Over the last few years, digitalization has greatly influenced the way we trade, as more people are beginning to buy and sell over the internet. The pandemic and its effect on in-person visits to physical stores brought about a sharp increase in e-commerce growth, as online sales amounted to 19% of total retail sales in 2020, a record increase of 16% from 2019. By 2021, global retail e-commerce sales had reached $5.2 trillion and are expected to grow by 56% over the next five years to reach about $8.1 trillion by 2026.
This rapid e-commerce growth is not limited to developed markets, with the fastest-growing e-commerce countries located in emerging markets, where e-commerce sales are forecast to increase by more than 25% year-on-year. For example, in Africa, e-commerce adoption is expected to reach 400 million users by 2023, representing a 14% overall increase.
This rise in e-commerce has altered the landscape for brands, retailers, and distributors that have hitherto relied on traditional offline channels to buy and sell their products. As internet and smartphone penetration continues to increase across emerging markets, traditional players in the consumer goods industry will have to adapt to embrace e-commerce to remain competitive in today’s digital landscape.
Why is e-commerce vital for FMCG brands, distributors, and retailers?
Trading digitally holds several advantages for emerging market businesses in the consumer goods industry. The traditional trading process is grossly inefficient and prevents businesses from maximizing the available growth opportunities.
For example, FMCG brands that want to expand into new geolocations will have to hire hundreds of sales reps and field agents to visit retailers physically, which is incredibly costly. Retailers, on the other hand, are often unable to access the products they need, depending on their location, or have to pay exorbitant prices to the multiple middlemen that distribute the products to them.
With digital trading, brands can easily reach more customers, and retailers can directly access more brands and distributors to purchase their stock at more affordable prices.
However, the biggest advantage that digital trading provides across the entire value chain is the ability to capture data. Digital transactions mean digital records are kept, which can be analyzed to provide increased visibility across the entire distribution chain in real-time. Under the traditional offline trading model, FMCG brands and distributors have very little visibility across their distribution channels and do not know in detail who their customers are or where the demand for their products is in real-time. In addition, many retailers are forced to pay for their goods in cash and do not have verifiable records that can be collateralized to access credit and grow their businesses.
E-commerce can potentially digitalize the entire consumer goods supply chain in emerging markets and ensure that brands, distributors, and retailers can rapidly drive growth and increase efficiency. Still, the question remains, how can it be best implemented?
The current e-commerce model is bad news for your business.
For businesses in emerging, embracing e-commerce in emerging markets usually means signing up on e-commerce marketplaces as third-party sellers. Marketplaces like Amazon, Mercado Libre, Jumia, and many others dominate the e-commerce landscape, accounting for over 50% of all online retail sales, with the top 100 marketplaces accounting for over 95% of all e-commerce sales. However, there is a hidden danger in working with these marketplaces.
E-commerce marketplaces are deliberately set up to have an unfair advantage over brands and distributors and reap all the advantages of digital trading. For example, most e-commerce marketplaces do not give sellers visibility over who is buying their products or where the demand for their products is. In addition, most marketplaces have built their last-mile delivery systems, which means that brands are forced to depend on the marketplaces to deliver their products and lose access to the crucial customer and transaction data generated. E-commerce marketplaces have also been reported to use sellers’ transaction data to build competing white-label products on the marketplace while limiting the reach of similar third-party products.
Retailers also cannot benefit from buying stock on e-commerce marketplaces, as they often target individual customers to maximize their profits; thus, purchasing stock in bulk from an e-commerce marketplace is not cost-efficient and will only hurt the business in the long run.
In conclusion, the traditional e-commerce model is centralized and brutally cuts out brands, distributors, and retailers from the distribution chain and possibly out of business altogether.
So, how can you enjoy the benefits of digital Commerce and protect your business without relying on centralized commerce marketplaces?
The solution is Open Commerce.
Unlock the full value of digital trading with Open Commerce
To access the full value of digital trading, you need a digital solution that:
1. Enables you to connect directly with all channel players along the distribution chain
2. Captures granular data across the entire supply chain and analyzes the data to provide actionable insights
3. Unlocks the full value of the existing distribution chain while allowing you to reach new markets.
The only digital solution that provides all these benefits is Open Commerce.
Open Commerce is superior to the traditional, centralized e-commerce model, as it directly connects retailers, distributors, and brands and provides a level playing ground for everyone.
As a brand, you can digitize your existing distribution processes and retain control of your supply chain by onboarding your distributors and retailers onto the world’s first Open Commerce platform. All the transaction data generated is also available to you in real time, so you can leverage the insights provided to drive consistent, outsized growth.
Retailers and distributors can also sign up on the Open Commerce platform and start trading online in a few minutes. With Open Commerce, they can directly access their favorite brands and purchase stock at favorable prices on an open online marketplace while also generating valuable transaction data as you trade, which can be leveraged to access credit facilities to help you grow your business.
Join the world’s first open commerce platform today
RedCloud has built the world’s first Open Commerce platform, Red101, to provide manufacturers, distributors, and retailers in emerging markets with a new, more efficient way to buy and sell consumer goods. Red101 is creating a true ‘sell anywhere’ economy and empowering over 1 billion merchants to transform their stores into digital businesses.
RedCloud has also eliminated the need for cash payments across the distribution chain by providing an efficient digital payment solution. We’ve built the world’s largest local payment network with over 2 million pay-in points across 100 countries. This means unbanked retailers in rural locations can walk up to the nearest agent, digitize their cash, and pay suppliers via the in-built digital wallet on the Red101 app.
Schedule a demo today to unlock new growth opportunities with the world’s first Open Commerce platform.
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