The fast-moving consumer goods market (FMCG) – in which products are sold quickly at low cost on a mass scale – is growing at a staggering rate. FMCG spend has increased 33% in the last decade, with double-digit growth during 2021 and no signs of slowing down. In fact, by 2025, the global FMCG market is predicted to reach a value of $220 billion.
Price fluctuations, market volatility, rising competition and changing customer expectations, among other factors, are affecting consumer goods companies, and those with a future focus are acting fast. Investment in digitisation – particularly online Marketplaces – will help companies survive and thrive in an era of unprecedented growth. Indeed, global online share of FMCG is projected to reach 9.2% by 2025 (in 2012 it was only 1.3%).
So, exactly how can FMCG companies secure sustainable growth while connecting with consumers on a deeper level? In this article we’ll explore how technology will play a pivotal role in the future of consumer goods manufacturers, distributors, wholesalers and retailers, providing an infrastructure that enables agility, efficiency and a far more sustainable business model.
FMCG B2B marketplace simplification
In today’s fast-paced technology-driven world, simplicity is key. B2B decision makers want an easy user experience when buying and selling goods. And with digitisation increasingly focused on providing intuitive, fluid user experiences, ecommerce is gaining more sway – a McKinsey study found that 80% of B2B buyers and sellers prefer digital self-service to in-person transactions.
FMCG Ecommerce: online store or Marketplace?
For modern food producers, selling food products online has become essential. Not only does it plug products into the increasingly influential online space, but it also addresses the historic unfair balance of power in the FMCG industry – a balance that is only now shifting away from the retailer toward the brand.
Still, creating your own online store from which to sell your products is a tricky proposition. Generating customer traction and building a large audience in a crowded market is extremely difficult – according to Forbes, 90% of ecommerce businesses fail within the first four months of operation.
So, while online stores often struggle, companies that sell their products through an online Marketplace can:
- Boost brand recognition
- Increase customer engagement
- Expose their products to a far larger audience
- Develop a richer, more personalised customer experience, with higher acquisition and conversion rates, as well as brand retention
While food industries are jumping onto the ecommerce train on a global scale, some regions are seeing quicker growth than others. In Latin America, for example, FMCG ecommerce growth is reaching unprecedented levels. The fact that Latin America registers 20% more millennials than any other region in the world may point toward this ecommerce boom. Still, many large South American FMCG companies are taking new approaches to gain larger market shares and attract new customers.
One particular South American FMCG company has reaped the rewards of FMCG ecommerce growth by partnering with digital transformation platform Shopery, to build its own Marketplace and enable digitised sales to the HORECA channel. In doing so, it has:
- Switched to become a more service-oriented and less transaction-oriented company
- Increased sales with third-party products without the burden of inventory, logistics, service costs or overheads
- Generated sales commissions
- Become a leading company in the digital food sales market
Less fragmentation, improved margins, more control
High fragmentation in the value chain and a distribution chain with several intermediaries has reduced margins for producers – another reason why online Marketplaces make sense. Still, while the likes of Amazon, Alibaba and other global Marketplaces reduce intermediaries and, therefore, fragmentation, they don’t improve margins.
A digital transformation platform for B2B sales does increase margins, through the digitalisation of sales and administration processes. Meanwhile, it affords producers the option of shortening the distribution chain, giving them better overall control over pricing and product management.
Beyond margins, global Marketplaces also stifle agility, content management and customer relationship management, failing to put control in the hands of the vendors. On the other hand, producer-led Marketplaces contribute to a network effect – with higher traffic, better price control, better customer behavioural know-how and many other benefits (more on the network effect later).
Innovation through the metaverse and blockchain
The new frontier or flash in the pan? Both the metaverse and NFTs seem to be the former, with big players getting in early with investments. Microsoft has put down $69bn on their own metaverse, while Facebook spent $10bn and even changed its name to get in line with what’s being hailed as the next big thing in tech.
Meanwhile, decentralised blockchain technology enables users to exchange NFTs or ‘non-fungible tokens’, as well as cryptocurrencies, which look set to be part of the metaverse’s long-term unique economic system.
