Driving growth in the toiletries and cosmetic industry with Open Commerce

A few years ago, the beauty industry (comprising toiletries, cosmetics, fragrances, and personal care) was the fastest growing FMCG sector and the primary diver of the overall FMCG growth. However, COVID changed everything. With more people staying at home and covering their faces with masks, one of the best-performing sectors found itself struggling. As a result, overall retail sales fell by 15 percent, and revenues dropped by up to 30 percent as brands were forced to deal with closed stores and reduced demand.

Fortunately, the beauty sector is resilient, and experts predict a return to growth in 2022 as sales continue to increase, especially in emerging markets like Latin America. However, the expected rapid growth will be driven majorly by e-commerce and other digitalization trends rather than a return to brick-and-mortar stores. For example, data from PayU, one of the largest payment processors, shows that online spending in Latin America’s beauty category grew by 133% in 2020. Other external analysis showed that the predicted online spend on cosmetics and other beauty products would reach $4.3billion by 2022, up from $3.8billion in 2020.

This article will show how brands in the beauty sector can unlock the hidden growth potential of digital commerce in emerging markets to increase sales and maintain market share.

The challenge for toiletries and cosmetics manufacturers in emerging markets

Across emerging markets, toiletries and cosmetics manufacturers face a major supply chain challenge. The retail market is fragmented, and the supply chain that ensures that products get to retailers’ shelves in time has become increasingly vulnerable to disruption. Rising prices due to supply chain issues also pose a problem, as emerging market consumers are price sensitive, and a slight price increase can shift consumers to a competitor.

Find out how digitalized distribution can help reduce the prices of goods.

The traditional route-to-market depends on manual processes that don’t give toiletries and cosmetics brands visibility or control over their supply chain. For example, sales teams don’t know who their distributors sell their products to, and the brand loses visibility and control of its products immediately after the delivery trucks leave the warehouse.

Without the ability to identify where the demand for their products is or what retail channels are the most effective, driving sales growth becomes significantly more challenging.

Sales teams now must depend on data generated by third parties, which can be costly and often not useful for decision-making in real-time.

The only alternative is to wait for sales reps and field agents to cover a few geolocations, as the retail market is too fragmented to cover. Unfortunately, gathering data through these physical visits is costly and inefficient as the data is often collected and entered manually, making it prone to errors and personal biases.

Learn how the traditional supply chain leads to slower sales growth.

Our conversation with smaller, local cosmetics and toiletries brands reveals that there’s often a problem of low-quality imitations sold by some retailers, which hurts the brand image.

Take the case of Linda, a consumer who walks into a small retail store and unfortunately purchases a low-quality imitation of a locally branded cosmetic product. Like many younger consumers, Linda will likely switch to a competitor if she believes the brand can no longer be trusted. But, more than that, she is more likely to talk about her experience with other consumers online and convince them to switch brands.

Beauty brands need a more efficient way to communicate with their distributors and engage merchants to drive sales. A digital solution that enables manufacturers to see where the demands for their products are and effectively control the distribution of their products will unlock the growth already predicted in the sector.

Learn how to increase brand loyalty and drive merchant engagement with Open Commerce

Open Commerce is the solution

Open Commerce is the solution to the challenges beauty brands face in emerging markets. This new digital way of trading unlocks the full value in the traditional supply chain by digitizing existing business relationships between brands and distributors and opening new retail channels across multiple geolocations.

RedCloud’s Open Commerce capabilities

RedCloud has built the world’s first Open Commerce platform that enables brands, distributors, and retailers to trade directly without any restrictions. Unlike other e-commerce solutions that attempt to hijack the supply chain from brands, our platform is decentralized and provides a level playing ground for everyone.

See how traditional e-commerce is hijacking control of the distribution chain from brands.

RedCloud also empowers beauty brands to build a new and efficient route-to-market by providing increased speed, flexibility, and visibility across the entire supply chain.

  • Speed: B2B customers, including your retailers and distributors, expect the same speedy delivery and personalized experiences from B2B brands as they do from smaller, digitally native B2C brands.

    However, the traditional distribution model often leaves retailers and distributors waiting for a long time, sometimes weeks, for sales reps to visit them and deliver orders. RedCloud allows you to manage orders more efficiently, meet your retailers’ demands and avoid costly out-of-stock situations.
  • Flexibility: How resilient is your supply chain, and how quickly can your brand bounce back from a supply chain disruption?

    RedCloud helps you build a flexible and resilient supply chain (which is essential to driving growth) by providing a platform that allows for direct connection with every channel partner simultaneously. You can directly engage and communicate with every distributor and retailer across multiple geolocations, which makes it easier to restructure your distribution strategy in the event of a supply chain disruption.
  • Visibility: Can you identify in real-time where the demand for your products is and pinpoint who is buying your products, right down to the minute?

    RedCloud enables you to do this and more by capturing valuable data at POS, syndicated across the entire supply chain. Our platform also has an integrated marketing-intelligence engine that analyzes the data captured and provides actionable insights that can be leveraged to drive growth by up to 25%.

Open Commerce helps toiletries and cosmetic brands in emerging markets drive growth

Open Commerce is what your beauty brand needs to capture the enormous growth opportunity in emerging markets. Schedule a demo today to see how RedCloud can help you increase sales and unlock consistent, month-on-month growth.