By 2025, for the first time in world history, the number of people in the consumer class will exceed the number of those still struggling to meet their basic needs. Over 1 billion new consumers will be created in emerging markets over the next few years, representing a huge growth opportunity for consumer goods manufacturers.
However, capitalizing on this attractive growth opportunity can be challenging, especially for more prominent FMCG brands, due to the fundamental difference in how emerging and mature markets operate. CEOs of large multinational consumer brands acknowledge that despite their greater size, and larger capital bases, they often struggle to hold their own in emerging markets. Available data shows that smaller brands captured 45% of growth, and the private label grew by 30%. This contrasts with larger brands, which have only generated 25% of growth over the same period.
In this article, we examine the peculiarities of selling and distributing consumer products across markets and provide a playbook on how FMCG brands of any size can leverage data to unlock new sales opportunities and drive growth.
The traditional trading model in emerging markets is costing you sales opportunities
Most emerging markets still follow a traditional trading model, where brands depend on channel partners to deliver last-mile delivery to small retail outlets and roadside shops scattered around rural and urban areas. This value chain, which has remained unchanged for decades, prevents brands from fully penetrating the market and capturing public demand.
One striking feature of the retail landscape in emerging markets is the fragmented distribution network comprising various channel partners. These channel partners often include large and small distributors, wholesalers, dealers, stockists, and smaller retailers, who are the eyes and ears of the manufacturers. As a result, they help brands achieve much-needed market visibility across multiple geolocations and understand the rapidly changing demand patterns in the market.
However, the traditional market structure doesn’t provide enough visibility across the market to enable brands to make strategic data-driven decisions in real time. The fragmented nature of the distribution network means that once a product leaves the manufacturer’s warehouse, the brand loses almost all visibility on that product as it moves from one channel partner to the other.
To win in emerging markets, it’s imperative that FMCG brands build dynamic supply chains where individual channel partners, both large and small, work together to provide valuable data across the value chain and implement corporate data-driven strategies on the ground.
Data-driven collaboration with distributors and retailers to drive sales growth
Most FMCG brands already recognize the need to capture data across their supply chain, with 86% of B2B companies believing that they can do much better with data. They want to know what’s happening in the distributors’ vans and the retailer’s shelves because that data can help reduce distribution costs, create dynamic pricing opportunities, and unlock granular pockets of unmet demand.
Unfortunately, many of the existing channel partners who make up the nerve center of the distribution network still rely on manually jotted down sales notes to make critical inventory decisions. A surprisingly large number of distributors don’t even have an email address to send or receive invoices.
Therefore, FMCG brands need a strategy that changes the mindset of distributors on data-driven collaboration and an easy-to-use digital solution that has apparent incentives for the distributor. Accomplishing this will require sales and marketing teams to go a step beyond simply creating an app and throwing it at distributors. Instead, they must devise a development plan that leverages existing technology and lays the foundation to hand-hold small distributors and train them to build simple workflows based on easy-to-use digital solutions.
However, the million-dollar question is, what digital solution is available?
Open Commerce is the best data-analytics solution for FMCG brands in emerging markets
For years, many FMCG brands have tried to digitize their distribution networks with little success. Market data shows that, on average, 70% of all digital transformation initiatives by FMCG companies eventually fail to deliver the promised results – and it gets worse.
The rise of e-commerce marketplaces adds another layer of complexity to driving digital transformation, leaving brands with an important question.
Should FMCGs sell their products on e-commerce marketplaces? They can, but they risk losing total control of their supply chains, as most e-commerce companies own their fulfillment networks and often don’t share market data with the brands who sell on their platform.
On the other hand, building a digital solution in-house hasn’t been met with much success, as distributor and retailer adoption rates remain critically low.
The solution is Open Commerce.
Open Commerce is a new, digital way of trading that unlocks the full value of the traditional distribution chain. Unlike traditional e-commerce, Open Commerce allows brands to directly engage their distributors and sell to them digitally, so they retain control of their supply chain and can even build dynamic, resilient distribution networks at the touch of a button.
But it doesn’t end there.
Accelerate sales growth in emerging markets with RedCloud’s Open Commerce platform
RedCloud has built the world’s first Intelligent Open Commerce platform™, Red101®. It’s a new way of trading that connects brands, distributors, and other channel partners on the same platform, making collaboration possible. With Red101, distributors can buy products directly from brands on the B2B marketplace and sell to retailers on the same platform, providing end-to-end visibility across the entire supply chain.
RedCloud’s AI-powered Intelligent Open Commerce Platform™ allows brands to see consumption patterns in real-time across the market. We also have an inbuilt marketing intelligence system that uses AI to analyse the data generated and provide actionable insights that can be leveraged to identify growth opportunities in the market and capitalize on them.
Red101® has also solved the distributor adoption problem by providing distributors with valuable incentives that will compel them to switch to digital commerce. We also enable them to sell to more retailers across multiple geolocations, which leads to consistent growth. Finally, RedCloud has solved the cash payment problem, making it possible for retailers and other small shop owners to pay for their products online, even if they don’t have a bank account.
To learn more about how RedCloud has helped numerous brands unlock growth opportunities across emerging markets, schedule a demo with us today, and let’s unlock outsized growth for your brand.