Imagine a billion-dollar organization that manufactures thousands of products with a 100% manual, paper-based management system. Does this sound strange? Unfortunately, this is all too common in the consumer goods industry, especially in emerging markets, where manufacturers still depend on physical visits to retailers and van sales across a vastly fragmented retail market to deliver essential consumer goods.
This model is severely outdated, grossly inefficient, expensive, and stifles growth for FMCG brands. As supply chain disruptions continue to occur with alarming regularity and place considerable strain on the already inefficient traditional chain, the need for consumer goods manufacturers in emerging markets to digitally transform their organizations is clear, but the “how” is not. Data shows that out of 10 global consumer goods companies that have launched large-scale digital transformations since 2015, only 30% have hit their growth and cost-efficiency targets.
To successfully drive digital transformation and reap the numerous benefits it offers, consumer-goods companies must embrace a new breed of transformation that builds a sustainable competitive advantage. They will also need to rethink their entire distribution models, where to play, and how to win with digital while building new capabilities for the future (such as end-to-end supply chain visibility, data-driven marketing, digital route-to-markets, and next-generation inventory management).
Why FMCG brands need digital transformation now
CEOs of large CPG companies have lots of reasons to worry. The traditional advantages incumbents have held for decades – scale, marketing reach, and long-standing relationships with retailers are far less relevant today. Retail customers now expect more personalized experiences, and smaller, digitally native brands with direct-to-consumer distribution models can hit the ground running and seize market share within months.
E-commerce marketplaces and last-mile delivery startups are already monetizing new competitive advantages with customer and transaction data in ways that large FMCG manufacturers cannot compete. In addition, supply chain disruptions, rapidly shifting demand patterns, and rising input costs have added more economic uncertainty to the industry, adding another layer of complexity to the difficult digital transformation task.
Digital transformation can become a game-changer for larger FMCG brands and enable them to compete aggressively and unlock new pockets of growth. Available reports show that digital transformation can build a 50% faster route-to-market at a third of the cost and double the return on investment.
From chaos to insights – the FMCG transformation journey
FMCG brands already recognize that maintaining the existing manual business model will leave their companies sitting ducks but have found it increasingly difficult to identify the best path forward to drive digital transformation. For example, on average, CPG companies have reported an 8% increase in digital technology budgets over the last three years, but only 25% have successfully executed a digital transformation (well below the 35% cross-industry average), and only 20% have created little long-term change.
Most FMCG brands today are still lagging in the stages of “passively digital” or “exploring digital” and are unable to cross to the “doing digital” stage because they lack a cohesive data capturing and analytics strategy, a critical component to supporting digital transformation. Any captured data is often scattered in spreadsheets, field agent reports, and even mobile phone pictures. Without access to real-time data syndicated across the value chain, no meaningful insights can be generated, and the company cannot respond in time to rapidly changing market demands or maximize growth opportunities.
In our work with FMCG brands in emerging markets to drive digital transformation across the entire business, especially in the sales, marketing, and supply chain function, we have identified four major steps that these companies must take to move from chaos to insights:
- Develop a comprehensive data strategy that makes capturing data across the entire value chain mandatory.
- Invest in data transformation tools that aggregate, digitize, analyze, and derive insights from unstructured data to support business use cases.
- Move the traditionally manually captured data to a single source of truth, where it can be made accessible and searchable for all stakeholders in the value chain.
- Use advanced analytics tools to derive insights that unlock cost reduction, increase profitability, and accelerate product delivery.
By taking these steps, CPG companies will:
- Achieve real-time end-to-end visibility across the entire supply chain
- Accelerate the time to market
- Maximize trade promotion spend with data-driven campaigns
- Identify localized growth opportunities among multiple customer segments.
The most critical question that FMCG leaders in emerging markets must now answer is this – what digital solution should we invest in that will provide the capabilities we need to drive true transformation?
The answer is Open Commerce.
Digitally transform your FMCG brand with Open Commerce
Open Commerce is the only digital solution that provides everything FMCG brands in emerging markets need to drive digital transformation. Open Commerce is a new way of doing business that connects the entire FMCG supply chain on a single digital platform, making it possible for FMCG brands to sell to both new and existing retail customers online.
In addition to enabling online e-commerce sales, consumer goods companies and distributors who leverage Open Commerce can now access valuable, real-time customer and transaction data synced across every single point of sale. This means that for the first time, a manufacturer in an emerging market like Nigeria or Brazil can see who is buying their products in any geolocation, even the most remote ones, and create specific, targeted campaigns that will increase sales and drive growth.
RedCloud has built the world’s first Open Commerce platform, Red101 Market, a complete end-to-end digital solution that is easy to implement, cost-effective, and, most importantly, captures the data that legacy FMCG brands desperately need to stay competitive. Unlike other e-commerce solutions, CPG companies do not need to abandon their existing distribution network. Rather, Open Commerce gives you more control of and visibility across your supply chain, so you can build the much-needed data-analytics capabilities and rapidly scale across the entire organization in a matter of weeks, not years.
The future of Commerce is Open, and RedCloud is the pioneer of that future. Schedule a demo with us today to see how we can help you drive rapid digital transformation and unlock new levels of growth.