The eruption of Covid-19 has left millions and millions of businesses scurrying for survival. Although somewhat less affected sans some categories, the FMCG companies too did face headwinds for some time. And to counter these headwinds, technology has been the single most important intervention that they have employed during these trying times. And of the technologies, applications enabling a direct route to the consumer as well as other businesses in the value chain have been most prominent. While placing their faith in these applications, FMCG companies have also recast their value chains weeding out unnecessary elements at various levels allowing themselves greater leverage vis-à-vis their vendor partners, and establishing a more direct connection with their end-consumers. And among FMCG firms, food companies or those with prominent food product portfolios have been particularly noteworthy for taking the app route. A step ahead of general trade, modern trade, or even traditional e-commerce channels, these apps have been the popular yet necessary go-to modes for these companies.
The big B2C advantage
How does B2C prove to be advantageous for FMCG companies? Until now, customer-relationship building and acquiring customer insights were largely the preserve of the retailer community. However, what B2C apps do is that they facilitate a direct and one-on-one company-to-consumer relationship with the former no more having to make efforts to establish bonding with a faceless consumer. On top of allowing deeper end-consumer insights for companies and brands, they can catalyze more relevant and individualized product and service propositions by the brand to the consumer thus leading to a more enriching customer experience which in turn would drive increased customer acquisition, conversion, and retention for the brand. And needless to say, the power balance between the brand and the retailer is further shifted in favor of the brand and away from the retailer.
B2B applications not too far away
However, this taking to applications has not been limited to B2C channels. FMCG companies have also incorporated apps in their business processes directly targeting retailers and kirana stores who offload their products and serve as a last-mile seller/supplier to end-consumers. Identifying and prioritizing retailers who delivered top volume businesses, the companies made sure that the retailers continued to place orders for their products, and even more efficiently using these applications than they did before. In fact, thanks to Covid, the earlier forecasts projecting a contribution of around 10% digital channels in the total FMCG market in the next ten years in the country have been advanced to the next three to four years now. And at the same time, cutting out or minimizing the role of distributors especially in terms of selection of retail outlets, the brands have reclaimed their power vis-à-vis the latter while effecting greater streamlining and consolidation of their distribution systems.
Proliferation of new products
While pivoting to digital technologies, B2C and B2B apps, the FMCG companies have also realigned their product portfolios in a major way capitalizing on the shifting consumer preferences and behavior in times of the pandemic. And as part of this realignment, there has been a proliferation of new and innovative products which have been introduced to the market in the last few months. With health and hygiene being a predominant consumer focus, as many as 3,000 products in the health and hygiene category have been estimated to be launched in the September quarter alone last year. Earlier, in the April-September quarter, as many as 9,700 new products were launched by FMCG companies. Mindful of and in response to the country-wide lockdowns in place and customers being confined to their homes, 125 products were introduced in-home cooking segment alone during March-August 2020 in categories including ketchup, jams, cheese, and milk powders.
Exploring alternative channels of distribution too
Even as D2C apps gain traction, the FMCG companies are also exploring tie-ups with new-age delivery startups, food-tech service players, food aggregators, hyper-local apps and courier firms to have their products delivered to the doorsteps of the end-consumer. In fact, some FMCG companies are also making product-specific tie ups with delivery platforms and micro delivery platforms.
Digitization not limited to distribution: Influencer marketing gets a boost
Rising uptake in apps and the broader digitization has not only been confined to retail and distribution but also advertising and marketing. And riding on the increasingly entrenched position of social media and its consumption, influencer marketing has become a big part of FMCG’s digital marketing strategy in recent one year. According to a report, globally, nearly a fifth (19%) of FMCG companies has raised their influencer spending significantly as compared to pre-covid-19 levels. And within India, during the festive season campaign alone, influencer marketing saw a 20% jump in campaigns. A digital marketing agency has estimated India’s influencer market at $75-150 million a year, as compared to the global market of $1.75 billion, which is only set to get bigger in the coming months and years.
Other technologies that could aid the B2C momentum
At the same time, apart from apps, there are several related B2C technologies and platforms that could add teeth to the ongoing B2C drive. They could range from customer data platforms to data management platforms to marketing automation tools to business intelligence and data visualization tools to social listening tools, among others.
So, incoming the future, there is no doubt that the B2C apps as part of an FMCG company’s digitization program will acquire a more permanent dimension. Notwithstanding a resurgence of Covid in certain states, now with vaccination underway and revival of consumer sentiment in urban India, FMCG businesses including food companies are set to see greater activity and growth.
Article is authored by Manish Aggarwal, Director, Bikano.
