Players in the FMCG (fast-moving consumer goods) market need to become more digitally-driven as customers are increasingly replacing store visits with on-demand deliveries and using online marketplaces and e-wallets to browse and shop on the spot.
Alexander Friedhoff, co-founder and CEO of ecommerce enabler etaily, said that they should equip themselves for this inevitable change and align their business models to the new reality.
“We’ve seen the increase in global value of large companies like Beyond Meat and The Honest Company, and others have created billions of dollars in economic value by using the digital native brands and excellence in supply chain management. Local and regional FMCG companies need to adapt to this and understand what opportunities they are missing. They should wake up from the old days and focus on the core challenges: cash, sales, and costs,” Friedhoff said.
FMCGs, he said, should have the capability to scale as well as the operational advantage to make them stand out in a world of free shipping, voucher subsidies, and mega campaigns that offer big discounts.
etaily’s end-to-end approach, such as warehousing, fulfillment, channel management, and marketing services, addresses all major pain points while giving FMCG players more focus on their core business.
“The cost savings by using an enabler help offset this enormous ecommerce complexity that brands are taking on just to win online,” said Friedhoff.
“Instead of them doing it, we help make operating several campaigns with our in-house experts. We make shipping time faster for the consumer through our multi-warehouse capabilities, which will take FMCGs a long time and a lot of trained manpower to build on their own,” he added.
FMCG players need to understand the formula for winning the battle between cost, cash, and sales, he said.
“We all know that margins in ecommerce are low, at least initially – but scaling helps. At etaily, we see that our FMCG partners are much more profitable online than others,” Friedhoff said.
“Other players in the market are distributing FMCG products out of one centralized warehouse. This alone has an immediate impact on the three key challenges of Cash, Sales, and Costs, because the longer the delivery lead time, the higher the probability of a cancelled order and the higher the costs. But through our multi-warehousing approach, deliveries get delivered faster and thus the cash-cycle decreases. Another way that multi-warehousing affects Costs is that our partners can run better free shipping campaigns which ultimately end up in lower costs and higher sales,” he said.
The ability to respond quickly and reliably to the final-end consumer, he added, also has a major role in boosting Sales, which adds revenue to the etaily customer.
“This scene of the unhappy final-end consumer who cancels the orders because the delivery is taking too long is all too familiar to sellers, who lose both customers, sales, revenues, and potential income in that canceled transaction.”
“Conversion increases for our client because the end consumer is happy to get items faster…Our end-to-end fulfillment service prevents that situation from happening to our customers. More importantly, we empower and equip them to be agile, prepared, and responsive in an ecommerce highway that is always in a state of transformation,” he added.
