Will Direct to Home (DTH) RTM sustain post covid19 for companies?
How will wholesale channels behave in the future?
Which components of distribution shall go digital?
These were common threads among many questions asked to the panelists during our recent webinar “Future of FMCG & CPG Sales in 2020s” by industry participants from India, Philippines & Indonesia.
Answering all your unanswered questions
Q. What kind of business shift happens after COVID-19 In the FMCG & OTC product range, in terms of consumer & in terms of company requirement?
A. From Consumer’s perspective – Many would not like to queue up in front of neighborhood retail stores. Some will prefer the MT stores that will have a higher perception of hygiene. Many more would buy online. However given that 85% of India’s retail happens through small stores across all categories, the shift could be minimal. Also in the post-vaccine scenario, Indian consumers might return to their old habits of buying in the neighborhood.
Q. Everyone talks about using technology to adjust to the new normal. Can you suggest what kind of software should we use?
A. Right technology and tools will always help. Panelists feel a relationship with customers will still be the key, Technology lead communication bridges that bring transparency of transactions on both sides, offset the facelessness with instant back and forth communication, offer digital connect on communication platforms like WhatsApp will be key on the customer side. Panelists also felt up-skilling our sales teams to focus on contextual relationships v/s old-style transaction execution is also an area where technology can help.
Q. Which sectors may become a by-product of this pandemic?
A. It’s a very wide-open topic and none can claim to know everything. However many new products in the hygiene category will be obvious. In general a lot of unorganized category businesses will see branded packaging for the conscious consumer.
A. Can’t think of a specific reason why there will be any negative impact on a product just because it is a single brand and D2C premium. In fact the premiumization will only take away any concern of hygiene. Products that play that well will only stand to gain.
Q. In case a company has one very popular product for consumers, how & which services may be adopted to reach a large number of customers?
A. If the product already has popularity, the focus should be on making it available. Depending on the TG and where it lives, one will have to choose its channel of distribution. Partnership with companies that have adjacent products and tend to fall in essential categories for distribution can be the trick. Many companies that have a delivery network will look for offsetting their losses because of the pandemic and will be open to creative partnerships.
Q. Business will happen virtually, the transaction will happen digitally, only product delivery will happen directly. what do you say?
A. Panelists feel India and most of the neighboring countries will gradually inch towards that. It won’t be a sudden shift. Order execution will definitely shift to digital however as far as GT channel is concerned, one will have to still fight for shelf share of the retailer. Relationships will never be virtual but visits will be fewer. Look at regulated liquor trade in India where sales reps visit retail outlets for a preferential response to their promotions and schemes and shelf share.
Q. Who takes the liability of vendor/retailer end training & engagement on changed processes? Anticipated packaging norms that will support consumer confidence in cooked-and-packaged food?
A. The provider takes responsibility for the hygiene of course. The financial burden of safety against a real or perceived fear can always be passed on to the buyer if you communicate your value proposition well. As far as packaging standards, it is a very technical question for this panel to answer.
Q. How is the relationship between Retailer and Wholesaler going to be affected? Will Retailers visit Wholesalers like before?
A. Retailers will visit or transact with everybody who gives them a better price and the convenience of sizable assortment. Unrelated with COVID however areas that are serviced by directly unserviced retailers with the help of wholesalers will always be there even if they dynamically change.
Q. What would be the best strategy to build a distribution channel for a new but good quality product or brand? Which would be the best media to use?
A. Panelists feel localized social media ads are underutilized in FMCG business for targeted localized launches. That should definitely be an option.
Q. How do u see the Route to market-changing post COVID for the FMCG category? What are the changes in the retail environment by retail environment type (e.g Pan store vs. small grocers vs. chemists) – on portfolio, credit, servicing preferences, etc?
A. One thing Panelists could surely establish is that GT RTM will see a change in terms of visit frequencies. Some stores might be serviced through telephone orders. If your product can be sold through a chemist channel that should definitely be a focus. Many new-age online aggregators in the last GT channel will offer integrated credit service. May sales execution technology providers will tie-up with fintech companies to provide on-tap credit to retailers.
Q. Any view on the impact of any significant change in the snacking segment? Need a view on startups in the snacking segment.
A. Snacking in India is a big unorganized sector. There will be a considerable shift towards branded products that can position themselves as responsible brands. Any short term shift to homemade snack will only shift back to the branded category and will persist beyond the post-vaccine phase.
Q. Will layoffs happen in the FMCG sector?
A. It is felt that existing brands will have fewer people in field visits and there may be some layoffs for those reasons or for lack of funds. However, there may be more jobs in the MT channel. People who skill themselves up towards more qualitative selling and relationship-based selling will fare better.
Q. Educational or office stationery – How can sell Direct to Customer – the cost of servicing would be very high?
A. Anything D2C will be expensive to service. Only the ticket size and differentiated product can help adopt this strategy viably.
Q. Will Direct to Home (DTH) RTM sustain post covid19 for companies?
A. The home delivery preferences of consumers will change slightly. Nobody would like multiple deliveries and consumers will like to consolidate their orders with fewer providers. Aggregated home delivery will always sustain.
