The FMCG industry has always been challenged by the perishability of its products and its extremely short life cycles. Even in the best of times, getting orders quickly and delivering on-time required balancing customer needs and complex logistics. So, the industry increasingly turned to eCommerce as the answer. Pre-pandemic estimates by Nielson & Company put global FMCG eCommerce sales at $400 billion by 2022. And this was before COVID-19 restrictions moved many more businesses online.
In response to changing markets and market conditions, FMCG companies are rethinking their business models. Industry giants are selling direct, and they aren’t relying on Amazon as their sole eCommerce channel. Kraft Heinz is selling direct to consumers through their Heinz to Home channel and even Ben & Jerry’s will ship ice cream straight to the house. B2C and B2B eCommerce aren’t fads, they are trends. ShipBob started tracking eCommerce trends at the beginning of the pandemic and as you can see, the trend line for food and beverage only goes up. What is true for food and beverage is also true for beauty, personal care, and other FMCG product categories.
How COVID-19 Affects the FMCG Industry
From the start of the pandemic, FMCG companies were completely disrupted. Customers such as restaurants were forced to close, and consumers began to prepare and consume more at home. In New York City alone, an estimated 1,000 restaurants have closed their doors permanently. At the same time, grocery stores expanded their on-line shopping and delivery services. FMCG companies had to rethink products and find new partners. For example, Unilever partnered with Oyo to create personal hygiene kits. Add to this change in buying patterns, regular supply chain disruptions, and rules and regulations that seem to change every day. It’s a recipe for chaos. Here’s what the new normal looks like for FMCG businesses and how FMCG eCommerce can help.
Changes in buying patterns More people are staying at home and they are preparing more meals at home. In the UK, grocery sales through digital channels have grown by 75%. And digital shelf space is much easier to create than it is to buy it in a retail store. With eCommerce, FMCG companies can pivot to direct to consumer sales and even use headless architecture to help their wholesalers stand up their own eCommerce channels.
Changing consumption levels Back in the early days of the pandemic, sales spiked based on fear. But economists are predicting a global GDP contraction of 5.2% in 2020. The most recent recession developed over 18 months. This time around the economic change has been swift and massive. Already consumer confidence has been shaken as people anticipate or experience a loss of income.
With eCommerce, FMCG companies can easily scale up and down as needs arise.
Problems with supply chains Constant disruptions in supply chains and volatile commodity prices make planning, production, and pricing difficult. For FMCG companies, the Iowa derecho of August 10 will further stress corn, soybean, and related commodity supplies as more than 30% of the state’s crops were destroyed. Prices will go up and you may be forced to limit production. Don’t disappoint buyers. Let them know what’s in stock before they place an order. eCommerce allows you to provide complete visibility into inventory.
Shifting purchasing patterns In 2018, online FMCG sales grew just a little over 20%. Within a year, online sales grew seven times faster than the total FMCG. So, the move was already well underway to more online buying. Now the new goal is to transfer that offline brand loyalty into online buying. As both retail and business buyers prefer to buy online, eCommerce is more important than ever.
Logistics and compliance nightmares For a company operating in the United States, there are at least 50 different sets of operating rules and guidelines. This covers everything from how drivers operate at the loading dock to what businesses are considered essential. eCommerce with a 3PL integration may make these tasks easier.
eCommerce Provides the FMCG Industry More Than Just Sales
The COVID-19 pandemic accelerated changes that were already underway (like a shift to buying for B2B online) and initiated new changes, such as the pivot to DTC sales. But eCommerce has the power to do more than just take orders. It is a tool FMCG companies can use to respond to current market issues as well as the market of the future. That’s because it provides FMCG manufacturers, wholesalers, and distributors more than sales, it provides flexibility and data.
FMCG companies need the flexibility to:
● Scale up and down to meet market changes
● Shift business models from B2B, B2C, B2B2C and back again
● Quickly push new products as new needs arise
● Face ever-changing supply chain and logistics challenges
● Deliver the customer experience that meets or exceeds customer expectations
Data is crucial for:
● Insights into customer buying patterns
● Entering new markets
● Expanding supply chains
● Delivering the right product and message at the right time
● Segmenting markets for improved conversions
● Improving the average order value
Essential B2B eCommerce Platform Features for FMCG Companies
It doesn’t matter if you are entering eCommerce for the first time or re-platforming a legacy site, here are the key features you need in a B2B eCommerce platform to serve FMCG industry customers.
Seamless and Easy Integration. Your eCommerce solution cannot stand alone. In order to operate efficiently, it must integrate with the ERP, logistics, WMS, CRM, PIM, and other architecture components. So that everyone can make informed decisions, data must flow freely, and all systems must stay synchronized. For maximum flexibility in integration, look for a solution with the ability to deploy in traditional or headless architecture. Don’t forget to ask about the APIs and plugins available as these will speed the time to market.
Multi-channel support. All indicators point to continued strong demand for DTC sales. This means your eCommerce platform must support both B2B and B2C channels. Each of these buyers requires a different customer experience. So, your platform must handle both flawlessly Don’t settle for a B2B platform that is merely a repurposed B2C solution. It won’t come out of the box ready to support the way the FMCG industry does business. Look for a platform that supports multiple business models.
Personalization Studies show that 86% of buyers are willing to pay more for better customer experience. Personalization is an important part of providing exceptional customer experience and it pays off. According to Adweek, personalization can reduce acquisition costs by as much as 50%, lift revenues by 5 to 15%, and increase marketing spend efficiency by 10 to 30%. Deliver personalized price lists, product catalogs, and minimum quantities to each B2B customer. Push B2C sales with impulse purchases and promotions. Pick a platform that will let you leverage data and analytics to segment audiences and deliver the right message at the right time.
Scalability The eCommerce solution you pick today should also prepare your business for the future – whatever it may bring. As your business grows, your platform should scale with you. Look for solutions that can deploy on-premise, on the web, or in the cloud. Also, be sure that your platform handles an endless number of SKUs and customers.
Ecosystem and Support An important consideration is an ecosystem around the platform and what type of support will be available. Generally, you will find that open source solutions offer greater security and are supported by a larger developer and user community. Because the code is peer-reviewed, it’s more reliable. Check into solutions providers and partners as well. It’s important to work with partners that are familiar with the platform.
FMCG Needs the Perfect B2B eCommerce Platform Now
As the recent crisis demonstrated, FMCG brands should be prepared for volatile demand. A robust online presence is mission-critical in today’s FMCG industry. It doesn’t matter if you are selling B2B or B2C you need support for uninterrupted selling across all channels. The perfect eCommerce solution will provide you flexibility while serving up reliable and actionable data. It will integrate with your existing systems such as ERP, WHM, and PIM for easy, real-time flow of data.
Your perfect platform will be as easy to use on the front-end as on the back-end. It will support multiple websites that are SEO-friendly and render perfectly on any device. For FMCG companies, eCommerce is the way to achieve higher conversions and more repeat sales.