The digitalization of the FMCG industry faces three main challenges:
- Large proportion of offline revenue. In Q1 2020, due to the pandemic, even with people nationwide unable to shop in person and e-commerce expanding extremely, online consumption only accounted for 23.6% of total social retail sales. Offline remains the main battlefield for FMCG sales, but offline digitalization is more difficult to achieve.
- Monopolistic e-commerce ecosystem in China. Alibaba, JD.com, and Pinduoduo hold 89.41% of the market share, giving them a strong oligopoly advantage. In this competition, FMCG companies' digitalization efforts are unlikely to yield direct results in the short term.
- Low ARPU (average revenue per user) in the FMCG industry. Due to low average order value and many consumer choices, customer loyalty is low. As a result, the cost of aggregating private traffic is high, making it harder to gain traction in social e-commerce.
In this context, Liu Zhao, founder of Waiqin365, believes that digitalization in the FMCG industry should focus on "channel digitalization aimed at achieving online market activities, online channel orders, online distribution inventory, online personnel, and online customers; and consumer insights that explore the time, scenario, purchasing group, and purchase triggers of product sales."
The five online initiatives are the key directions:
【Online Market Activities】 Digitalize the entire process of market activity expenses, from investment to execution, payment, verification, reimbursement, and ROI analysis; ensure activities are authentic and effective.
【Online Channel Orders】 Enable distributors to manage purchases and sales, automatically match promotional policies, and dynamically calculate rebates; help distributors manage distribution orders to retail stores, control pricing systems, match buy-give strategies, and set payment schedules.
【Online Distribution Inventory】 Ensure clear product flow and reduce cross-regional selling. Maintain accurate and appropriate inventory levels in the distribution channel—neither too high (causing dumping and cross-regional selling) nor too low (affecting market expansion).
【Online Personnel】 Manage your own employees, distributor employees, promoters, and supervisors simultaneously, ensuring timely transmission of company directives to the frontline and timely feedback of market dynamics to the company.
【Online Customers】 Including distributors, retail stores, and core consumers—all are customers of consumer goods companies. Customers should not just be a field in a data system but should be directly connected online with the company, allowing the company to reach them anytime.
The five online initiatives are the most fundamental work for consumer goods companies' digitalization. With products, customers, inventory, employees, and market activities online, companies will comprehensively enhance their management capabilities, effectively utilize offline channels, gain a competitive edge, and stand at the forefront of the digital era.
In channel digitalization, Waiqin365 also provides powerful AI tools. At the event, there is a Waiqin365 technology booth where attendees can experience Waiqin365's AI + SFA product automatic recognition technology and AI carton cutting recognition technology.
A single photo can identify products placed on shelves, such as facing count, variety count, shelf layers, ground displays, carton cutting, POSM, refrigerators, and price tags, and categorize the data.
For carton cutting, salespeople only need to take a photo, and within one second, they can know which SKUs are cut, the display specifications, and receive a display compliance score.
Now, more and more consumer goods companies realize that offline channel traffic is a relatively undervalued asset. Using digital tools for channel management and distribution refinement will lead to dramatic performance improvements compared to the past.
Therefore, investing in channel digitalization is undoubtedly the option with the highest ROI.
Tips will be paid 400-2000 yuan once adopted.