2022 was the year in which trickle-down economics reemerged as a preeminent political ideology in the UK, only to combust spectacularly - from trickle-down to burn-down. But what if, rather than asking whether empowering those at the top can generate growth for everyone, we focused more on empowering those lower down the pecking order? What if we could make 2023 the year of ‘trickle-up’ economics and show how financially empowering local merchants and entrepreneurs can create wealth that flows right the way up the chain?
The Truss Government’s experiment with ‘trickle-down’ economics came to an abrupt end in late 2022 when ideology slammed up against the cold reality of markets. Indeed, the resounding failure of Trussonomics has brought the efficacy of ‘trickle down’ into sharp focus. In an apparent rebuke at the time, President Joe Biden tweeted: “I am sick and tired of trickle-down economics. It has never worked. We’re building an economy from the bottom up and middle out.”
And yet, while the UK may seem like an isolated example, trickle-down still exerts a surprising hold over policymakers in both rich and poor economies worldwide. How else to explain tax breaks and indulgence of anti-competitive practices by some of the world’s largest technology companies?
Monopolistic positions are tolerated in the hope that wealth will spread. Tax breaks are handed out – and tax avoidance overlooked – in the hope that investment will be stimulated, with opportunity and capital trickling down to everyone else in the economy.
Yet a recent paper from the London School of Economics and King’s College looked at 18 countries over a 50-year period, analysing their tax policies and the resultant economic outcomes. It showed economic growth and unemployment rates were largely unchanged after five years in countries that slashed taxes for the wealthy, compared with those that didn’t.
Trickle-down is a dubious policy in affluent markets such as the US or Europe. And it is wholly unsuited to markets where local economic development is an essential antidote to the current high levels of extreme poverty and food insecurity.
As the recent strains on the Argentinian banking system demonstrate, when the economic storm clouds gather, the wealthy can’t get their money out fast enough. Similarly, South Africa has a long history of putting controls in place to prevent capital flight. The wealthy have responded by holding more and more capital offshore, preventing it from being put to work within the country itself.
So what happens if, rather than empowering wealthy individuals and companies, we put more money in the hands of those on lower incomes who work at the heart of their local communities?
Through our work in countries like South Africa and Argentina, we’re seeing powerful evidence that a ‘trickle up’ strategy is a far more effective growth generator. Financially empowering those at the bottom of the ladder is helping to create wealth that flows right the way up the chain to some of the largest consumer brands.
By encouraging smaller enterprises to flourish and empowering local entrepreneurs, we get what economist John Maynard Keynes referred to as the ‘fountain’ effect – individuals, communities and, ultimately, their home countries as a whole, creating self-sustaining growth.
The starting point is to address the entrepreneur gap in lower-income economies. In most larger economies, SMEs contribute more than 50% of GDP (in some, it is as high as 70%) and create the vast majority of private employment. However, it’s far less in lower- and lower-middle-income countries – the International Labour Organisation (ILO) puts it at 29% and 23%, respectively. In South Africa, for example, smaller enterprises contribute just one-third of GDP.
Closing this gap is vital to realise the trickle-up effect. Microfinance organisations recognise this and have had some success in allowing individuals to develop small businesses, but there are other factors that could make a difference. The ILO identifies stronger supply chains, better access to finance and improving data as key to bottom-up development of private enterprise in lower-income countries.
At RedCloud, we see these problems first-hand. Supply chains have been significantly disrupted by Covid, but in truth, they’ve been under growing pressure for decades. The market for consumer goods can’t work effectively because supply and demand are not effectively matched. In 2021, there were just under $2 trillion worth of products that weren’t available in stores for customers who wanted to buy them. This is a significant brake on local economic development.
Even when products are available, local merchants and retailers can’t build stock in the right areas because they can’t access working capital solutions. These businesses typically trade in cash, making it impossible for them to build up a formal trading history to show the banks. Hence, they’re forced to replenish stock reactively, as and when they have sufficient cash in the till, leaving them forever running to stand still, regardless of how much unmet demand there may be in their local communities.
This is why we’re focused on digitising the B2B supply chain, enabling more merchants in more markets to access more products, quickly and easily, without the trading problems caused by over-reliance on cash. By getting merchants and retailers onto an online trading system – accessible via their smartphones with minimal red tape – they can build a digital trading profile for the first time, regardless of where they’re based or what they’re selling.
Once their trading activities are digitised, these local retailers and merchants can give banks the information they need to make decisions on financing, allowing access to working capital, and finally start growing their businesses. At this point, the fountain effect happens at great speed. Distributors shift more products, develop a better understanding of the merchants, and form more efficient trading partnerships. And the FMCG brands at the top of the supply chain not only start seeing an uplift in sales, but because everything is digitised, for the first time, they can see exactly which products are being sold where – helping them tailor their marketing to achieve further growth.
Our trickle-up approach forms an important part of the open commerce movement – a blueprint for frictionless, free, and fair trade across the globe, with any supplier able to connect to any seller.
Trickle-up can be a powerful source of growth for lower-income countries, but it will not happen accidentally. At the moment, aspiring private enterprises face real barriers in getting their products to markets effectively and at the right price. Only by embracing open commerce and digitising trade – locally, regionally, and globally – can these barriers be overcome.
Global patterns of food production and trade are seeing once-in-a-generation disruption. Fertiliser shortages have limited agricultural output, while labour unrest, geopolitical tensions and logistical difficulties have disrupted supply. Consequently, retailers are increasingly unable to meet demand for even the most basic goods. Urgent solutions are needed to prevent this crisis from escalating...
The problems affecting global food distribution are manifest – from Lagos to Lima. Even in Western economies, supermarkets have been forced to cut specific lines, stocking around 10% fewer products than pre-pandemic.
Inevitably, these food shortages diminish consumer choice and push up prices at a time when inflationary pressures are already acute. But if it’s an irritation for wealthy consumers, it’s a disaster for lower income consumers. Global goods price inflation was running at 3.4% even before the current crisis and has continued to soar.
The IMF reports that staple food prices in sub-Saharan Africa surged by an average of 23.9% in 2020-22, the most since the 2008 global financial crisis. In Nigeria, cassava and maise prices have more than doubled, reflecting higher production costs and transport constraints.
Food makes up around half of household expenditure in low-income countries such as India or Pakistan. Almost half of humanity lives on less than $5.50 a day. There is no slack in budgets to absorb significant price rises created by food scarcity. Without creative intervention from policymakers and private enterprises alike, there is a genuine danger that billions of consumers in emerging economies will be priced out of the market.
Consumers across emerging markets are already seeing their incomes squeezed. Since the start of this year, inflation rates have soared. While Turkey and Argentina – with annual inflation of 80% and 78.5% respectively – are particularly drastic cases, they’re far from the only countries feeling the pressure. Brazil and Hungary, for example, are seeing consumer price index (CPI) readings in double digits.
On the ground, the strain is starting to show. The number of people in food crisis has reached over 200m, with food insecurity rising across the globe. The United Nations estimates that around one in three people across the world do not have access to adequate food. Even the United States has found it necessary to roll out a plan to fight hunger.
The global economic crisis likely to worsen this problem in the short term. Protectionism from nervous governments could well exacerbate the supply difficulties. As countries have experienced stress in their food chains, export bans are already being put in place. The World Bank reports that as of September 15, 2022, 21 countries have implemented food export bans, and a further six have implemented export-limiting measures.
The implications of these potential food shortages cannot be underestimated. Beata Javorcic, chief economist at the European Bank for Reconstruction and Development, warned of an emergency situation in North African countries due to high food prices. The precedent of the Arab Spring, where food inflation was a contributory factor, is uncomfortable, to say the least.
Not being able to get products to customers isn’t good for food suppliers either. In the past 12 months, FMCG brands have lost $1.8 trillion in sales because their inventory didn’t make it onto merchants’ shelves in the first place. Further, these fast-growing markets are vital for suppliers’ long-term growth. By 2023, they will grow at almost triple the rate of developed economies.
