FMCG & eCommerce

The major problem of the FMCG Industry is the durability of their products. Most of the products have a great tendency to become spoiled in a short period. According to research, quick orders and swift delivery of these goods required complex logistics and balanced customer needs. The FMCG industry has chosen ecommerce as a solution to their difficulties.

What Are Fast-Moving Consumer Goods

Fast-moving consumer goods (FMCG) is listed among the most diversified and unique industries. It is estimated that the industry will be worth $10,621.2 billion in 2018 and by 2025, the market will be worth $15,361.8 billion. Market shifts, new customer demand, and price sensitivity affect wholesalers, distributors, retailers, and manufacturers.

However, the improvement in technology and competition make use of forces FMCGs to evaluate marketplace management technology and digital commerce to maintain their growth and sustainability.

Features of Online Sales of FMCG Goods

Fast-moving consumer goods (FMCG) is listed among the most diversified and unique industries. It is estimated that the industry will be worth $10,621.2 billion in 2018 and by 2025, the market will be worth $15,361.8 billion. Market shifts, new customer demand, and price sensitivity affect wholesalers, distributors, retailers, and manufacturers.

However, the improvement in technology and competition make use of forces FMCGs to evaluate marketplace management technology and digital commerce to maintain their growth and sustainability.

Diversification

The sale of CPGs/FMCGs helps widen the revenue of most retailers across a larger spectrum of products. Seasonal vsips in demand of other products or brands are most times managed by the high profits made from the sales of the CPGS/ FMCGs. This brand has various product choices the retailer can choose from, including beverages, household items, and even pharmaceuticals. Their choices are so wide that retailers that own not such large grocery stores and retail markets operate by selling these products.

FCMG statistics
Source: Nielsen's digital shopping fundamentals


Brand appeal

Brand appeals are the only reliance retailers have to drive sales when they offer CPGs/ FMCGs. It is mostly brands that advertise loudly that offer CPGS/ FMCGs. This means that the sighting of CPGS/ FMCGs on store shelves by most customers triggers an emotional reaction; since most of them are already emotionally attached to the brand, this reaction is not the same for all other brands or products the retailers sell. Customers seeing brands they are familiar with helps them trust the retailer more, and it can even lead to extra purchases. The retailer does not directly put any effort into making this happen.
Brand value of the leading FMCG in 2021
Fig. 1: Brand Value of the Leading FMCG brands worldwide in 2021, Statista


Cross merchandising opportunities

Customers visiting and purchasing numerous items on each of their visits help retailers to bloom.
CPGs/FMCGs give a chance at cross-merchandising, a situation in which two items from separate categories are close to one another in a business by a strategic arrangement. Electronic retailers selling a remote control with high-profit margins but have no relation to the CPG/ FMCG category is a very good example of this. The presence of a shelf of CPG/FMCG batteries next to those remotes will cause an increase in sales and higher profit on these two items, any customer that purchases the remote will like a battery for its smooth operation.

Cumulative profits

For a lot of retailers involved in the sales of CPGS/ FMCGs, their major gain is the cumulative profit they get.
These products have a pretty small profit margin, meaning that only a tiny percent of individual unit sales gives profit. One thing about the CPGS/ FMCGs is their ability to be sold out in very high quantities. These quick sales lead to a high amount of profits when they are added up and will sometimes form a huge portion of the retailer's final profit over some time. This profit will serve important functions in the business.

How COVID-19 Affects the FMCG Industry

FMCG companies faced some disruptions as a result of the pandemic. Many of their companies were forced to shut down, especially restaurants, and their customers had no choice but to prepare and consume their meals at home. Over 1,000 restaurants have closed down in New York City alone. Grocery stores, on the other hand, had a chance to expand via online shopping and delivery services. The pandemic forced FMCG companies to consider new partners and products like Unilever partnered with Oyo to create hygiene kits. All these, in addition to the change in customers' buying patterns, completely different rules and regulations, and the regular disruption in the supply chain, have been a pretty chaotic experience for FMCG. FMCG ecommerce has been of great help to managing FMCG's present chaotic state.

