How to conquer distribution challenges in emerging markets

Emerging markets present a complex and dynamic landscape for fast-moving consumer goods (FMCG) companies. While these regions offer immense growth potential, they also come with a unique set of distribution challenges. From infrastructure limitations to diverse consumer behaviours, navigating these obstacles is crucial for success.

In this blog post, Macmobile’s commercial and operations director, Sean Tennent, offers insights on how digital platforms can address common distribution challenges in emerging markets.

Obstacles on the route to market

Emerging markets like BRICS (Brazil, Russia, India, China and South Africa), MINT (Mexico, Indonesia, Nigeria and Turkey) and other notable regions like Kenya, Ghana, Mozambique, Uganda and Vietnam offer significant opportunities for the FMCG industry.

However, distribution challenges such as poorly maintained roads, unreliable internet connections in remote areas, incorrect vehicle and inventory management, and other hurdles often lead to delays, spoiled or damaged products, increased cost, low market penetration, and ultimately lower profitability. What can an FMCG business do to overcome these challenges?

Be wise, digitise

Digital innovations can help solve some of these logistics and distribution challenges by removing the guesswork from your route-to-market planning.

It all comes down to greater visibility through data. With the correct digital platform, businesses can now track their route to market in real time to make sure it is effective and efficient.

By using one fully integrated mobile application, they can achieve greater visibility of the entire value chain. For example, a digitally enabled avocado farmer in Tzaneen can use a platform like Macmobile with its offline capabilities to:

• Take pre-sale orders in advance from shops in neighbouring towns
  
• Load his vehicles correctly with the optimal amount of avos
  
• Schedule the best route to market in real time for minimal disruptions
  
• Stay in contact with drivers even in remote areas
  
• Generate a clean invoice with no return and get paid on time.

The farmer won’t run out of stock or return to the warehouse with unsold goods. But how can he make sure traders and customers choose his avocados above all others?

Winning the ‘share of wallet’

Cash is still king in emerging markets and therefore ‘share of wallet’ (how much a specific customer spends on a brand relative to its competitors) is a real challenge. Market penetration comes down to the business that can provide their product to the customer at the right time and place to win their share of the customer’s wallet.

However, many traders and retail outlets in emerging markets still rely on traditional methods like paper, fax and email to issue purchase orders, submit invoices and make transactions. In the process, they miss out on the power of customer data.

When data drives strategy

In the FMCG sector, leveraging data effectively can mean the difference between market leadership and mediocrity. By unlocking data-driven insights currently trapped in paper-based processes, traders and retailers can understand their customers’ needs and offer them personalised suggestions based on their order history. Plus, the sales agents will have more time to upsell their product range and reach new traders.

It comes down to what a business can do with their data. Good route-to-market platforms have quality reporting and dashboards, but most of this reporting is still looking backwards. What FMCG businesses really need is proactive reporting.

A good example of proactive reporting is understanding when an outlet or trader is at risk of closing down. By analysing transaction data, a sales agent can track signals or red flags proactively and help traders overcome setbacks, build stronger relationships, and avoid losing sales.

What about regulatory and cultural hurdles?

Pro tip: choose a route-to-market platform provider that operates in a number of emerging countries and has experience in solving regulatory and cultural challenges. The key is to pick a platform that is intuitive and so easy to use that the trader, sales agent and delivery driver will return to it repeatedly.

Vernacular-enabled platforms may overcome some of the cultural barriers but must come with training and a support team, which the route-to-market supplier can provide.

Overcoming obstacles leads to growth

We all know that time is money, but digital platforms allow businesses and individuals in the FMCG value chain to quantify and manage their time more efficiently.

For example, a sales agent needs a significant amount of time to generate an order at the trader’s location, limiting the number of traders they can visit in a day. However, if the order is pre-populated using sales history and knowledge of the store’s format, the agent can spend more time selling their extended range of products to the trader or visiting more outlets to get more orders in the area.

The same pre-sale approach can apply to a cash van. By using data-driven insights, the supplier can load the correct vehicle with the correct stock, optimise the route through machine learning, and deliver the correct order with a clean invoice and no returns.

In the end, both FMCG businesses have improved their cash flow, grown their market share, and increased their profitability by overcoming distribution challenges with digital solutions.