Digital Inclusion: The Integration of Next-Generation RTM Capabilities (Part 2: Implementing the Route-to-Market strategy)

 Part 2 explains the secret to seamless business growth is implementing a next-generation Route-to-Market strategy while maintaining retail as the primary enabler.

A route-to-consumer model can assist fast-moving consumer goods (FMCG) companies in selling directly to customers. This method offers various sales channels, including online shopping, traditional stores (small grocery stores), and modern stores (hypermarkets and supermarkets). Regardless of the chosen channel, the FMCG company ensures delivery straight to the customer's door.

In this approach, companies and distributors often collaborate to ensure the delivery of goods to stores. These distributors may have their own sales teams and provide services such as stocking the FMCG company's products on shelves and promoting them in stores. Subsequently, retailers sell the FMCG company's products to the consumers or end users. Additionally, the FMCG company may enlist the store to handle tasks such as merchandising and loyalty programs.

Making the Flow Better:

In the FMCG (Fast-Moving Consumer Goods) supply chain, companies use traditional manual methods and innovative automated processes to optimize their operations. Manual practices traditionally involve time-consuming tasks such as hand-processing orders, forecasting demand based on historical data and subjective insights, and manually managing inventory and order fulfillment within warehouses. On the other hand, automated processes harness advanced technology to simplify and enhance these tasks. For instance, Electronic Data Interchange (EDI) enables the seamless electronic exchange of orders with retail partners; specialized sales forecasting software utilizes historical sales data to predict future consumer preferences, etc.

What are the pros and cons of a blended approach?

The combination of manual and automated processes, known as a blended approach, offers several advantages for FMCG businesses. Automation can improve efficiency by streamlining tasks and reducing errors, leading to cost savings from decreased labor and overhead expenses. It can also enhance accuracy and provide better visibility of the supply line, enabling informed decision-making.

However, implementing a blended approach can present challenges. Automated systems can have substantial initial setup and maintenance costs. Transitioning from traditional methods to automation may require significant change management and could result in job displacement as tasks become automated.

FMCG businesses can reap substantial benefits by strategically integrating traditional and automated processes in their supply chains. Nevertheless, carefully considering the associated costs and challenges is crucial before implementing new systems. Finding a balanced approach will enable FMCG companies to leverage the strengths of both methods, leading to improved efficiency, cost reduction, and better decision-making, ultimately enhancing business operations.

The present situation: Maintaining retail as the primary enabler

 

In the usual way of distributing goods, there are three parts: FMCG companies, distributors, and retailers. Distributors are like middlemen between FMCG companies and retailers. They usually stock and sell goods made by FMCG companies. There are two types of retailers: traditional and modern. Retailers are stores that sell goods straight to customers.

FMCG businesses can reach both old and new trades through distributors. Merchandising in stores, retail advocacy, and trade loyalty programs are all ways to reach and interact with customers. Some FMCG companies may choose to sell to stores directly through their own sales staff.

At this point, the process from company to distributor is mostly automated. However, to reach retail and then customers, it still uses a mix of traditional and automated methods.

While retail remains an important channel for reaching customers, businesses must also adapt new route-to-market strategies to achieve seamless business growth.

Shifting Multi-channel strategy to Omni-channel

The picture shows how a business can change from a multi-channel strategy to an omni-channel strategy. With a multi-channel strategy, you sell your goods through a number of separate channels, like online stores, and physical stores. With an omni-channel approach, all of these channels work together to give customers a consistent experience across all interactions. Some important ways to improve channel synergy are to make sure that product information and availability are the same in both online and physical stores, to offer 24/7 solutions like Interactive Chat Bots and IVR Driven automated call centers, to use augmented reality for product experience, and to make sure that your products have a place on the shelf and in the mind of the retailer.

It shows the part that different departments play in the switch to an omni-channel strategy. For example, the wholesaler makes sure that products get to the right places quickly, and key and contributing stores are very important to the success of the business. To get people to buy its goods, the company should focus on getting along well with these stores. The goal is to create a smooth customer experience and enhance coordination across channels.

Developing an Omnichannel RTM Strategy: Uniformity across touchpoints and sales channels

 

FMCG companies should try to connect their online and physical stores so that consumers can reach them at any time. Modern Trade is mostly about e-commerce sites and big stores. It gathers information about customer advocacy, merchandising, and advertising in stores. General Trade goes after smaller stores and distributors by automating tasks and connecting with major stores and consumer interest groups. The system is meant to make it easier to keep track of sales, inventory, retail advocacy, customer psych demographic analysis, retail capacity analysis, stores that are spread out geographically, and Route to Market optimization. The diagram also shows how different apps and data sources are linked, which helps the direct-to-consumer sales plan work. The Consumer App, the Wholesaler App, the Field Force App, and the Retailer App all send data to a central server so that it can be analyzed. This complicated method could give the FMCG company a big edge in the direct-to-consumer market if it works well. D2C has many benefits, such as more brand knowledge and customer loyalty, more control over pricing and promotions, the ability to collect data on how customers behave, higher efficiency, and lower costs. But there are problems, like making and keeping up with a mobile app, connecting it to other sales platforms, and competing with other stores. Even with these problems, direct-to-consumer (D2C) is a growing trend in the fast-moving consumer goods (FMCG) market. It could be good for businesses, but it also has problems.

In the third part of this series, we will demonstrate that the combination of digital and traditional tactics is the most important factor in bringing the stakeholders of the channel closer together, with retail serving as the principal enabler.

For additional information, please reach out to Marketing Brains BD team.