The problem is even more acute for new food manufacturers and ‘challenger’ brands. This is a moment when people need cheaper alternatives. It could be the perfect chance to diversify our food supply and build market share and loyalty. However, without the right distribution chains in place, these nascent brands can’t fulfil that demand, leaving consumers reliant on the old guard – those FMCG giants with the clout and deep pockets to get their products to market, however inefficiently.
The IMF has already proposed a series of government-led solutions to the crisis: “A mix of fiscal, monetary, and structural reforms could help lower food inflation. For example, improving public financial management could help free up resources for investment in well-targeted social assistance programs or in climate-resilient infrastructure. This could help stabilise prices.”
It could. But there are other, more practical, more immediate, and (most probably) more realistic options. Using technology to unify fragmented local marketplaces and provide all-important on-the-ground connectivity would go a long way to preventing supply challenges, diversifying product range and availability, and lowering costs for consumers.
At RedCloud, we’re committed to solving this problem, using technology to better connect end-to-end supply chains from the source of production to the local street vendors and corner shops responsible for selling the finished products.
What does this look like in practice? Well, to give one example, in 2021, we found that retailers in Johannesburg were experiencing persistent shortages of various popular consumer products and losing revenue as a result. Their longstanding distributors had no solution to these shortages due to their own supply issues, nor did the retailers have any alternative trading relationships established further afield.
However, through our platform, we identified local suppliers in Cape Town that were willing and ready to supply to Johannesburg. In fact, they would have started supplying Johannesburg merchants long ago had they been aware of the unmet market need. Our technology allowed the two parties to come together and solve the local food shortage – a win-win for consumers, retailers, and suppliers.
This problem is far more common than you might think due to the opacity of local distribution chains and the absence of hard data governing distribution decisions. Too much food distribution is based on guesswork. Most distributors – and the food producers they serve – lack any real clarity and insight about where to ship their products, where demand is greatest, where untapped opportunities could be exploited, or conversely, where markets are over-saturated.
Bringing openness and transparency to these marketplaces – and the supply chains which serve them – can have a profound effect this can have on local commerce, helping retailers and merchants forge new distribution relationships, serve their customers better and reduce supply chain costs, in the process helping to curb food price inflation.
Much more is needed to cure global hunger in a stroke, but the drive towards locally connected, digitised and open commerce is vital to resolve near- and longer-term food shortages for many countries.
Imagine a massive machine with intricate gears and wheels working in sync to bring goods from all over the world to your local store. This machine is the consumer goods industry, a $30 trillion complex network of suppliers, manufacturers, distributors, and retailers that make it possible for over 5 billion consumers to access the products they need and want. It's an industry that touches every aspect of our lives, from the clothes we wear to the food we eat and the medicine we take.
But the gears of this machine are not as strong as they seem. Despite its vital role in our daily lives, the consumer goods industry is fragile and inefficient, particularly in emerging markets. McKinsey research reveals that major disruptions to the supply chain, lasting a month or longer, are becoming alarmingly frequent. These disruptions result in staggering financial losses, with brands losing up to $4 trillion in revenue. Furthermore, these disruptions also lead to record-high prices of consumer goods and consequently put essential items such as food out of reach for millions of people, putting them at risk of starvation.
According to data by the IMF, only 20% of the recent price hikes are due to the increased prices of raw materials passed from manufacturers to consumers. Rather, a staggering 80% of the price increase can be traced to shipping and final distribution costs. In other words, millions of consumers cannot access the goods they need at affordable prices due to the inefficiency and lack of transparency in the current offline distribution model, characterized by limited access to finance and technology.
This also means that by solving the distribution problem, we can help unlock significant business growth for the next billion retailers across emerging markets and enable over 6 billion consumers to access the essential goods they need, like food, medicine, beverages, and baby care products at affordable prices. In this article, we examine how digital, online trading powered by Open Commerce can address the challenges facing small businesses and retailers across emerging markets and help change the lives of consumers and communities in these markets.
Meet Joseph, a small retailer in South Africa who has been running his shop for over a decade. Despite his hard work, he has struggled to grow his business and make a decent living for his family. Joseph's shop is in a low-income neighborhood with limited access to finance and suppliers. As a result, He has to pay for all his stock in cash, which means that he is often unable to buy all the stock he needs and often has to wait several days to restock essential products, resulting in lost revenue for his business.
Joseph’s story is not unique; it’s the story of millions of small retailers in emerging markets struggling to survive under an unfair trading model. According to the World Bank, Small and Medium Enterprises (SMEs) like Joseph’s make up 90% of all businesses in emerging economies, account for 60-70% of all employment, and contribute more than 40% of the national GDP. These small businesses are the backbone of local communities but are faced with significant barriers to growth.
For example, even though Joseph and other retailers like him have been in business for over a decade, there are often no trading records that can be used to access credit and other financial services needed to grow their businesses. Any credit available usually comes from family, friends, or predatory loan sharks that take undue advantage of the retailer’s position. In addition, distributing goods to these retailers is difficult, as brands and distributors have to rely on multiple intermediaries and sales reps to help move stock across the informal market, which increases the cost of consumer goods significantly.
Technology can solve some of the problems that Joseph and other retailers like him face, but so far, very little progress has been recorded. For example, digital trading can help small retailers directly access brands and distributors to order the stock they need, and digital payments can allow Joseph to finally access the credit he needs to grow his business. Interestingly, the basic tools needed to help Joseph already exist - smartphone and internet penetration is on the rise in emerging markets, which means retailers like Joseph should be able to access the stock and finance their businesses need.
Yet, almost nothing has changed, and here’s why.
Digital technologies like online commerce and digital payments can unlock new possibilities for the millions of small businesses in emerging markets, with studies showing that digital payments, if implemented successfully for B2B merchant transactions, could potentially increase the GDP of all emerging economies by 6%, unlock more than $3.7 trillion in growth, and create more than 95 million new jobs across all sectors of the economy.
Unfortunately, most of the widespread digital solutions available will not unlock this level of growth for Joseph and retailers like him. For example, traditional e-commerce platforms like Amazon or Jumia would rather replace Joseph outright than empower him to grow his business. For most small businesses, e-commerce platforms are a threat to their survival rather than a solution to help drive growth.
Traditional e-commerce makes it almost impossible for small retailers to build their businesses online by charging exorbitant fees and implementing policies that can destroy entire businesses and livelihoods overnight. For instance, e-commerce giants like Amazon have been reported to spy on sellers, use third-party sales data to build competing products on the platform, then artificially manipulate search results to place first-party products higher to get more sales. More damaging, however, is that much of that sales data was never made available to the seller in the first place.
The average Amazon seller has no idea who is buying their products, where the demand for those products is, or what can be done to drive sales growth. In most cases, the best they can do is to pay more to Amazon for “advertising,” a pseudo-black hole that does not provide any useful visibility across the supply chain that can be used to drive growth.
Digital payments are another significant challenge for small business owners, many of whom have extremely limited access to traditional banking and financial services. Most financial services in emerging markets are provided by traditional players, such as banks, money-lending institutions, and credit card companies like MasterCard and Visa. These companies are often predatory and controlling, charging exorbitant fees and restricting access to financial services for small retailers.
Research shows that, on average, SMEs in developing economies pay as much as 10% more in fees for financial services than larger firms. These exorbitant fees, which most retailers cannot afford, are devastating for small businesses and leaves them struggling for decades. In addition, banks, credit card companies, and other financial service providers have strict requirements and policies that make it almost impossible for small retailers to access their services, further limiting their growth potential.
It’s time to transform how consumer goods are bought, sold, distributed, and paid for across emerging markets. We need a digital solution that empowers small retailers and gives them access to the tools they need to grow their businesses. And that solution is Open commerce.
