Navigating B2B FMCG eCommerce: Main Challenges & Emerging Trends for Companies to Consider
The FMCG industry has grown substantially since COVID-19, with ecommerce becoming the fastest-growing channel in this packaged goods segment. As a result, manufacturers and producers increasingly integrate digital commerce platforms to streamline procurement, optimize supply chains, improve inventory control, and boost operational efficiency.
In this article, we’ll explore major FMCG market players, including success stories from Lavazza by Bluespresso, HEINEKEN, and De Klok Dranken in collaboration with Virto Commerce, and the growing importance of ecommerce platforms in the FMCG B2B segment. We’ll also look at the industry trends that shape the landscape of FMCG today.
Contents
FMCG vs. CPG: What’s the Difference?
FMCG means fast-moving consumer goods, and they are a part of a larger industry of consumer packaged goods (CPG). To put it simply, when a consumer packaged product is used and purchased quickly and frequently (e.g., food and beverages, single-use or disposable items), it falls under the category of FMCG. In fact, food, beverages, and dairy account for over 70% of FMCG value.
Within the broader CPG spectrum, there are also consumer products that have a longer shelf life and relatively slower sales (e.g., cosmetics, cleaning supplies, office supplies). They are likewise included in the FMCG segment. Now, let’s look closer at the peculiarities of the FMCG segment of consumer goods.
The main features of FMCG
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From the buyer’s perspective
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From the seller’s perspective
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|---|---|
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✔ High purchase frequency
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✔ High turnover
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✔ Instant or quick consumption
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✔ Short shelf life of days or weeks
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✔ Relatively low prices per unit
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✔ Relatively low-profit margin per unit
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As we see, FMCG are perishable products that consumers most likely use daily, and these goods sell at a fast pace, at a low cost, and are in high demand. These characteristics pose very specific challenges for businesses in the sector, like distributors, dealers, wholesalers or retailers. You can read more about the distinction among those terms in our blog.
In a nutshell, working with perishable products means that businesses must provide not only the utmost quality of their product but also the fastest delivery to a wide range of customers and businesses alike. Simultaneously, FMCG companies must operate in a highly competitive consumer goods market where every penny (and every minute) counts.
As the relationships between FMCG market stakeholders get more complex and intertwined, the FMCG B2B sector is becoming progressively more dependent on its B2C counterpart. The latter sets the trends and standards for the entire industry of consumer goods. That being said, it’s important to consider the differences between these two business models to better understand the FMCG market.
B2C vs. B2B FMCG Commerce
FMCG companies can have B2C (Business-to-Consumer), B2B (Business-to-Business) business models, or even both at the same time. Traditionally, a B2C business model implies that a company, not necessarily a manufacturer of goods, sells their products to end users. Some manufacturers choose to implement a D2C (Direct-to-Consumer) business model and sell their products directly to end consumers, bypassing retailers. A traditional B2B business model, in turn, implies that a company sells its products to dealers, distributors, retailers, or other intermediaries.
In modern commerce, the boundaries between business models become vaguer, especially in the face of growing digitalization and ecommerce growth. In the digital age, where the line between online and offline is blurred, and everyone can become a potential customer, FMCG ecommerce companies strive to cover different niches and cater to both individuals and businesses.
Moreover, such industry features as quick orders and swift delivery of goods require centralized management of complex logistics and customer relations. Ecommerce for FMCG is a logical answer to these challenges.
FMCG in eCommerce: Post-Covid Market Growth
It’s no surprise that the COVID-19 pandemic acted as a catalyst for innovation and digitalization in many industries, including consumer packaged goods. In 2021, global online grocery and FMCG ecommerce sales grew by more than 15%. The rise of easily accessible and convenient ecommerce FMCG B2B marketplaces like Amazon Business, Walmart Business, and Alibaba significantly affected this online trend.
Moreover, in the past few years, ecommerce in FMCG has become the fastest-growing channel for ever-so-fast-moving consumer goods. It’s predicted that the online share of the global FMCG market will reach 10% by 2025. The B2B FMCG ecommerce market, in turn, was valued at above $520 billion in 2021 and is projected to reach $1.22 trillion by 2031. Now, let’s look at the most prominent examples of FMCG B2B companies that drive the industry forward.
