The virtual shelf space: how FMCG companies can ensure availability during and after COVID-19

Over the past few months, the various COVID-19 local news outbreak and control measures have had a great influence on consumer purchase behaviour. A recent study by Nielsen showed that the total FMCG sales growth is still high at 12.7%  during these new stages. However, owing to the fact that consumers are taking a risk shopping at brick and mortar supermarkets, availability has taken priority over preference. 

With Harvard scientists foreseeing social distancing as the norm until 2022 , FMCG companies have challenging times ahead to meet high demands with limited resources on the field. Broken supply chains can cause a huge dent in sales. Although e-commerce has increased by triple digits in many countries around the world, adopting online mechanisms to generate orders is only a small part of the revolution of the FMCG industry. 

1. A direct ecommerce platform or marketplace will mean sidelining the income of  traders
2. It would also require a different type of logistics process
3. And if just your traders or retailers sell online, it might still not solve the problem of supply

What FMCG companies can do is bring their entire trade channel online. Now, the next question that probably comes to mind is “How will this work?”

With all orders dropping in one place and being assigned to traders/distributors based on proximity, order value and availability : 

• Resellers will be able to purchase stock when they have funds, in quantities they can afford and as often as they require
• Consumers will be able to purchase their favourite brands 

This digital way of ensuring that stock is always ‘available’, can multiply the growth of manufacturers beyond the pandemic. 

In the last couple months, I have had the opportunity to discuss with CXOs, Business Development Heads and Sales Team Leads of over 50 FMCG companies in Nigeria. It is no surprise that they all have similar concerns with using SaaS [software as a service] for digitizing distribution. Even though many leading  FMCG companies want to be pioneers of digital distribution in their respective markets, these concerns may be a major setback. Now, let us address some of these concerns and the things you need to consider when adopting a digital distribution solution.

1. Setup: 

The first thing to consider at the setup stage is that  you are essentially replicating the physical to the virtual world. You must ensure that the SaaS application provides the required solution and also aligns to your business process. With offices being shut and teams working remotely, setting up a new process altogether sounds scary. However, following through with this list can make the process of onboarding your team easier:

• Ensure API integration with existing CRM / ERP solutions is available
• Start with onboarding traders in a particular location or a set of traders, in order to test run the solution
• Provide virtual training of team members with videos and video conferencing 
• Identify the early adopters. These are people who get excited to try new things and hence realize how solutions like these improve their productivity sooner than anyone else. Use them to create a domino effect. 
• Since everything is being captured digitally, you’ll have complete visibility from Day 1. Use it to identify the small improvements before bringing everyone onboard, track usage by individuals / teams and ensure that you manage the orders efficiently. 

1. Order Management

Remember that what you are offering is convenience. They are used to having or consuming the product on the same day as when they pay for it. This expectation has not changed. Order generation is the simplest part of the puzzle. There are a million and one ways to get orders today. However, the real task is being able to integrate all the channels. A digital distribution software should be able to integrate all order channels so that financial and inventory reconciliation is easier. Everyone involved in the order fulfillment process should be able to track their key metrics. Accounts should be able to track payments and refunds. The warehouse team or traders should be able to track orders, and their logistics arms should be able to track orders that are ready to ship and deliveries made. This will ensure quick order fulfilment. Getting everyone on the same application will also give a clear picture and help to quickly identify the ‘right’ areas of improvement. Again, this will help improve the resellers and consumers experience with the manufacturer’s brand. 

In the face of this pandemic, I believe that the Nigerian FMCG industry will be ‘forced’ to take the technological leap much faster than it anticipated. What other changes do you foresee in the Nigerian FMCG space? I’d be happy to hear your thoughts. 

Resources: 

https://www.weforum.org/agenda/2020/04/coronavirus-social-distancing-how-long/

https://www.forbes.com/sites/kaleighmoore/2020/04/17/retailers-selling-non-essentials-see-double–triple-digit-increases-in-online-sales-during-covid-19-crisis/#416ab5d46431

Understanding the Nigerian Consumer during COVID- 19 _Pierrine Consulting_Lagos Report_April15th_R.pdf.pdf

Global study of 25,000 Consumers Gives Brands Clearest Direction on How to Stay Connected in a Pandemic World