Open Commerce is a new way of trading for the next billion retailers like Joseph across emerging markets that unlocks the full value of the distribution chain, connecting brands, distributors, and retailers on a single platform where they can trade openly, with no restrictions or barriers. Unlike traditional e-commerce, where large platforms like Amazon have all the power and leave brands and retailers with none, Open Commerce puts retailers in control of their business. They can access every brand on the platform and buy stock at prices that they can afford.
To achieve our mission of accelerating global economic growth for the next billion retailers and ensuring that 6 billion consumers can access the products they need when they need them, we built the world’s first Open Commerce platform, Red101. With Red101, small business owners like Joseph instantly access a wide network of brands and distributors who carry a wide variety of stock. This means he can order all the products he needs for his store and have them delivered directly to his store, even before the current stock is exhausted. We’ve also built the world’s largest local payment network with over 2 million cash-in points across 100 countries, so SMEs can easily make and accept digital payments, even if they do not have a bank account.
Today, that mission is a reality. On our Open Commerce platform, over 200,000 retailers worldwide are buying over 250,000 products daily from some of the largest brands in the market, with a transaction volume above $1 billion. We’ve also unlocked exponential growth for brands, distributors, and retailers. For example, one of the distributors on the platform, Mishabet stores, has recorded close to a 500% increase in sales within the last year, and has grown its profit by over 30%.
We’re helping businesses of all sizes compete in a fair, open environment and driving sustainable growth that has a real impact on both our customers and the communities they reside in.
Schedule a demo today to see how RedCloud’s Open Commerce platform is revolutionizing offline trade in emerging markets and helping the next billion merchants drive consistent growth after decades of stagnation.
We’re building the future of commerce, and it’s Open.
This post was originally published on Business Age
After a decade of rumours, leaked documents suggest Amazon finally has concrete plans to launch online marketplaces in Africa over the next 12 months. ‘Project Fela’ will see the retail giant move into five new territories, including Nigeria and South Africa. But what does this mean for local FMCG supply chains, and who ultimately benefits from Amazon’s walled-garden approach to commerce?
Africa’s commerce landscape is in need of change. Supply chains are under chronic strain, leaving millions of consumers across the continent without access to basic, affordable goods – including food and essential household supplies. Supply and demand are poorly matched due to the over-reliance on cash and clipboard trading, with FMCG brands genuinely in the dark about where and when to ship their products.
The roots of this dysfunctional market are four-fold. Firstly, there is no transparency – brands don’t know who is buying their products, and merchants don’t know what other products might be available. Dominant distributors control pricing and don’t disseminate market intelligence. It means challenger brands can’t make headway because they can’t afford to ‘pay to play’. And prices are consistently high because the supply chains are inefficiently run.
The question is whether Amazon can move the dial on any of these problems. The eCommerce giant is often credited for transforming logistics and distribution to the benefit of consumers the world over. Certainly, it has successfully built a presence in many countries where there are acute operating challenges, overcoming problems such as distribution to rural areas and adoption of electronic payments. It now has a significant presence in India, for example, with an average of 108.1m monthly visitors.
In many countries, however, it is difficult to know whether improved distribution or adoption of electronic payments are cause or effect. For example, the Nigerian government has been actively promoting the adoption of electronic payments and mobile banking. In South Africa, card transactions are now the preferred way to pay for over 40% of online shoppers, alongside eWallets and bank transfers.
It seems more likely that Amazon has waited until adoption levels are sufficiently high before considering entering the African market. Indeed the lengthy delays to its expansion plans could well be down to a reluctance to navigate cash-based trading models, given the challenges experienced by local eCommerce players such as Jumia.
Similarly, logistics is already improving across the African continent – aided in no small part by other tech companies. Where people lack a formal delivery address, it is now possible to put a pin on Google maps to guide drivers to the door. Again, this paves the way for Amazon to get a toehold in the market, but it is not clear that Amazon itself is making the difference.
The experience of other international grocers and FMCG retailers is further evidence that international players are unlikely to make any real difference to African markets. In 2011, US retail giant Walmart bought a majority stake in South African retailer Massmart to get a foothold in the continent. The foray now looks distinctly ill-advised – with the retailer racking up significant losses and high debt. Walmart has recently taken full control of Massmart, suggesting it still sees potential in the region, but so far, it has done little to solve the market dysfunction described earlier.
Like Walmart and others before it, there’s little evidence to suggest that Amazon will be a liberating force in African commerce. The region craves the nirvana of a functioning market, efficient supply chains and a broader choice of competitively-priced consumer goods. Based on Amazon’s track record to date, it is highly unlikely to solve these challenges, and its presence may make existing problems worse.
For a start, a significant minority of sellers never make any money on Amazon. While Amazon may adapt its pricing for the local market, its demanding margins make it a difficult option for all but the largest brands, while it routinely competes with third-party sellers by offering (and prioritising) its own products on its platform.
Secondly, Amazon will not help small, physical store-based retailers to get the right products for their customers. Let’s not forget, this is still the way most consumers across Africa want to shop. For example, online shopping may be growing fast in South Africa, but it still only has a 2.8% market share – and South Africa is one of the more advanced eCommerce markets on the continent.
Thirdly, Amazon won’t provide the market intelligence that brands desperately need. Its instinct is to guard market information rather than disseminate it – ensuring no one is any closer to understanding their customers.
Against this backdrop, it seems unlikely that Amazon will bring down the cost of basic goods for African households. If anything, by exerting a stranglehold on distribution, merchants may be forced to push up the price of goods to meet Amazon’s margins.
Amazon’s entrance may well improve logistics and accelerate the adoption of digital payments across the African continent. And it will present an attractive retail option for top-end consumers, as it does in every market. But its presence will do nothing to address the fundamental problems faced by African commerce, because issues such as supply chain opacity, inefficiency and monopolistic behaviour will never be solved by walled garden marketplaces.
Only by pursuing truly open commerce can we hope to transform the African commerce landscape. The Open Commerce movement puts power back in the hands of brands and merchants, makes market intelligence available to all – levelling the playing field - and unlocks clogged supply chains by creating new and more efficient routes to market. Amazon’s expansion into Africa has long felt like an inevitability, but the real solution to improving African commerce lies elsewhere.
The consumer goods industry is one of the largest in the world, with a market size of over $10 trillion, and is projected to hit $15 trillion by 2025. This industry, which accounts for two-thirds of the volume of trade in the world economy, plays a vital role in the economies of emerging markets, where it is often the primary source of income for local businesses and a major provider of essential products that consumers in these markets need. A walk down any local market in Africa or Latin America would prove just how important this market is to the daily survival of millions of small businesses and the communities they are located in.
However, despite this industry’s importance and outsized impact on emerging markets, the current trading systems and distribution model places distributors, brands, and retailers at a marked disadvantage. Broken supply and distribution chain challenges, outdated, manual trading processes, and over-reliance on cash payments have led to consistently higher prices and limited access to essential goods. These challenges have far-reaching negative effects on the health and well-being of local populations and hinder economic development.
Solving these challenges will require a new approach to how consumer goods are traded. A long-term solution that provides an open, level playing field for retailers and small business owners is necessary to create a better world for these underserved communities. This is why we need Open Commerce. By creating an open, transparent digital trading system powered by open commerce, we can finally solve the inequalities that keep these communities at a disadvantage and provide them with the tools they need to grow their businesses and better serve their communities.
Globally, the consumer goods industry is under immense stress as prices of consumer goods continue to rise, and the supply of essential consumer goods remains limited. These challenges are more pronounced in emerging markets, where the retail market is fragmented, and the supply chains are too complex, slow, and opaque. While it is commonly assumed that the disruptions causing rising prices are on the supply side of the chain, such as the lack of availability of raw materials, the IMF reports that 80% of price increases are caused be increased shipping and distribution costs.
The traditional distribution process that moves essential consumer products from the manufacturer's warehouse to the retailer's shelves and into the consumers’ arms is centralized and is largely dependent on many intermediaries, many of whom operate entirely manual processes and are chronically inefficient. This inefficiency makes it possible for bad actors to create artificial barriers across the supply chain, thereby increasing the prices of essential goods.