The pandemic has caused people to have no choice but to remain in their homes, and this will lead to the preparation of more meals at home, causing a major change in their usual buying patterns. Grocery sales have been observed in the UK to have increased by a margin of 75 percent. Digital buying is seen to be easier than buying in physical stores. ecommerce has provided the opportunity for FMCG to pivot directly to customer sales and even use headless architecture to assist their wholesalers with their eCommerce websites.

Changing consumption level: sales spiked due to the fear of what happened in the early days of the pandemic. However, prediction is being made by economics, which is a global GDP contraction of 5.2% in 2020. Over some time, the most recent recession developed over 18 months. There has been a massive and swift economic change, but there is still a shaken confidence in the mind of people because they're already anticipating a loss of income.

The difficulty in planning, production, pricing, and volatile commodity prices is due to constant disruptions in supply chains. The FMCG companies, lowa derecho of August 10 thus puts further stress on corn, soybeans, and many other related commodity supplies to more than 30% of the state's crops getting destroyed. There will be a hike in price, and this will lead to reduced production. Buyers should not be disappointed under any circumstances. eCommerce helps to make what is available known to customers before they order, reducing any disappointments.

Purchase patterns shifted in 2018, growing FMCG'S sales by about 20 percent. The online sales increased about seven-folds within a year, even faster than the overall FMCG. Online buying was the preferred move, creating a mission of converting offline brand loyalty into online buying. It has been observed that the majority of retail and business buyers prefer online shopping. eCommerce importance is more pronounced.

Any company running in the United States has the constant troubles of logistics and compliance; there are nothing less than 50 rules and guidelines to be followed. These are rules that guide everything from the driver's operations to the essentiality of the business. eCommerce combined with a 3PL integration takes stress off of these tasks.

Covid impact on FMCG
Fig. 2: Change in Consumer Packaged Goods Sales Due to the Coronavirus Pandemic Worldwide in September 2020, by Country, Statista

Key Benefits of eCommerce in the FMCG Industry

Low investment: high ROI

Most ecommerce platforms do not require extremely large capital to set up. Since most of the activities carried out like payments, billing, checkout, and other processes involved in the operation are automated, there's a need for only a few employees. Also, ecommerce merchants do not require a physical store or company, which rules out all real estate expenses.

Use consumer data to build a long-term relationship

In most physical stores, getting customers to put down their details might be quite challenging. Still, with ecommerce platforms, you will easily access your customer's information, including even their email address, names, and phone numbers. Email marketing is a very superbly efficient strategy in digital marketing, and it requires zero capital.

Cut out the middleman and maximize profits

When selling with ecommerce, it's always a direct sale to the customers, and there are no in-betweens. You can make three to four times the usual profit that would have been made with major retailers.

Keep your eye on consumer's buying habits

Keeping records of your customers is very important with FMCG sales; this can be made easier by making use of your ecommerce platforms to learn a lot about your customers, and it also helps to build marketing and digital campaigns and effective NPD.

Open 24/7

A 24/7 service round the year is expected of all ecommerce websites, which makes them 100 percent reliable for all customers.

Easier to encourage impulse buying

On ecommerce platforms, it's extremely easy for customers to find whatever they need. There's no need for endless searches down isles, and all the customer needs to do is click.

Provide abundant information

eCommerce allows businesses to display large amounts of information concerning each of their products and even explain your brand's purpose, something that would have been difficult to achieve if the product was put on display in a physical store. eCommerce can even display information in the form of videos or images.

Create a market for niche-products

Physically it can be quite a challenging task for customers to locate a particular brand, but with ecommerce online, all they would require to locate their preferred brand is a Google search.

Scalability

eCommerce brands have the opportunity to scale outside their countries of origin and be introduced into new markets without difficulty.

Overcome geographical limitations

eCommerce makes selling a fun experience by creating an opportunity to make sales anywhere in the world, preventing the limitation to your geographical area that comes with owning a physical store.
Key Benefits of eCommerce in the FMCG Industry

Features of B2B Ecommerce Platform for FMCG Companies

If you are a newbie at e-commerce or just planning to re-platform a legacy site, you would require some key features in a B2B e-commerce platform in order to fully serve FMCG industry customers.

