Uncovering the Hidden Challenges Faced by FMCG Distributors

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Introduction to FMCG 

FMCG stands for fast-moving consumer goods that have less shelf life but are sold quickly due to high and recurring demand in the market. They may be consumer goods like packed foods and beverages, personal care products like bathing soap, shampoo, etc, or electronics goods like cell phones, cameras, and battery cells. Though the profit margin is low, fmcg distributors are compensated by daily demand and a high quantum of sales. 

FMCG in India ranks as the fourth largest sector in turnover. Its market is very vast, so is the competition. The FMCG distributor business faces fierce competition because the market is highly saturated and competitive with numerous brands. The market is flooded with many national and international brands or their distributorships giving the end customer too many options to choose from. 

The result is, small fmcg distributors find it very hard to persuade the end customers to choose their products over

                              Courtesy to wikipedia

the international brands. Only strong fmcg distributors settle in the end while the low-profile fmcg distributors gradually evaporate midway. 

To make one’s brand strong and visible, an fmcg distributor has to undergo so much pain and setbacks in the market. Let’s find out the major pain points fmcg distributors have to undergo for existence.

Challenges Faced by FMCG Distributors

Supply chain issues

Fragmented supply chains remain the major problem FMCG companies face regularly. A supply chain is made of multiple independent players, each having different expertise and working independently on different aspects of production, distribution, delivery, and after-sales services. Big FMCG brands usually outsource many of their operations and are dependent on third parties. Any fault or error happening from a third party will hamper the goodwill of the brand.

Other major supply chain issues 

Lack of visibility

A fragmented supply chain makes it difficult for FMCG retailers to have comprehensive control over their operations. It is very hard to track all independent third parties to make sure their services are delivered on time and are up to customer expectations.

Quality issues

When fmcg products distributorship outsources a part of their production, they face quality issues as they have less control over the quality of the fmcg products a third party is producing on your behalf. It affects the overall quality of products and goodwill.

Delays in delivery

A fragmented supply chain will have to face delays in delivery as different players will have different priorities and timelines. 

Non transparent promotions

To compete in the fmcg market, distributor and retailers carry out many promotional activities to boost sales. But unfortunately, retail distributors may times make a fuss out of it, and end customers will feel betrayed for not getting the promised promotions. Suppose a product distributor promises a free shampoo sachet with every purchase of their detergent soap, the shampoo may not be there inside the packet at the time of delivery. Usually, a customer does not escalate this to the retailer. Even if they complain, distributors will not take the onus of missing. It is very difficult to operate foolproof delivery management when different players are working together.

Aging and brand loyalty

FMCG as an industry relied heavily on brand loyalty. But it is a very difficult task to maintain an appropriate balance among different forms of customers and different age groups to remain relevant in the market. As consumers age, their preferences and requirements may change and so will their buying habits. However, in some cases, it is also found that brand loyalty increases with age particularly when that particular brand succeeds in establishing a strong emotional bond with the customer.

Factors Affecting the brand loyalty

Several factors can influence the brand loyalty of existing customers.

Quality of the product

Loyal customers will remain loyal to your brand till they receive the products of their expectations. The moment they find any better alternatives or something which exceeds their expectations, they may switch over from you. You should be well aware of these fundamentals of human behavior.

Popularity of alternatives

You as a product will have to compete with many alternative products arriving in the market daily. New players with a vibrant social media presence can challenge the very existence of age-old brands and question their hegemony in the market.

Customer service

Customer service is very important for FMCG products. If your competitor succeeds to give more customer support, their brands will become more popular.

Break in the emotional connection

The prime reason for brand loyalty is the emotional bond the brand has with its customers. One bad day or one bad deal is all enough to break this emotional bond built over years.

Solutions to do away with these pain points

So what are the solutions? How can we get rid of these pain points? By following the below basics.

Keep yourself engaged with customers

Engaging with your customers is the key to success. Make use of powerful social media platforms. Regularly engage with them via SMS or emails giving them details of new arrivals or trending products in the market.

Not compromising the quality

Never compromise on quality even if you are an established fmcg retailer in the market. 

Increase maximum visibility in social media.

Make your products converse well in the market with the buyers. It also helps you in getting better market coverage. 

Give the best customer service.

New-age customers are not only satisfied with the quality of the products but they expect more from the sellers particularly after-sales service or best customer service support. 

Give your customer a platform to become vocal about their positive experiences.

Mouth-to-mouth publicity is believed to be the best form of fmcg marketing strategy. So identify those customers who wish to speak a lot about your products and give them a platform to converse with the market. 

Improve your services.

Always take advantage of the latest tools and technologies available in the market.

Concluding Note

Post covid age has sprung open vast avenues for fmcg business and there should be an earnest effort from the manufacturers to make use of this opportunity and become more customer-focused and open to adopting new-age strategies.

People like fast and reliable service. So switching to a digital strategy is the key to overcoming market challenges.  It helps both customers and producers alike. High-quality products, a robust distributor supply chain building a brand image, better after-sale support, and personalized experiences are sure to take off the pain of competition.

(The content is crafted specifically for the client's needs, and they retain full ownership rights. I, as the writer, have been compensated for my work.)