These barriers have far-reaching effects on entire communities. For example, when retailers cannot access the products they need at prices they can afford, they are forced to buy less stock, which means that consumers who need those products cannot access them. For many consumers in emerging markets, especially those in rural areas, going to bed hungry or being unable to feed their children is a frightening but very real possibility. In addition, the fragmented distribution process often means that retailers have to close their shops and travel great distances to get the products they need. They also have to carry significant amounts of cash, as most distributors only allow cash payments, leaving them at higher risks of getting attacked and robbed.
Modern-day technology has the potential to help level the playing field for SMEs and help them grow their business. However, most available solutions are either too expensive or utilize the same centralized model that propagates the barriers to doing business. For example, digital commerce, that is, buying and selling consumer goods online, is one of the easiest technologies to deploy and could help reduce the price of consumer goods. However, less than 3% of all consumer goods are sold online, and most of those sales take place on third-party eCommerce platforms like Amazon, which are responsible for over 95% of online consumer goods sales.
These large e-commerce platforms have hijacked control of the supply chain by building their own distribution networks and locking out millions of distributors and retailers from accessing the goods they need. More importantly, the vital trading data needed to help build a more efficient trading system is often locked up and kept away from both brands and distributors, leaving them playing blind.
Payments are another critical barrier to unlocking real growth for SMEs in emerging markets, where it is often difficult to open bank accounts or access credit facilities to grow their businesses. Despite the decades of advances made in payment technology, there are very few solutions that enable merchant payments, and the few that do, are quite costly, with transaction fees and other charges eating deep into the retailer’s profit margins.
The situation of trading in the consumer goods industry across emerging markets can be summed up as prohibitive and difficult and ultimately enriches a few intermediaries that leverage their outsized power to influence the market, making life difficult for the average retailer.
Open Commerce is the only way to build a truly equitable future for the over 1 billion merchants and small businesses in emerging markets responsible for moving essential communities across communities. It is a revolutionary technology built to level the playing field and provide any merchant in any location with the tools they need to grow and scale their businesses.
It should not be difficult for the small merchant in the most rural part of South Africa to access products from any brand, neither should they have to travel kilometres on foot, carrying cash, just to buy the products their communities need.
This is what Open commerce solves. By putting simple, digital tools in the hands of every retailer, we provide them with the tools they need to grow their businesses. Now, with our revolutionary Red101 Open Commerce app, retailers can simply order for stock on their phones at any time of the day and have the products delivered to their stores or any location of their choice. We’ve also solved the cash payment problem by building the world’s largest largest local payment network, RedPay, with over 2 million cash-in points across 100 countries, allowing retailers to walk to any nearby agent, digitize their cash, and begin buying their products. More importantly, by opening up digital payments to these retailers, they can build a trading history that allows them to access the credit they need to grow their businesses.
As we remain committed to our mission of building a better world for the millions of retailers in emerging markets, we are also giving back to the communities where we operate with various initiatives. This year, we launched the RedCloud Academy, where we equip young adults in underserved communities with the skills they need to thrive in the digital economy. We train many of these young adults on digital skills for free and provide them with certificates and internship opportunities which would help them contribute positively to their societies.
We also recently launched our community event series, where we will be giving back to all the communities we operate in more tangible ways. For the first edition, we partnered with a non-profit educational centre in South Africa that focuses on early childhood development. The RedCloud team,, based in Johannesburg, South Africa, came out to hand out gifts to the children at the centre. We also donated food items and stationery packs to help advance the educational development of the children, as well as some food items.
Speaking about the event, Justin Floyd, the CEO of RedCloud Technologies, said, “We wanted to give back to the communities where we are currently operating, and there is no better way to do that than to support the children in these communities. These children are the future, and we have a responsibility to support them in every way we can.”
These community events prove our commitment to building a new Open Commerce system for the World, where efficient supply chains will bring down the cost of food and other essential goods for billions of consumers and improve the quality of lives of children, especially those in disadvantaged communities. And In line with our mission, we also plan to host community events like this in all the countries we are currently operating. Furthermore, we would also be creating food banks all over Africa to support the poorest in local communities.
To find out more about Open Commerce and see it can help brands, distributors, and retailers grow their businesses, please schedule a demo here.
Emerging markets currently account for 55% of consumer expenditure for fast-moving consumer goods (FMCG) companies, and this share is expected to grow significantly in the coming years. Over the next five years, an additional five billion consumers are projected to enter the consuming class in these markets, bringing with them an estimated annual spend of over $6 trillion. This growth presents a significant opportunity for FMCG brands to capture new pockets of revenue and profits.
However, FMCG brands will have to rely on global supply chains to serve this rapidly-growing market. Unfortunately, global supply chains have experienced numerous shocks over the last few years as product shortages and supply-chain disruptions continue to drive headlines. A recent report from Reuters shows that supply chain disruptions may have cost brands up to $4 trillion in lost revenues and caused an average drop of 107% in profitability. Further research shows over the course of the next decade, FMCG brands may face disruptions that could erase half a year’s profits or more. The devastating effects of supply chain disruptions on FMCG brands have forced supply chain leaders to prioritize building resilient, crisis-proof supply chains.
This article will explore the trends that FMCG brands, especially those in emerging markets, need to embrace to make their supply chains more resilient and crisis-proof.
The COVID-19 pandemic, rising energy prices, global inflation, and the conflict in Ukraine. These are just a few of many external factors threatening global supply chains today and compounding the troubles in critical sectors. However, contrary to popular opinion, supply chain disruptions did not start recently. Weather disasters, trade disputes, and political instability have long affected the flow of goods and services across nations. These factors are not the problem; they are the symptoms of a much deeper problem - global supply chains are no longer fit for purpose.
The process of moving raw materials to factories and from factories to merchant’s shelves is broken. For many brands, their supply chains are managed manually, held together by a broken mix of paper and legacy IT, resulting in fragile supply chains that crumble at the first sign of external pressure. Unfortunately, FMCG supply chain managers have not learnt from past crises and are still using the same outdated playbook in a fast-changing world. For example, a recent McKinsey survey of supply chain leaders comparing the effect of the pandemic to the global financial crisis of 2008-2009 shows that less than half of the respondents were able to improve their organization's performance.
The main barrier to improving supply chain resilience is the lack of visibility across the market caused by inefficient distribution processes. The FMCG supply chain in emerging markets has remained largely unchanged over the last few decades, as brands still rely on van sales to deliver goods to retailers, are forced to accept and reconcile expensive cash payments, and have no more visibility across the market today than they did ten years ago.
Across these markets, FMCG companies are almost totally dependent on monthly data collected by field agents and on-the-ground researchers, which is grossly misleading and outdated and has led to many pulling out of markets with high growth potential.
Digitalization is the only way to increase visibility across the supply chain and make them more resilient. By leveraging digital technologies, especially analytics generated across the supply chain, FMCG companies can spend more intelligently and efficiently and increase speed and transparency while providing decision-makers with crucial insights on where, when, and how to act.
Supply chain leaders have since recognized the importance of digitalization in building resilient supply chains resistant to disruptions. For example, a 2021 supply chain survey of 71 global companies showed that brands are accelerating their investments in digital technology, with 99% of the respondents admitting a tenfold increase in their digitization efforts from the previous year. However, for many brands, there is still a question of how to integrate digital solutions into their existing supply and distribution processes.
E-commerce and digital selling have long been touted as the future of consumer goods sales, as they could help provide more visibility across the supply chain and make distribution quicker and more efficient. This position seemed to be proved by the rapid e-commerce growth during the pandemic. However, recent data shows that e-commerce revenue is set to shrink for the first time since 2019 caused by supply chain disruptions, showing that e-commerce is not the solution that your supply chains need.
While e-commerce might seem like an improvement over traditional manual distribution chains, two major issues with the model make it unsuitable for solving the problem with supply chains, especially in emerging markets.