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Top 5 Largest FMCG B2B Companies by Market Capitalization
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Rank
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Name
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Market Cap*
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HQ
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Specialization
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|---|---|---|---|---|
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1
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LVMH Moët Hennessy
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$451B
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France
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Luxury goods & beverages
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2
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Procter & Gamble
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$382B
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USA
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Household products
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3
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Kweichow Moutai
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$296B
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China
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Beverages
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4
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Nestle
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$284B
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Switzerland
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Food products
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5
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The Coca-Cola Company
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$264B
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USA
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Beverages
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*As of March 2024 (Global Data)
It’s important to note that some FMCG ranks exclude LVMH Moët Hennessy’s beverage business division from the top in the niche. As this article focuses on the fast-moving consumer goods industry, including cosmetics and alcoholic beverages, we intentionally kept this market giant on the list as an example of an FMCG B2B company.
The top 10 FMCG B2B companies by market capitalization also include such brands as L’Oréal, PepsiCo, Philip Morris International, Unilever, and AB InBev. These major B2B FMCG companies have a few things in common, including their growing investments in digital capabilities and ecommerce to optimize the customer experience in B2C and B2B relationships.
Higher ecommerce user penetration also means companies of all sizes face unique obstacles on the path to scaling their business operations. Let’s look at the three key challenges brands need to overcome to succeed in this dynamic space and real-life success cases from industry leaders.
Key Challenges Every FMCG Company Should Know When Scaling Its B2B eCommerce
The Virto Commerce team has been working with the leading FMCG market players and assisting their smooth B2B ecommerce journey for decades. Based on our expertise in creating tailored FMCG ecommerce solutions, we know that this industry has unique challenges that many companies struggle with and few can predict.
Don’t worry, we've compiled success stories for each challenge described below, so you can take notes for your business.
Challenge #1: Combining B2C and B2B activities
When growing an FMCG ecommerce business, many companies ask themselves: How can we provide a better shopping experience to both B2C and B2B customers? Having separate solutions for B2C and B2B clients may result in operational inefficiencies, fragmented customer data, and increased costs. Thus, businesses need a unified solution when scaling their operations.
A unified ecommerce platform tailored for FMCG brands fits any business model and can simplify real-time inventory and complex logistics management, providing superior customer experience.
Lavazza by Bluespresso: a unified B2B & B2C ecommerce solution
One of the unique challenges faced by the coffee distributor Lavazza by Bluespresso came down to having an extensive, complex catalog with more than 4,000 items and an individual price list for each of their 2,500 B2B clients. The company’s current solution couldn’t support variable pricing per channel, which added complications for the sales and account management teams. Moreover, besides serving B2B clients, the company wanted to extend its offering to the B2C segment.
The coffee distributor wanted to launch a new ecommerce platform that would accommodate the growing customer requirements and improve user experience. Implementing a new solution was a particular challenge for Lavazza by Bluespresso, as it had to be linked and integrated with other components in the company’s ecosystem. Additionally, it had to be more scalable and flexible than the current solution.
Together with Virto Commerce, a thought became a reality.
Challenge #2: Creating effective centralized management
Managing B2B procurement, offline and online multi-vendor activities, and maintaining & growing customer relationships in the digital space while simultaneously entering new untapped markets is exhausting. The right technology is crucial.
Integrating ecommerce software tools with the rest of your internal systems and best-of-breed third-party applications guarantees you’ll be able to keep your inventories in check and data synchronized across all systems.
HEINEKEN's multinational centralized management solution
HEINEKEN is one of the world’s most international brewers, actively present in over 190 countries, including the APAC region. In this region, fragmented trade has the largest share of retail in the grocery market. One of the biggest challenges for a global FMCG giant like HEINEKEN was to find an effective and scalable ecommerce solution to, first, digitize routes to customers and, second, get all-around customer insights to build a superior CX for fragmented retail (e.g., small grocers) in the APAC region.
When choosing an ideal platform for solving this complex business case in the context of rapid regional expansion, HEINEKEN opted for the Virto Commerce eB2B management solution: portals and applications through which distributors can sell HEINEKEN products to small retailers and restaurants. This way, HEINEKEN gets a complete picture of non-chain retail in the region with a fully automated platform that provides real-time customer insights and grants access to account information previously available only to distributors.
Launched first in APAC in 2018, the Virto B2B Solution is now a core part of HEINEKEN FMCG ecommerce in more than 20 countries.