Q. In the midst of this crisis many organizations have realized they need to be more frugal in the ways they want to reach their consumers. How is it going to affect the retail ecosystem? What impact is it going to bring to employability in the near future (1year horizon)?
A. Expecting fewer sales reps particularly in the GT channel may not be that wrong. The workforce in MT might increase with a bit of channel shift in favor of MT. Companies will definitely like to use the mindset shift to capitalize on promoting remote order taking. Some of the BeatRoute customers are already trying this.
Q. In FMCG, the Wholesale channel has always played a key role. How will this channel behave going in the coming months?
A. Wholesales does a very sizable portion of last-mile retail. While we will see expedite growth for new-age aggregators/e-distributors, wholesales will still continue to play a huge role. The problem of economic drop size will still persist for the company’s distributor to service certain areas and wholesale will continue to fill that gap.
Q. What about the targets per product, per salesman, per retailer?
A. These will always be a key metric of effectiveness for sales execution. However strategy comes first. Depending on the strategy one follows to crack the post-COVID world where companies will take a highly segmented view of their retail partner network. This might mean recalibrating targets for each customer, sales rep.
Q. In the Philippines, dine in will not come back anytime soon until the vaccine becomes available. Having said this, Horeca sales for alcoholic beverages in this industry will be practically zero. What strategy can you suggest would work in this scenario?
A. Dine-in is actually a big employer and one of the industries that cater to the core of the socializing nature of humans. So the jury is still out on how much of the business will come back and how much restaurants will be trusted for their hygiene standards. It is wise to expect a fall in the pre-vaccine phase. Focus on off-premise and home delivery (if allowed in your country) will be the key. People might trust their home handling of parties more and the scene for socializing might shift to homes. Party packs could be a trend.
Q. During the corona outbreak, some countries decided to implement total lockdown which has limited retailer operational hours. Some brand response to this situation was by launching home delivery services. This rapidly changes the shift in the consumer buying journey. Do you think it will reshape the retailer ecosystem and go to market strategy?
A. A brand doing a home delivery is actually just a transient phenomenon. In the long run home delivery will remain with aggregated players and consumers will prefer them for the reasons of choices and assortment. It also means more business for home delivery channels.
Q. What will be the norm for route building and lead generation for general trade given the limitations brought by the pandemic?
A. With the general expense of servicing the supply chain going up because of hygiene overheads, it will be important to have a very segmented approach towards customers and run differentiated programs for each type, class, etc. Right from the first time placement of products, companies will have to be very calibrated on who they include in their service network.
Q. Is it best to top-grade our talents?
A. Relationship skills will be important as some of the order goes digital and visits become fewer. Sales reps will have to learn qualitative selling so they can compensate for not being face to face.
Q. Role of Technology to make business model agile and efficient. What are organizations looking forward to in this area and spend expected?
A. Relying on data and being data-driven in your tactic and strategy will always keep a team in the right position. Building technology infrastructure that is not just for today’s need but is scalable will be important to absorb these shocks. Choose a Software as a service (SaaS) technology that does not put too much of a burden on your for capital expenses and more importantly keeps evolving.
Q. Impact on White goods & Kitchen appliances business and Customer’s buying power? Whether the gap in sales will rebounce?
A. Consumers are definitely losing some of their buying power. That will hurt in the short term. Within Consumer durables and appliances, categories that are going to be seen as essential by customers will not be impacted and there will be some latent demand to capitalize on when the lockdown eases out. While some other categories which are seen as nice-to-have will suffer for the reasons of lower buying power. Easy credit options will definitely be a strategy for some high budget products.
Q. How do you see the channel interplay between GT and MT and subset of both? What will be the necessary tools for a field salesperson and how can productivity be increased?
A. Panelists felt some GT sales might shift to the MT channel. Quality of ales interaction will matter more now even when it is between a remote sales rep and the small store or between a product promoter at an MT store and a shopper. Brands can use the BeatRoute platform to have a better insight into customers and to have a differentiated engagement. There will be considerable focus on sales rep productivity, our belief is that FMCG performance management will move from tracking the sales rep to actually inspiring and nudging people to get better and enabling them to do better. BeatRoute technology is designed to inspire and augment sales reps and managers and maximize outcomes with intelligence.
Q. What channel shift in terms of distribution is anticipated post lockdown? How the Beatroute model will help to translate last mile reach of products to the retailer
A. Our belief is that it is going to be a mix of digital orders by customers, sales reps triggered digital orders, and old-style visit-based orders. BeatRoute technology helps in creating a digital bridge between the customer, retailer, and distributor to smoothen this transition. We are not in the business of marketplace or last-mile delivery ourselves. We only provide technology to maximize outcomes from customers, distributors, and influencers.
Conclusion
Covid-19 crisis has accelerated the digital transformation of the FMCG & CPG Sectors. Traditional retail channels will still continue to exist, but companies will need new approaches & technologies to get desired outcomes.
Based on requests received from many FMCG & CPG organizations, BeatRoute has launched a digital bridge feature, using which companies can easily serve all their retailers, even when they can not visit them physically. If you are suffering from reduced field team strength & reduced field visits you can request a free demo of the BeatRoute platform here.