So, what is the solution if e-commerce cannot provide FMCG brands with the needed visibility and supply chain resilience?
FMCG brands in emerging markets need a solution that marries the digital and offline worlds together. This solution must serve the existing fragmented retail market while simultaneously providing real-time data and in-depth visibility across the supply chain. The only solution that can provide this is Open Commerce.
Open Commerce is a revolutionary solution that connects brands, distributors, and retailers, on the same digital platform and provides a better way to trade. With Open Commerce, brands can transform their traditional, vulnerable offline supply chains into responsive, resilient chains that can withstand disruption and be rapidly reorganized to maintain maximum efficiency in the face of severe crises.
RedCloud has built the world’s first Open Commerce platform, Red101. It’s an open digital platform connecting the next 1 billion merchants and distributors in emerging markets directly with FMCG brands, allowing them to grow their businesses rapidly.
With Open Commerce, FMCG brands gain visibility across their supply chain and can access granular data from each distributor and retailer in their delivery network in real time. As a result, for the first time, supply chain managers, FMCG sales, and marketing managers can identify with precision, in real-time, who is buying their products, what quantity they are buying, and where there is excess demand for their products. Armed with this data, they can build more resilient supply chains, reduce product shortages and maximize growth opportunities in the market.
Schedule a demo today to see how RedCloud can help your brand build a resilient supply chain and reach over 200,000 new retailers across multiple markets.
Merchant payments are the hottest battleground for digital financial services providers (DFS) in emerging markets. Over the last five years, mobile network operators (MNOs), fintech, FMCG brands, and other players have sought to crack merchant payments, and it’s easy to understand why.
While much progress has been made with person-to-person (P2P) payments as an initial use case in many markets, retail payments are a much bigger prize, as small merchants accept $19 trillion in cash payments yearly. Digitizing these cash payments would unlock a massive and immediate opportunity for DFS and MNOS, nearly 500 times more than the total volume of payments made across the entire mobile money industry.
However, digitizing merchant payments and driving the adoption of the different types of digital payments in the retail market have proven a tough nut to crack for DFS and FMCG brands alike. This article provides a blueprint for digitizing merchant payments by adopting a strategy from the global card payments industry, which can help the digital payments industry unlock up to an additional $19 trillion in revenue.
The arguments for digital payments are well known by now; it’s faster, more secure, and cheaper than cash on a large scale. Currently, cash handling costs can reach up to 9% of the annual revenue of distributors, wholesalers, and consumer brands, while retailers lose up to 4.7% to 15.5% per transaction due to leakages and other cash management costs.
In addition, many merchants cannot pay for the products they need when the FMCG sales van comes around due to a lack of cash, leading to avoidable stock-outs on shelves and lost sales opportunities.
However, the most important component of digital payments is the massive amount of detailed transaction data generated. These data can be analyzed to identify trends and patterns in buying behaviors, and the insights generated can be used to create new products and services. These would help introduce value-added services, like credit facilities and insurance, that will benefit small merchants in some of the most vulnerable and disadvantaged communities across emerging markets.
Despite the seemingly obvious advantages of digital payments, merchant adoption rates remain abysmally low, and DFS cannot crack the code on merchant payments. The reason is a strongly held skepticism of digital payment solutions in the retail industry.
The simple reason merchants and small retailers prefer cash is a better customer experience. For most merchants, cash is free to use, universally accepted, reliable, and requires no prerequisites. In contrast, most digital payment solutions are cumbersome, have a steep learning curve, and require additional technology.
Many payment providers and FMCG brands have positioned their digital payment solutions as a “better way to pay,” but there is nothing wrong with the old way; merchants love cash! Unfortunately, this is exactly why DFS providers and FMCG brands cannot unlock the full value of digital payments in emerging markets.
Small retailers, such as mom-and-pop shops, are less inclined to trust these “abstract” payment systems in favor of physical cash they can see and hold. In addition, there are often fees associated with digital payment channels, which is off-putting, as it sounds like they are being charged to spend their money.
Finally, even when merchants are convinced to adopt digital payments, there is a severe lack of interoperability between multiple systems. In many cases, the payment providers used by the merchants and the customers are different, and there is often no easy way to transfer funds between these systems. In the end, merchants end up with monies locked up in their digital wallets but cannot use them as freely as they would use cash.
Without a common layer of interoperability for the many digital payments solutions currently in use, eliminating cash payments across the retail market will remain a pipe dream.
In the 1950s and 60s, credit and debit cards were just becoming popular for payments. During this period, banks basically issued their cards and built their acceptance networks, much like today's digital payments industry. However, as the demand for cards began to rise, merchants struggled to handle multiple acceptance processes, and consumers found that they could not use their cards everywhere.
This lack of universal acceptance made using cards cumbersome and limited its widespread adoption. This continued until an association was proposed - one that would bring all the banks in the system together to form a more coherent scheme. This led to the formation of the Nation BankAmericard Inc (or NBI) in 1970, which brought all the banks that issued the BankAmericard into one system. In the ensuing years, more cooperative entities emerged and were fully consolidated into global schemes, with the formation of Visa in 1976 and MasterCard in 1979. These companies were established to build a common platform for managing card payments across different banks and evolved to provide the consistent, reliable experience consumers enjoy today.
Now, consumers can walk into any shop in any country with full confidence that the merchant will accept their card. In addition, the high level of interoperability between cards issued by different banks, even in different countries, has enabled card payments to grow into a $26 trillion global industry, with over 11 billion cards in circulation and growth rates of 6 to 16% per year, including in emerging markets.
To unlock similar growth and even exceed it, DFS and payment operators need to provide merchants and consumers with a simple, seamless experience, similar to what card companies have done for the last 60 years. They must build interconnection, common processes, and unified brand acceptance to drive massive adoption. In addition, DFS providers must also provide value-added services that prove to merchants that there is a significant advantage to switching to digital payments.
Building this collaborative infrastructure will take time and effort, but when built successfully, a $19 trillion prize is ripe for the taking.
RedCloud envisions a world where every trader, brand, or merchant, can start trading digitally without any barriers or limitations. This is why we built the world’s first Open Commerce platform. A decentralized, open platform where consumer brands, distributors, and retailers can all connect and trade seamlessly.
We created Open Commerce to pioneer a new way of trading for the next 1 billion merchants that will be created in emerging markets, and to power this new trading system, we also built RedPay, the world’s largest local payment network.
We partnered with some of the largest payment providers across Africa, Latin America, and Asia to provide over 2 million pay-in points in over 100 countries, so merchants can easily digitize their cash. In addition, RedCloud has also expanded the RedPay network to enable retailers to add money into their wallets via QR codes, Mobile Money, Bank Transfers, and many more.
More importantly, we have provided retailers with multiple ways to use their digital money. For example, they can sell digital top-ups like mobile airtime, TV subscriptions, and utility bill payments to their customers and earn a commission on each transaction. Apart from increasing customer footfall to the retailer’s store, this offering means that the retailer gains an extra income stream and can use their digital cash, even when accepting cash from customers.
Retailers can access the digital marketplace on the Red101 app, where they can see and purchase different products from multiple distributors at affordable prices. In addition, they now have the power to buy their stock from the comfort of their home or shops, pay digitally, and have their products delivered to their doorstep or any location of their choice.
That is true freedom.
By using the Red101 app, retailers can unlock access to credit facilities, using their trading history as collateral to access small loans, and supply chain credit that can help them grow their business.
FMCG brands, and other Digital Financial Services Providers, can also leverage RedCloud’s Open commerce ecosystem to access real-time data across the distribution chain. They can see where the demand for certain products is, which retailers and distributors are the best performing, and can use the insights provided to create data-driven promotions and campaigns that drive revenue.
Schedule a demo with RedCloud today, to see how we are unlocking the full value of the consumer goods industry in emerging markets and have empowered over 200,000 retailers across five countries to grow their businesses by up to 40%.
The article below originally appeared in Logistics Business on 2nd November 2022.
