The FMCG industry has experienced significant disruption over the last decade, caused by the rapid adoption of digital technologies and e-commerce, as well as changing consumer preferences. This disruption, which is poised to continue has affected the ability of larger FMCG brands to generate profitable growth. Research shows that smaller, digitally-enabled brands have recorded the highest growth rate of 34 percent compared to larger, manual-first companies, which grew by only 0.4 percent within the same period. Other reports show that companies in certain sectors like apparel, that effectively leverage data analytics have doubled their EBITDA margins compared to their traditional peers.
It is, therefore, no surprise that FMCG leaders recognize the need to digitally transform their operating models to meet today’s and tomorrow’s needs as 60 percent of FMCG CEOs plan to digitally transform their organizations completely within the next few years. To successfully accomplish this and maximize the considerable advantages that digitalization offers, FMCG brands, especially those in emerging markets, must carefully choose the right technology solutions that guarantee success. Choosing a hard-to-use solution that lacks company-wide adoption can spell doom for any transformation plan, leading to huge losses and reduced efficiency even with the right strategy.
The FMCG industry has experienced significant disruption over the last decade, caused by the rapid adoption of digital technologies and e-commerce, as well as changing consumer preferences. This disruption, which is poised to continue has affected the ability of larger FMCG brands to generate profitable growth. Research shows that smaller, digitally-enabled brands have recorded the highest growth rate of 34 percent compared to larger, manual-first companies, which grew by only 0.4 percent within the same period. Other reports show that companies in certain sectors like apparel, that effectively leverage data analytics have doubled their EBITDA margins compared to their traditional peers.
It is, therefore, no surprise that FMCG leaders recognize the need to digitally transform their operating models to meet today’s and tomorrow’s needs as 60 percent of FMCG CEOs plan to digitally transform their organizations completely within the next few years. To successfully accomplish this and maximize the considerable advantages that digitalization offers, FMCG brands, especially those in emerging markets, must carefully choose the right technology solutions that guarantee success. Choosing a hard-to-use solution that lacks company-wide adoption can spell doom for any transformation plan, leading to huge losses and reduced efficiency even with the right strategy.
What FMCG brands need from their technology
FMCG brands in emerging markets face numerous challenges that their technology must solve to increase market penetration and drive sales growth. Some of the crucial competencies that brands must develop are:
- Increased visibility across the value chain: The retail industry across emerging markets is highly fragmented. Brands lack real-time visibility into who is buying their products through the traditional retail channels. Available data shows that up to 60 percent of all sales can be affected at the store level. By adopting a solution that provides access to this data in real-time, sales and marketing leaders can easily create data-driven growth strategies that increase sales.
- Real-time data analytics: The ability to analyze real-time data to generate actionable insights is invaluable for FMCG brands. Building this competency allows CPG companies to track the micro-consumption patterns in the market and predict shifts in demand before they happen. This enables brands to build resilient supply chains and ensure that even the smallest merchant in the most remote areas receives the right product assortment at the right time.
- Digital payments: Cash payments remain a huge problem across the FMCG industry, as FMCGs lose up to 20% of their annual revenue due to cash handling costs. With a digital payment solution that is widely accepted by sellers, retailers, and distributors, brands can reduce the resources lost on cash while gaining another layer of valuable insights into their customers.
- Direct merchant engagement: The lack of merchant engagement across the traditional retail industry leaves brands in the dark on how best to market to their customers and drive sales. A digital solution that provides FMCG marketers with direct access to distributors, retailers, and merchants all on the same platform is invaluable and can help increase revenue by up to 15%.
In addition to providing the above-listed competencies, FMCG brands need a digital solution that is:
- Easy to integrate with any existing technologies: FMCGs seldom use one digital solution. Therefore, every tech solution chosen must synchronize with all existing and future tech that the brand builds or acquires.
- Easily used by a wide array of people with different levels of technical sophistication: A solution is less useful and exponentially costly if it can only be operated or managed by an engineer or highly technical employee. Without the ease of use, the technology will not be adopted uniformly across the company and can lead to a failed digital transformation agenda.
To find and choose the right digital solution for their FMCG brands, CEOS, sales, marketing, and technology leaders must all work together to identify the best tech solution for their companies and the industry.
Selecting the right technology stack for FMCG brands
FMCGs often take a technology-first approach to digitalization by building major platforms without focusing on specific use cases that can provide the most value for the organization. Upon identifying digital opportunities and increased competition in their industry, many brands rush to invest in technology without building a holistic digitalization strategy. They mostly focus on the technology alone and address immediate, discrete use cases without considering mid-to-long term sustainability. It is no wonder then that over 70% of all digitalization initiatives by FMCG brands eventually fail, and only half of FMCG leaders say they have made moderate progress at meeting their digitalization and analytics objectives.
A recent global survey by McKinsey shows that the two largest challenges FMCG companies face with driving digital transformation are creating a holistic strategy to effectively develop data analytics capabilities and designing an effective technology infrastructure that effectively supports data-and-analytics activities at scale. The survey also found that 80% of all CPG companies make their IT departments responsible for data transformation, often without input from sales and marketing leaders. This results in brands adopting sophisticated, expensive technologies chosen by IT staff but unusable by sales and marketing teams.
Selecting a technology solution should be as much of a business decision as an IT decision. Brands must closely identify key business use cases and consult with sales, marketing, and operations leaders to identify value drivers across multiple teams and processes. Then, they must select from a wide array of available technology solutions while prioritizing efficiency, ease of use, and ease of integration.
Driving FMCG digitalization with open Commerce
An open commerce platform is the best technology solution for FMCG brands in emerging markets, as it satisfies the criteria mentioned above while providing the necessary competencies that will drive growth.
RedCloud’s open commerce platform is the world’s first decentralized trading platform powering a trade anywhere economy. With RedCloud, brands gain unprecedented visibility across their supply chain as our solution captures POS data in real-time from every merchant, distributor, and retailer across the market. This provides a clear picture of the market and enables brands to reach their customers faster and easier.
Our open commerce platform also allows retailers to order for stock when necessary, rather than relying on visits by sales representatives to take orders. By providing sellers and distributors with the ability to pull demand, brands can build resilient supply chains that can instantly respond to changes in demand, increasing sales by up to 30%. Our inbuilt market intelligence tool analyzes all the data collated and provides actionable insights displayed in easy-to-understand, customizable dashboards. With these insights, sales and marketing leaders can identify growth opportunities and devise data-driven campaigns to take advantage of those opportunities.
We have also built the world’s largest payment network with over 2 million pay-in points in over 100 countries. This digital payment network allows even the smallest merchant in remote areas to make digital payments for their FMCG products, while also generating a digital trading profile that can be used to provide access to much-needed credit and other financial services.
We have specifically built our open commerce platform to integrate seamlessly with any technology stack that your brand uses. This eliminates the need for huge installation or retraining costs, as the platform is intuitive and easy to use. Most field agents and marketing executives can use the platform and generate tangible results within record time.
Schedule a demo with us to see how our open commerce platform easily integrates with your current tech stack and can help grow your business.
