The CPG industry is at a digital-commerce tipping point after lagging behind other sectors for years, accelerated by the long-lasting effects of the pandemic and its lockdowns on consumer behavior. While the total share of FMCG goods sold online still hovers under 10%, it’s expected to more than double globally over the next few years. Digital Commerce is also expected to grow twice as fast in emerging markets as in developed markets, as smartphone and internet penetration continues to accelerate in developing economies.
Online FMCG growth potential exists in nearly all markets, and most major FMCG players, especially in emerging markets, recognize that digital commerce will play a key role in driving growth in the future. However, the current e-commerce model in the retail market doesn’t help brands, distributors, or retailers grow their businesses or solve the existing supply chain problems delaying growth.
This article examines how traditional, centralized e-commerce cuts off millions of buyers and sellers. It also introduces a new, open model of e-commerce that provides brands, distributors, and retailers across emerging markets with the tools they need to manage their supply chains and grow their businesses.
Are e-commerce marketplaces ruining the supply chain?
E-commerce holds a lot of promise for the consumer goods industry, as it enables brands and distributors to create faster, more seamless buying experiences for retailers and can even reduce the prices of goods by creating resilient supply chains. However, with e-commerce marketplaces accounting for 52% of all online retail sales and the top 100 marketplaces accounting for over 95% of those sales, it’s become harder for brands and distributors to reap the benefits of digital commerce.
Large e-commerce platforms like Amazon, AliExpress, Mercado Libre, and many others are hijacking the supply chain and eliminating distributors by selling directly to consumers. Manufacturers aren’t safe either, as brands who use these platforms as sales channels also lose control of their entire supply chain. The current e-commerce model is centralized and restricts manufacturers and distributors from accessing valuable data on who’s buying their products or where the demand for their products is across multiple geolocations. Instead, the e-commerce marketplace often controls this data and uses it solely for its own benefit.
Recent reports claim that one e-commerce giant in India used proprietary data of other brands on its own marketplace to replicate best-selling products under private label owned exclusively by the marketplace. The private label products were then rigged to appear at the top search results on the marketplace, effectively destroying the rival brands on the platform.
E-commerce marketplaces also charge high commission fees on each sale, up to 20% in some cases, in addition to other marketing costs. However, there’s often no visibility over the impact of this marketing, and brands cannot access any insights that can be leveraged to grow their business or better manage their supply chains.
This monopoly power exerted by centralized e-commerce marketplaces shows that the traditional e-commerce model is broken. Many brands and retailers are stuck and completely dependent on the marketplace, just an algorithm change away from seeing all their online sales evaporate. So, it’s not surprising that brands and retailers rank the dominance of large e-commerce marketplaces as the top concern in their efforts to drive business growth with digital commerce.
How FMCG brands and distributors can protect their supply chain with Open Commerce
With traditional e-commerce, brands in emerging markets are faced with a dilemma. They can upload their SKUs to a third-party marketplace and reach an increasing number of consumers who want to buy online. However, they’ll have little or no visibility over their digital sales and inevitably lose control over their sales growth to the platform. In addition, the brand would still depend on the inefficient, traditional supply chain to reach the vast maturity of their current market – a true lose-lose situation.
FMCG brands and distributors need an e-commerce solution that unlocks the full value of the traditional supply chain and makes distribution more efficient without alienating current channel partners.
This solution is Open Commerce.
Go digital and protect your supply chain with Open Commerce
RedCloud has built the world’s first Open Commerce platform, where brands, distributors, and retailers can directly connect and trade together on a digital platform without unnecessary restrictions. Unlike traditional e-commerce marketplaces, Open Commerce is decentralized and is focused on digitalizing your current supply chain rather than hijacking it.
With Open Commerce, brands can now sell to both new and existing distributors and retailers while also reaping the full benefits of digital commerce. FMCG manufacturers and distributors will gain granular visibility syndicated across the entire supply chain in real-time, as every distributor and retailer across the fragmented retail market is transformed into a data point. This will enable sales and marketing teams to identify precisely where the demands for their products are across multiple geolocations and leverage the data to create data-driven go-to-market strategies.
Open Commerce also solves the digital payment challenge that e-commerce marketplaces have been unable to solve for decades. RedCloud has built the world’s largest payment network with over 2 million pay-in points across 100 countries. Any retailer, even in the most remote locations, can instantly digitize their cash, even without a bank account, and use that cash to pay for their FMCG products anytime.
Retailers also have nothing to fear and everything to gain from Open Commerce, as they can manage their stores from their mobile phones. Using the Red101 Market app, retailers can directly access any brand or distributor, place orders for their stock at the best possible prices and make online payments. In addition, top-performing retailers can access loans, supply-chain financing, and other credit facilities from brands, distributors, and other financial services providers, which would help them grow their businesses.
Schedule a demo today to see how RedCloud is helping thousands of FMCG brands, distributors, and retailers unlock the full potential of digital commerce .