Seamless and easy integration

Your seamless and easy integration requires support to make it function properly. Hence, it would be best if you carried out an effective operation so as to integrate with the ERP, WMS, PIM, CRM, Logistics, and other architecture components. This will enhance easy access for everyone to make informed decisions, create an easy flow of data and keep all systems synchronized. In addition, to get maximum flexibility in Integration, do your best to look for a solution with the ability to deploy in traditional or rather headless architecture. Lastly, do not forget to inquire about the APIs and any available plugins, in order to speed the time to market.

Multi-channel support

The fact that all indicators continue to point to strong demand for DTC sales implies that your e-commerce platform must support both B2B and B2C channels. In other words, each of these buyers must have a different customer experience. If you want your platform to be handled flawlessly, ensure that you don't settle for a B2B platform that is just a mere repurposed B2C solution. It would not come that easily, going by the way the FMCG industry does its business. Make a thorough search on platforms that support multiple business models.
Research carried out by "Personalization studies" shows that 86% of buyers are willing to pay more for a better customer experience. Moreover, it is an important way of providing an exceptional customer experience, and it pays off. According to Adweek, the rate of personalization can reduce acquisition costs by as much as 50%, raise revenue by 5 to 15% and also increase marketing spend efficiency by 10 to 30%. Make personalized delivery price lists, minimum quantities to each B2B customer, and product catalogs. Push B2C sales with strong impulse purchases and promotions. Select a platform that will allow you the liberty of leveraging data and making analytics to segment audiences, then deliver the right message at the right time.

Scalability

The e-commerce solution you selected today will put you on track as you prepare your business for the future, no matter what it may bring. The more your business grows, the more your platform scales with you. Also, be on the lookout for solutions that can deploy on-premise, whether in the cloud or web. Make sure that your platform is capable of handling an endless number of SKUs and customers.

What is a SKU?


Ecosystem and support

The kind of support available depends on the ecosystem around the platform. Generally, you locate open source solutions that offer greater security and are backed up by a larger developer user community. Moreover, due to the code being peer-reviewed, it becomes more reliable. Look into solution providers and partners because it is important to work with familiar partners with the platform.

Which B2B eCommerce Platform to Choose for Your FMCG Needs

Virto Commerce is an ideal solution for an FMCG company. It’s a cloud-based, headless, API-driven, and B2B-first ecommerce platform that has all essential B2B features out of the box.

Virto Commerce

FAQs

What is B2B in FMCG?

"B2B marketplace management systems" is a term that refers to multi-vendor B2B ecommerce platforms that build a bridge for countless sellers and innumerable consumers. The B2B marketplace is quite different from the B2B website, known for being a single seller. The platform is also known for its ability to help customers make the right choice for their purchases by comparing and contrasting products from suppliers.
A B2B supplier enjoys the benefit of reaching a large customer base, thereby increasing the chances of huge sales.

What is FMCG ecommerce?

Online transactions, otherwise known as ecommerce, have widely been adopted by B2B and B2C industries like automotive, electronics, and industrial supplies. Despite how effective this technology is, it still has not been affected by the (FCMG) fast-moving consumer goods before it carries a large portion of consumer spending in the US.
Food and beverage industry, consumer packaged goods need unique qualities and abilities which will pave the way for compound and complex supply chains in the industry. However, this has to deal with cooperation or affiliation with various systems pricing, complex catalog and promotions, and endorsement with selling channels, locations, and websites.

What is a B2B ecommerce platform?

B2B ecommerce means online transactions in which both involved parties are businesses. The software-based solution that facilitates such transactions is called a B2B eCommerce platform, responsible for presenting the company well and providing the required information to increase B2B sales.

Is ecommerce a B2B or B2C?

Business-to-Business, as it spells, is the selling of products or services to another business by a business. The B2B eCommerce entails the sale of raw materials or other forms of service online, which will, in turn, boost the effectiveness and efficiency of the company's sales.
However, the "Business-to-Consumer" which involves delivering products to the customers by the business. Purchasing a pack of cigarettes or buying clothes from a boutique are great examples of this. The B2C (Business to Customer) e-commerce, however, involves potential businesses delivering services or goods online to customers.

Why should FMCG and CPG brands try ecommerce?

An integrated order management system is an order management software that’s integrated with a business’s critical internal and third-party systems to ensure data consistency across channels.

What does entering data into an order management system mean?

Entering data into any business system should be reflected across all business and sales channels, including an order management system.

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Mary Gabrielyan
CMO