The pandemic, followed by a brutal war in Ukraine, has provided a catch-all explanation for rising prices. However, these two crises alone do not explain the persistent market pressures for everyday items such as food, drink, soap, or nappies. The root cause is a broken system of distribution that fails to match demand effectively with supply – with devastating consequences for global food security. - Says Justin Floyd, CEO of RedCloud Technology
Why is the pricing of everything continuing to rise? The popular narrative – both within media and economic circles – is that prices are rising because of the Ukrainian war and the disruption caused by Covid, both of which have limited the supply of staple food and FMCG products.
However, food insecurity was climbing long before either crisis hit. It already affects more than 30% of the world’s population, while a staggering three billion people cannot afford to eat healthily.
In reality, the recent supply limitations have laid bare a broader problem. In 2021, almost $2 trillion of products weren’t available in stores for customers who wanted to buy them. Why? Because it is so difficult to distribute at scale. Even major brands such as Starbucks must rely on a vast network of intermediaries to get coffee from bean growers in Kenya to a cup in London.
Sprawling, over-complex distribution chains
Perhaps the most memorable scene of the 2004 indie movie Layer Cake is when Michael Gambon’s character, Eddie Temple, informs Daniel Craig’s unnamed protagonist that “The art of good business is being a good middleman.”
In FMCG distribution today, the art of good business is being hampered by some of the primary intermediaries responsible for connecting supply with demand.
Intermediaries can’t always provide sellers with the right information on who is buying their products and where. In many instances, this type of information gathering tends to rely on paper-based, manual processes. Or, in the case of the major consumer technology platforms, it is guarded with proprietary zeal. Either way, the information that makes it back to suppliers – i.e., FMCG producers, manufacturers, and brands – is typically outdated or inaccurate, leaving all parts of the supply chain floundering, struggling to get the right product to the right local customers at the right time.
Working within these often sprawling systems, brands find themselves hopelessly disconnected from their retailers. They don’t know who buys their product, what else they should sell, or where a product wasn’t in stock and they lost out to a competitor.
In short, they don’t know who is selling their products or understand their needs. Their sales, marketing and distribution decisions are based on guesswork. Consequently, while the local retailers and merchants know their consumers, they can’t access suitable sources of supply to fulfil their needs and have no means to talk to the suppliers directly.
Bad middlemen
Perhaps more worrying, many of these intermediaries engage in monopolistic behaviour that further damages retailer access and consumer choice. Whether it is the global consumer technology platforms like Amazon, or dominant local wholesalers in Kenya and Argentina, if a distributor controls the terms of engagement for suppliers and retailers, it can quickly push up the pricing for consumers while simultaneously putting sellers out of business.
Further, where a large wholesaler has a monopoly, only the largest brands can thrive, as they’re the only suppliers with deep enough pockets to pay the distributors’ heavy commissions. Challenger brands that could bring lower-cost options to market are squeezed out, a real problem when household incomes the world over are under pressure from inflation.
The problem of centralisation
Monopolistic behaviour is a familiar problem wherever power is centralised – even though centralised platforms often start out as benign influences. They do what they can to bring buyers and sellers to the platform. As their network builds, they have greater power over these two groups, who come to rely on them for access to brands on one side, and to consumers on the other. From that point, their relationship with network participants changes.
This market failure represents a significant threat to the food security and quality of life for billions of people worldwide. The poorest nations are hit hardest, but in truth, all nations are vulnerable when goods cannot move effectively from the source of supply to the point of demand.
It is bad news for FMCG brands, a missed opportunity for retailers and, potentially, a disaster for consumers. The system is teetering. Were it to collapse, we could quickly reach a point where basic foodstuffs become unaffordable for large swathes of the world’s population. By 2050 the world will need to feed two billion more people. Unless these market failures are addressed, this pressure may come at an unsustainable cost for the planet.
In pursuit of Open Commerce
The tools exist to fix this problem. In today’s world, building connectivity via digital means is straightforward, providing there is the will to deliver and the infrastructure to support it.
This is where RedCloud comes in. Our platform seeks to connect buyers, sellers, and distributors, while providing transparent market information to all participants, ensuring no single party can develop a stranglehold over any locale or geography, and no one can dictate the price or the terms of engagement. Through RedCloud, brands can finally understand who buys their product and focus their marketing activity accordingly. Retailers can get the right products in stock to meet their local customers’ needs at a fair price. And distributors – the 100,000s of good middlemen out there – can meet the demands of both sides.
Of course, monopolies do not wish to give up their position readily. This is why we intend to bypass them altogether, offering a viable alternative to this damaging centralised infrastructure that prevents people from trading with each other effectively.
The best way to bring security of supply to the world’s poorest nations is to rip out old infrastructure and centralisation, democratising information on supply and demand, opening up logistics and creating a level playing field for competition. The aim is a free-flowing economy – a world of Open Commerce – where retailers and merchants, distributors and manufacturers can trade freely with each other. It is about restoring the art of being a good middleman.
Over the next few years, over 1 billion new consumers will be created in emerging markets, leading to unprecedented demand for consumer goods as these new consumers gain more spending power. Consumer goods brands must build brand loyalty across their supply chain to capture this demand and capitalize on one of the biggest growth opportunities in history.
However, building brand loyalty has become increasingly difficult ever since the pandemic. In this new post-COVID world, 50% of consumers and retailers report that they will switch brands when faced with shortages. This is a cause for concern, as 75% of retailers surveyed reported encountering problems with supplier and distribution footprint, while 85% struggled with inadequate digital technologies across the supply chain, which resulted in “out-of-stock” situations at inopportune times.
Consequently, as supply chain crises and distribution problems continue to prevent consumer products from reaching the shelves in time to meet existing demand, brands will lose more customers, sometimes permanently.
This article closely examines how driving loyalty differs in emerging markets from developed markets and shows how leveraging digital technology like Open Commerce can help consumer brands unlock and maximize the growth opportunities in their respective markets.
FMCG brands have long sought ways to increase the lifetime value of each customer, as retaining and incentivizing an existing customer to make repeat purchases can be 5 to 25 times cheaper than acquiring new customers, according to research by Invesp.
For decades, the best way to achieve this was with loyalty programs, especially points-based loyalty programs where customers could earn points by making repeat purchases and redeem the points for rewards such as discounts on future purchases, gifts, and other special offers.
While this strategy worked well, and an estimated 90% of all consumer companies today have a loyalty program, it is beginning to fail. A 2018 report by Oracle on Loyalty shows that less than 30% of consumers believe that the loyalty rewards they receive are valuable. In addition, the pandemic radically changed consumer behavior and had a negative impact on brand loyalty. A recent McKinsey consumer sentiment survey shows that over 35% of consumers have tried a new brand since the pandemic, and 79% intend to keep exploring new channels, stores, and brands.
These reports also show that while consumer sentiment has changed significantly in the last few years, loyalty programs are yet to catch up. For example, a recent Financial Times survey of the loyalty programs of the top 100 brands shows that over 50% of the loyalty programs are still point-based, with only 2% evolving into ecosystem offerings.
While consumer brands in developed markets struggle to drive loyalty with loyalty programs, it’s even worse for brands in emerging markets.
In developed economies, most consumer goods are bought in supermarkets and hypermarkets, many of which already leverage technology in their daily processes. This sophisticated model is a perfect fit for traditional point-based loyalty programs, as customers can easily gain points by scanning receipts in an app or sharing posts on social media.
However, implementing a loyalty program is difficult in emerging markets, where over 80% of all consumer goods are sold in small roadside shops and open market stalls, and brands have little or no direct connection with their consumers. In addition, most end retailers only accept cash and do not even provide receipts, which makes any point-based loyalty program of little use. Therefore, FMCG brands must focus on channel partners, specifically retailers, to build loyalty in emerging markets rather than end consumers. If manufacturers can incentivize distributors and retailers always to carry their products, they will successfully convince end consumers to make repeat purchases.
