The Indian Business landscape is undergoing a significant transformation. Traditionally, business-to-business (B2B) operations in the Fast-Moving Consumer Goods (FMCG) industry were driven by conventional distribution models that relied solely on human interactions. However, with the exponential growth of digital technology and the escalating popularity of B2B marketplaces, many FMCG brands in India are adopting a novel approach: the creation and control of their own eB2B) channel.
The Dawn of Distribution 4.0 and B2B Marketplaces
Distribution 1.0 (1950-1980) revolved around a traditional model, where goods were transferred from manufacturing facilities to state distributors via C&F agents, and then sold to retailers through dedicated sales representatives, with minor changes over three decades.
Distribution 2.0 (1980-2000) saw adaptations, such as transferring sales representatives to distributors for better management and introducing technology for primary sales tracking at the distributor and branch level, and dividing sales teams into category-focused units.
Distribution 3.0 (2000-2020) witnessed widespread use of technology for tracking inventory and secondary sales, and a surge in modern trade and B2C eCommerce.
Distribution 4.0 (2020-Present) is marked by the rapid rise of B2B eCommerce, Direct-to-Consumer (D2C) models, Quick-Commerce, and Open Network for Digital Commerce (ONDC). This wave of disruption is expected to be more transformative and expansive, rewriting traditional distribution frameworks with digital-first, customer-centric models that enhance supply chain efficiency, and cater to the increasing needs of a rapidly growing India.
B2B marketplaces are major drivers as well as beneficiaries of these changes, offering a myriad of benefits such as reduced transaction costs, greater market reach, improved efficiency, and transparency in pricing. Giants like Alibaba, Amazon Business, and India’s Udaan, with their streamlined procurement processes and vast supplier base, have quickly gained traction.
These platforms have become particularly valuable in India, a country with a complex distribution network due to its geographical expanse and consumer diversity. As per a report by India Brand Equity Foundation (IBEF), the Indian FMCG sector is projected to reach a market size of $220 billion by 2025. An increasing number of B2B transactions are taking place online, triggering a shift from traditional wholesaler and distributor-centric models to digital B2B marketplaces.
FMCG Brands and Their eB2B Strategy
However, this new trend also engenders challenges for FMCG brands. They have spent decades building strong working relationships with their B2B customers such as dealers, retailers and wholesalers. These relationships give them control over their Route-to-Market execution and provide them with an edge over startups and challenger brands. Relying on third party B2B marketplaces means relinquishing control over customer relationships and data, which could potentially weaken their bargaining power and dilute their brand value. In response, a growing number of Indian FMCG brands are establishing their own eB2B channel to directly engage with retail stores, thereby solidifying and enhancing their control over the supply chain.
By implementing this strategy, FMCG companies can reap several benefits:
1. Strengthened Retailer Relationships: Building their eB2B platform allows brands to directly communicate with retailers, bypassing intermediaries. This paves the way for personalized promotions, tailored services, and more prompt redressal of grievances. In the long run, these factors contribute to stronger and more reliable relationships with retailers, which can lead to increased loyalty and better customer retention.
2. Enhanced Control Over Branding: B2B marketplaces, while offering visibility, also lead to commoditization, with brands often losing their distinctive appeal. With a proprietary eB2B channel, FMCG brands can assert more control over their brand image and messaging, ensuring that their unique selling propositions and value propositions are consistently communicated.
3. Greater Access to Data: By directly interacting with retailers, FMCG companies can access a treasure trove of data. Insights gleaned from these interactions can facilitate better demand forecasting, inventory management, and targeted marketing campaigns.
4. Cost-Efficiency: Direct interactions with retailers eliminate the need for marketplace intermediaries, reducing costs associated with distribution. It also allows brands to offer competitive pricing, further solidifying their market position.
Indian FMCG Brands Leading the Way
Companies such as Hindustan Unilever, Marico, and Dabur are already making strides in developing their B2B eCommerce capabilities.
Hindustan Unilever’s Shikhar app, for instance, is an innovative eB2B platform that enables direct sales to retailers. The app provides features like order tracking, delivery status updates, and access to promotional schemes, delivering a seamless, end-to-end experience. Similarly, Marico and Dabur have also started experimenting with this channel.
A more recent development in this trend has come through BeatRoute which has launched its eB2B-platform-as-a-service (eB2B PaaS) that allows brands to build their self-owned, self-managed eB2B channel. Already onboarded with customers in India and Southeast Asia, BeatRoute has seen encouraging response from retailers.
For instance, a leading dental hygiene brand has started using BeatRoute to facilitate B2B eCommerce with its retailers, implement multimedia educational campaigns, and enhance loyalty through B2B rewards. Additionally, a leading Indian paints brand is utilizing BeatRoute to engage and empower its dealers through the eB2B channel. BeatRoute has already garnered over 150 enterprise customers who have embraced its current sales enablement platform. However, the company has set its sights on an even more ambitious goal, aiming to empower an additional 100 enterprise brands with its innovative eB2B PaaS (platform-as-a-service) by the year 2024.
Conclusion: A Dynamic Shift in the FMCG Landscape
The rise of B2B marketplaces has undeniably catalyzed a digital revolution in the Indian FMCG sector. However, the increasing emphasis on owning and controlling eB2B channels through platforms like BeatRoute signifies an evolving landscape where brands strive to protect their unique identity and strengthen their retailer relationships.
While the journey may be fraught with challenges—ranging from initial planning and roll out to achieving widespread retailer adoption—the long-term benefits of data access, improved brand control, cost efficiency, and strengthened retailer relationships make the investment worthwhile.
In the rapidly evolving digital era, FMCG brands that can strike a balance between leveraging the convenience of B2B marketplaces and cultivating their eB2B channels will be better positioned to navigate the increasingly competitive landscape. For these brands, the future isn’t just about making sales; it’s about building strong, enduring, and direct relationships with their partners. This is the dawn of a new era of empowerment and strategic growth for India’s FMCG sector.
Vinay Singh Co-founder, BeatRoute