Challenge #3: eCommerce replatforming
Operational changes can be painful and costly in any business. Companies would prefer not to pay twice for what ideally has to be a one-time decision. However, more often than not, FMCG companies find themselves in need of replatforming when an existing solution no longer meets the company’s expectations due to technical limitations and high development costs.
When replatforming, companies must prioritize solutions that are future-proof, flexible, and scalable for innovation in the long run. Simply speaking, it’s best if the new FMCG platform is open-source and modular in nature, as this allows your team to modify and enhance the platform as needed and add new components to it. This adaptability secures long-term flexibility and control and ensures your platform can continuously evolve in a competitive environment.
De Klok Dranken replatforming journey
De Klok Dranken, a leading Dutch FMCG company, was searching for a replatforming ecommerce solution to move from the legacy system while retaining a few existing capabilities that the company thought worked well. Considering a relatively low profit margin for fast-moving consumer products, the company wanted to establish an online self-service portal for customers on a unified platform to streamline the ordering, accounting, and checkout processes. Simultaneously, the goal was to increase the digital adoption rate of such a portal among its customers.
Respecting the brand’s commitment to excellent user experience, Virto Commerce accommodated extensive functionality to meet future market demands and reached an 80%+ adoption rate for the platform.
Emerging eCommerce FMCG Trends & Strategies
#1 Omnichannel all the time
The most prominent trend in FMCG in 2024 is brands actively implementing an omnichannel strategy. Omnichannel in FMCG means providing a consistent and smooth shopping experience across all channels and touchpoints with clients, including an FMCG website, mobile app, offline store, etc. As a result, this strategy, like many others, aims to improve customer experience and satisfaction.
#2 Sustainable growth
From the modern customer’s point of view, the product packaging and ingredients & nutrition labeling are as important as the product itself. From production to packaging and distribution, customers nowadays want full transparency from brands they can trust.
Sustainability reports are becoming a must-have public annual go-to communication with customers to demonstrate how your FMCG business tracks and reports on sustainability progress. Generation Z consumers are especially prone to be loyal to brands that prioritize sustainable growth.
#3 Flexibility and convenience
Flexibility here means implementing a wide range of ecommerce features to maximize convenience for your B2C and B2B customers alike, including but not limited to innovative payment and checkout methods (e.g., BNPL, ACH payments), personalized subscription plans, and convenient delivery options.
The post-Covid online buyers’ expectations regarding ecommerce are high, so don't hesitate to raise the bar for what you offer as an FMCG enterprise.
#4 Balance between globalization & localization
A local context for business practices matters in FMCG ecommerce as much as in other industries. Moreover, every country has its own regulations regarding the manufacturing of food and beverages and personal care products and labeling compliance. For instance, in the US, companies must comply with the FDA’s Nutrition Facts Label. In the EU, they need to follow European Regulation 1169/2011 on the provision of food information to consumers.
Local seasonality also matters: higher demand during December shopping sprees in the Western world and pre-Chinese New Year preparations in January in the East are a great example of that.
Maintaining brand identity while accommodating regional business and legal expectations and unique local cultural influences is vital for the long-term success of your business.
#5 Everything is a marketplace
Believe it or not, many retail websites are marketplaces in nature, and many large FMCG B2C marketplaces have an FMCG B2B marketplace under the hood.
The aforementioned Amazon, Walmart, and Alibaba operate as B2C and FMCG B2B marketplaces where multiple sellers can list and sell their products. This model is getting increasingly popular as it allows for a broader range of consumer packaged goods and competitive pricing. This merger appears to be the future of FMCG ecommerce.
To sum up, these top five trends can be your guiding light in the world of B2B FMCG ecommerce. That being said, if you’re particularly interested in the F&B segment, you can learn more about hot food and beverage ecommerce trends in our blog.
Conclusion
The number of ways to interact with B2C and B2B customers grows in diversity and complexity, and FMCG businesses strive for consistency and efficiency across all channels. While understanding that ecommerce provides fantastic growth opportunities for companies, it’s also important to consider the unique challenges it brings to the table. However, with the right FMCG ecommerce platform that meets your business needs, the path to digital excellence becomes easier. To make your task easier, we’ve compiled a comprehensive guide on selecting the most suitable FMCG B2B ecommerce platform for your business.
If you’re searching for future-proof, extensive B2B functionality and modularity, Virto Commerce can become your trusted partner in creating seamless customer experiences and an ecommerce platform that truly scales. Schedule your free consultation to learn more.
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