Available research shows that most emerging market consumers are heavily influenced by word-of-mouth recommendations by friends and families and make most of their purchase decisions at the point of purchase.
Unfortunately, incentivizing retailers to carry their products and recommend them to consumers has proven to be almost impossible for many manufacturers, given the current state of the distribution chain. Currently, consumer brands in emerging markets depend on a scattered, fragmented network of wholesalers, distributors, and retailers across multiple geolocations to deliver their products.
This fragmented distribution model does not give brands visibility at sales outlets or direct connections with retailers, making it hard to build loyalty across their supply chains. In fact, many retailers and distributors will gladly switch to any brand that can provide them with a better deal.
For years, FMCG brands in emerging markets have depended on “earn-and-burn” or pure discount-based trade promotions to attempt to increase sales and generate loyalty, but it is no longer enough. In addition, the true value of any loyalty program, access to real-time data, is lost. FMCG brands in developed economies can at least track the performance of their points-based loyalty programs in real-time as each consumer redeems their points, but brands in emerging markets do not have the same advantage.
Most existing trade promotions are communicated by brand sales reps or field officers to the few large distributors and retailers they can reach, which means that many smaller retailers across multiple geolocations do not even know about or take advantage of the available programs.
Fixing this problem and building loyalty into the supply chain will require FMCG brands to adopt a digital solution that provides real-time visibility into the consumer goods supply chain in emerging markets, consumer goods manufacturers need a digital solution that provides visibility across the supply chain and provides direct access to retailers.
They need Open Commerce.
Open Commerce is a new, digital way of trading that provides a level playing field for brands, distributors, and retailers in emerging markets. It allows brands to engage directly with their distributors and retailers and sell to them digitally, providing real-time visibility across the entire supply chain. With the visibility Open Commerce provides, brands can access data from every single distributor, wholesaler, and retailer in real time and leverage the insights generated to identify and better serve their most loyal customers. At the same time, also create personalized trade promotions targeted at increasing the loyalty of both new and existing customers.
RedCloud has built the world’s first open commerce platform, Red101, where brands can unlock the full value of their distribution chain and build loyalty into the supply chain. With the Red101 app, retailers and distributors can order their products directly from the brand and access customized promotions that can help increase brand loyalty. In addition, brands can harness a network of internal and external partnerships to create loyalty programs that tap into the Open Commerce ecosystem and provide unbeatable cross-sectoral value propositions for the customer. Ecosystem-centric loyalty programs, such as providing vouchers on digital products or providing access to credit facilities that can be used across the app have been shown to have a significantly higher success rate at changing customer behavior and driving brand preference.
Schedule a demo today to see how RedCloud can help your brand unlock loyalty across the entire supply chain.
RedCloud started in 2014 with the aim of building a democratised commerce system for the world. Soumaya Hamzaoui is one of the co-founders and technology architects of the company, tasked with developing and refining its open commerce proposition for FMCG brands, distributors, retailers and local merchants based all over the world.
We spoke to Soumaya about the company’s progress, its ambitions for the next 12 months, and her conviction that technology must always serve both an economic and societal purpose.
Global commerce is under real stress. In many parts of Latin America and Africa, local merchants are facing a shortage of suppliers and limited stock. They need to find other solutions to keep servicing their consumers. The pain is acute, particularly in the fragmented markets in which we operate. In the worst cases, consumers cannot access essential goods, such as food, washing powder or nappies.
While many have focused on supply disruption as the cause of these issues, distribution is a longer-term and more entrenched problem. Centralised distribution, concentrated in the hands of a few powerful players, has created a chronically inefficient market. Our goal at RedCloud is to break down these barriers and deliver open commerce. Our app brings together retailers, distributors and FMCG manufacturers to match supply with demand and deliver market insight to networks that have historically been opaque. We are a technology enabler, helping merchants, entrepreneurs, and small businesses to find affordable solutions and survive the difficult times that await them.
In the longer term, we see our role as fixing a broken market. Without better market information and technology tools to bring these disparate parties together to work harmoniously, supply chain shortages and spiralling costs will continue to plague global commerce.
We ensure brands and distributors are better aligned with retailers. We see multiple examples of how this creates efficiency in the market. Last year, retailers in Johannesburg were experiencing shortages of certain popular liquor products and losing revenue as a result. We had, in our customer base, local suppliers in Cape Town that hadn’t previously been able to access the Johannesburg market. Through our platform, these two parties have come together – a win-win for consumers, retailers, and suppliers.
We are also facilitating cross-country trade. We have local brands in Nigeria offering high-quality products. Thanks to the market insights delivered by our technology, we were able to identify South Africa as a good territory for them to target. Many of these brands are now talking to local South African distributors. For us, it’s about offering alternatives where we see gaps in the market, giving more choice for merchants. This is particularly important at a time of high prices, when consumers urgently need cheaper options to manage their household budgets.
We’ve made the decision to focus on the five markets where we are currently established – Nigeria, South Africa, Brazil, Argentina, and Peru – and go deeper, rather than immediately pursue further geographic expansion. We are exceeding our expectations for growth and speed of execution in each market. Growth is strong, around 300% per month, and we have built our team to 150. Our product suite is now well-established, and we’re putting the finishing touches on our financial services offering, ready for launch by the end of the year.
The problems of distribution are global, but these are markets where there is real fragmentation in the retail sector and a lack of access to technology. In the worst cases, distributors work on pieces of paper, with telesales execs calling people by phone or visiting in person to take orders.
Our objective is that any merchant, entrepreneur or small business in these markets can create an account on RedCloud and run their business through the phone. The first step is managing their relationship with suppliers directly via our Red101 app. The next is to order new stock and identify additional products to buy, expanding their distribution networks and access to local delivery services. Everything can be managed directly through our technology. Beyond this, our goal is to enable these retailers to become more consumer-focused, more professional, and better able to grow their businesses.
Today, when a local merchant downloads Red101, they immediately gain access to an inventory of products across two categories. Firstly, they can purchase consumer goods, from FMCG giants such as Coca-Cola, Heineken, InBev, or Nestle, as well as compelling new FMCG products. Secondly, they can access digital products to sell to their consumers – for example, pre-paid services such as airtime for mobile or pre-paid electricity meters. This is a vital part of our proposition in our target markets because it gives merchants an immediate additional source of revenue.
As we’ve worked with more retailers and distributors, we’ve found that lack of access to credit and working capital is a profound constraint on their ability to sustain and grow their businesses. Many still rely on their income to buy more stock – hence, they’re working on a short-term, reactive basis, placing orders two or three times a week, or whenever they can afford the next order. This is not a sustainable way to work.
We have been talking to banks and institutions about how to unlock this problem. Our financial services offering is designed to allow any retailer or distributor using our technology to gain access to working capital loans or credit solutions and thus start planning their inventory management more effectively.
That’s the really neat part. All of these businesses were previously trading offline, so there was no way to formally record and recognise their trade history.
Using our app, these retailers and distributors automatically create digital trading histories – proof that they’re performing as they claim. The banks can make decisions on the back of the trading history, aggregating this with data they already hold. It is the missing piece of the puzzle.
You’ve spoken about the importance of delivering timely and accurate data, plus real-world insights, to RedCloud users. What does that look like today?
Market data and insight is a crucial part of our proposition, improving transparency in the markets in which we operate and helping all participants to offer a better and more targeted way of conducting commerce.
We already have granular data to help FMCG companies learn more about the performance of their products in each market – something that is impossible to gather in the offline trading world. In the longer term, we are focused on developing predictive insights for everyone using our platform. This requires a lot of data, but it will be really valuable in helping FMCG brands and their distributors to focus on the biggest growth opportunities while helping retailers ensure they have the right products to meet anticipated demand.
The final piece of the insights proposition is marketing and communications. As our platform develops, we will be able to let FMCG brands leverage the data to run marketing campaigns through the app, targeting local merchants with relevant offers.