So, how does all this affect the FMCG industry? As highlighted at the Hospitality 4.0 Congress 2022 in Madrid, the idea of creating a metaverse Marketplace for HORECA, where apps are no longer the only virtual channel, is now a reality. Through this next-level Marketplace, customers would be able to virtually sample products, taking the customer experience into a new dimension, while loyalty programs would dramatically increase customer retention.
As the metaverse blockchain and NFTs continue to evolve, expect these emerging technologies to play a key part in the future of the FMCG sector.
Less fieldwork, more efficiency
Digitised FMCG sales process and the network effect
For many traditional food producers, long-standing customer attainment strategies are no longer working. With the FMCG market shift, outdated methods like door-to-door sales are proving too costly and inefficient. Many are waking up to the benefits of digitising the sales process, enabling them to redirect a significant portion of their workforce towards acquiring new customers.
One example of such digitisation is Shopery’s B2C direct-to-table FMCG Marketplace. Product management is decentralised and self-moderated, while advanced logistics management helps to facilitate recurring orders through product recommendations. In addition, with a variety of food producers selling their products within the same Marketplace, a network effect is created, meaning increased sales across the board.
For FMCG industrials selling food products online, there’s a lot to think about. From the operational side of the business – inventory management, site management and customer service – to marketing, sales, social media and content – a seemingly endless amount of time and money is invested in multiple areas of the business. And it doesn’t always feel like time and money well spent.
When selling food products online through an FMCG B2B Marketplace, food producers can concentrate on launching and developing a captivating Marketplace business. With state-of-the-art SaaS Marketplace platforms like Shopery, the hosting infrastructure is provided as standard.
That includes the back-office framework and the front-end storefront, as well as technical support on hand to problem-shoot at a moment’s notice. This enables Marketplace owners to leave the day-to-day operational side to the vendors, while focusing on promoting their Marketplace brand, driving traffic to the platform and adding user value by optimising the Marketplace to meet the needs of vendors and their customers.
The importance of customer behaviour intelligence
Customers expect you to know their expectations
Understanding the needs of customers is the cornerstone to any successful business. A recent Salesforce survey found that 66% of customers expect companies to understand their needs, while customer-centric companies outperform those that aren’t customer-centric by nearly 80%.
Meanwhile, a recent Mckinsey study found that personalisation is more important than ever. The study found that 71% of consumers expect personalised interactions and recommendations, while 67% get frustrated when it doesn’t happen.
And, of course, the key to providing personalised experiences in FMCG ecommerce is to get a deeper insight into user expectations.
Deeper insight is a delight in the digital era
With the shift towards a digitised market, the FMCG sector faces increasingly complex challenges when it comes to gaining insights into the behaviour and expectations of their customer base; a customer base that is more and more interested in making digital purchases 24hx7d and exploring new products in their own time – especially if there’s a large catalogue offering a variety of brands and products.
An online Marketplace gives FMCG producers deeper end-consumer insights, with access to real-time market changes and in-depth information about the habits of their customers. This enables them to:
- Anticipate user needs and detect trends, at a time of frequent market fluctuations
- Provide an enriching, personalised customer experience
- Further increases customer acquisition, conversion, and retention for the brand
The golden age of the FMCG industry
We’re entering a golden age for the FMCG market. But for FMCG producers to thrive in a new era of digitisation, adaptation to the FMCG online industry will be key – particularly in the form of an FMCG Marketplace.
Marketplaces are beginning to dominate the world of ecommerce. For companies looking to make the switch to a Marketplace, expert SaaS solutions like Shopery can make all the difference. We recognise the value of a fluid user experience, robust infrastructure, deeper customer insights and more time to focus on building better customer relationships. And we’ve already been able to successfully help FMCG businesses dramatically increase their market share, just by setting up a Marketplace.
In an era of unprecedented growth and increasingly influential technologies emerging every year, we’re just getting started.
Need expert advice on how a Marketplace platform can transform your business? Let’s talk.