice, and convenience. That’s why they are interested?
Field officer: Yeah, absolutely. We’ve done our best to get the best prices in the market, and the retailers and distributors are thrilled. They also really love the idea of being able to sort through their stock from the convenience of their own home, on their beds even. So, it’s a big sell. And as soon as they grasp what the app is about, they’re sold.
Justin: What are the top features of the open commerce platform that retailers and distributors love?
Field officer: Digital payments is one of the top features and a huge gamechanger. Paying in cash has always been problematic for these businesses because it’s not secure, and our customers feel safer when they can transact and pay for their products digitally.
Justin: Have you encountered any challenges or hiccups when talking to people about the idea of open commerce or the app?
Field officer: No, actually, we haven’t, which was very interesting and a little surprising. Usually, when introducing a new way of doing business, there’s significant friction or hesitation to adopt the technology, but we haven’t faced any major pushback.
Justin: That’s interesting. Could you tell me more about that?
Field officer: I think it’s because we preserve the existing distribution chain rather than dismantle it. Many other digital platforms either focus on getting retailers to sell directly to customers, which means they must compete with other bigger e-commerce players and the platform itself or focus on getting brands to sell directly to the consumer, eliminating the retailers and distributors from the supply chain. Open commerce and the Red101 app is the only solution that allows retailers, distributors, and brands to leverage digital commerce while still working with the existing supply chain that has kept the FMCG industry running for decades.
Justin: That’s incredible. We’ve always maintained that traditional e-commerce is terrible for small businesses, and it seems like our customers agree.
Field officer: Yeah, totally. The fear of e-commerce platforms stealing all their customers and putting them out of business is a real threat to these small businesses. They already must compete with malls and bigger supermarkets, so digital commerce has always seemed like another attack on their business, but they have a fighting chance with open commerce.
Justin: So, what are the things that we need to improve to make the experience even better for our customers?
Field officer: There are two main issues that our customers mention often. The first is that you need a mobile data subscription to use the app, and many of them rarely use the internet, so they don’t always have data. So, a solution that allows them to use the app offline would be perfect.
Secondly, we haven’t fully computerized the back end for distributors, so they haven’t been able to explore all the features that we have in real-time, but we have promised them that those functionalities will be added soonest. They are excited by the value that open commerce provides and once the development team makes the updates, we will become their best friends.
Justin: Yes, we are working on a USSD solution so they can use some features of the app even while offline, and I expect that it would be of tremendous help. Another feature that we’ve promised in the future is the ability for brands and distributors to upsell/cross-sell by recommending new products that were bought together as the retailers are checking out. How do our customers like that?
Field officer: Yes, absolutely, that’s a great feature, and the distributors can see the potential. By automatically recommending products that other retailers have bought together, they can get more sales from a single customer, while retailers get to discover new products and expand their product line. So, it’s a solid win-win for everybody.
Justin: Thank you so much for talking with me today. It’s exciting to hear that our customers love what we’ve been building and can’t wait to get more of it.
Field Officer: You’re welcome, Justin. We are proud to be a part of this commerce revolution and talk to people about this fantastic product that can drive a difference in the lives of small businesses and retailers across South Africa.
Schedule a demo today to learn more about how RedCloud is transforming the FMCG industry in emerging markets with the world’s first open commerce platform.