Centralisation. Whether we’re talking about consumer giants such as Amazon, or the cash and carry kings of South Africa, we want to break the stranglehold of centralised distribution whereby a tiny handful of players control the pricing, the terms of engagement and overall access to the market. Centralisation crowds out suppliers and limits choice to consumers. That’s what we’re trying to disrupt.
I don’t believe you should build a company just for profit or to make rich people richer. Technology should lift economies and societies, creating rather than destroying opportunities. Companies often lose sight of this.
For example, part of our value to distributors is that they can improve margins because they don’t have to have on-the-ground sales teams roving around trying to deal with local merchants. And what we see in practice is that, rather than firing these people, distributors are redeploying them in more valuable positions, such as technology or operations. In essence, this is what RedCloud is about: building opportunities for everyone involved in commerce, and the consumers they ultimately serve.
Ready to reach new growth levels with Open Commerce? Schedule a demo today and let's help you unlock the full value of your supply chain and drive revenue growth for your brand!
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.
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?
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.
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.
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.
Over the last few years, digital marketplaces have been the buzz of the consumer industry as the global online share of FMCG has increased steadily. FMCG digital commerce is expected to grow rapidly across emerging markets within the next five to ten years as smartphone and internet penetration increases in these regions. For example, FMCG e-commerce grew by 4% in Latin America in 2021, an acceleration three years ahead of the predicted schedule.
However, despite the growth opportunities FMCG e-commerce represents, many FMCG brands and retailers still struggle to understand how to adopt them into their already complicated channel mix. Currently, the only way for these brands to ensure their products reach consumers is by distributing them through a fragmented network of roadside shops, open market stalls, and other small neighborhood stores.
While this distribution model has worked for decades, its limitations are numerous. There is no visibility across the distribution chain, and driving sales depends on physical visits by sales reps to thousands of distributors and retailers. With the pandemic accelerating the rate of digitalization, more retailers and distributors are willing to shop online, and FMCG brands now recognize the advantages of reaching their B2B customers on a digital platform.
Forward-thinking brands are already thinking long and hard about how to participate in digital marketplaces. This article offers a brief overview of why traditional e-commerce marketplaces do not work for FMCG brands. We also showed how Open Commerce, a new type of B2B e-commerce, is the secret to winning in emerging markets.
Across emerging markets, over 80% of all consumer goods are sold via the informal market, making small, independent grocery stores not only a vital channel for FMCG companies but an essential part of the local economy by supporting millions of households.
However, there is an inherent disadvantage to serving multiple small retailers located along the same route but with different ordering and delivery schedules. Sales reps are forced to make multiple runs with partially loaded trucks, a grossly inefficient and costly delivery model. In addition, the system leans towards entirely manual processes, such as manual order-taking and reconciliation, which is more prone to inconsistency and inefficiency. Thus, it is unsurprising that the average SG&A costs for the consumer industry is 25%, the highest of any single industry.
A fragmented route to market also makes for an inflexible supply chain. Everything from sales plans to delivery routes are difficult to alter, and there is no room for agile reallocation of resources. In a world where supply chain disruptions are occurring more frequently, this model leaves brands vulnerable.
Despite the inefficiencies that emerge from this fragmented distribution system, manufacturers must continue crafting new, digital approaches to reach these stores due to their scale and proximity to end-consumers, and by adding digital selling to their channel mix, FMCG brands can:
FMCG brands can only reap these advantages when they build and execute online selling the right way. For most CPG executives, e-commerce has historically been less profitable than traditional offline sales. Yet, digital commerce will most certainly be one of the primary sources of growth for consumer goods companies in the foreseeable future. Does this mean that margin dissolution is inevitable?
With the right digital marketplace, CPG companies can generate healthier margins while selling online and drive revenue growth with data-driven dynamic pricing. However, a digital marketplace must offer brands the following capabilities to make the financial and technical investment worth it:
Unfortunately, no digital marketplace solution provides these capabilities to brands in emerging markets. While third-party marketplaces like Jumia in Africa or Mercado Libre have the digital infrastructure to enable brands to reach more customers, the trade-off is that brands lose control over their supply chain.
Most e-commerce marketplaces use their distribution and last-mile delivery networks to deliver any goods bought on the marketplace, so brands do not have access or visibility into who is buying their products and where the demand for their products is. As a result, the real value of digital selling – customer and transaction data, data-driven insights, and personalized customer experiences will forever remain out of reach for FMCG brands that use third-party marketplaces.
The only other solution for brands is to build their own digital marketplaces, but it also has a disadvantage – convincing retailers and distributors to adopt the platform. Most digital marketplaces designed in-house by FMCG brands have a limited selection of products to choose from. This is an entirely unattractive prospect for distributors and retailers who often carry SKUs from multiple brands.
So, the question remains, how do FMCG brands win with digital marketplaces?
The answer is Open Commerce.
Imagine a digital platform with the reach and scale of traditional e-commerce marketplaces but provides full, end-to-end visibility across the entire supply chain. Instead of simply seeing how many products were sold on the platform (basically the only information 3party marketplaces provide), brands can see who is buying their products down to the smallest retailers, their geolocation, how often they restock, and so much more.
This is what Open Commerce provides.
Open Commerce is a new digital trading platform for the consumer goods industry built on the same principles as the original Open-Source movement. It provides a single point of digital engagement for brands, distributors, and retailers to connect and trade directly with each other, allowing the free flow of data between all ecosystem partners. With Open Commerce, retailers and distributors can access their favorite brands, order for stock, and pay securely online, no matter their location.
RedCloud has built the world’s first Open Commerce platform, Red101, which allows brands to leverage the advantages of a digital marketplace while defending their core business. Red101 also allows FMCG brands to capture real-time data across the entire distribution chain and analyzes the data to provide actionable insights that can be leveraged to drive growth. With the insights generated, sales and marketing teams can shift from traditional outlet segmentation, which is often based on scale or region, to a more sophisticated approach, such as grouping outlets based on micro market characteristics and overall growth potential.
Schedule a demo with us today to see how FMCG brands in emerging markets are embracing digital Commerce and winning with Open Commerce
Imagine a billion-dollar organization that manufactures thousands of products with a 100% manual, paper-based management system. Does this sound strange? Unfortunately, this is all too common in the consumer goods industry, especially in emerging markets, where manufacturers still depend on physical visits to retailers and van sales across a vastly fragmented retail market to deliver essential consumer goods.
This model is severely outdated, grossly inefficient, expensive, and stifles growth for FMCG brands. As supply chain disruptions continue to occur with alarming regularity and place considerable strain on the already inefficient traditional chain, the need for consumer goods manufacturers in emerging markets to digitally transform their organizations is clear, but the “how” is not. Data shows that out of 10 global consumer goods companies that have launched large-scale digital transformations since 2015, only 30% have hit their growth and cost-efficiency targets.
To successfully drive digital transformation and reap the numerous benefits it offers, consumer-goods companies must embrace a new breed of transformation that builds a sustainable competitive advantage. They will also need to rethink their entire distribution models, where to play, and how to win with digital while building new capabilities for the future (such as end-to-end supply chain visibility, data-driven marketing, digital route-to-markets, and next-generation inventory management).
CEOs of large CPG companies have lots of reasons to worry. The traditional advantages incumbents have held for decades – scale, marketing reach, and long-standing relationships with retailers are far less relevant today. Retail customers now expect more personalized experiences, and smaller, digitally native brands with direct-to-consumer distribution models can hit the ground running and seize market share within months.
E-commerce marketplaces and last-mile delivery startups are already monetizing new competitive advantages with customer and transaction data in ways that large FMCG manufacturers cannot compete. In addition, supply chain disruptions, rapidly shifting demand patterns, and rising input costs have added more economic uncertainty to the industry, adding another layer of complexity to the difficult digital transformation task.
Digital transformation can become a game-changer for larger FMCG brands and enable them to compete aggressively and unlock new pockets of growth. Available reports show that digital transformation can build a 50% faster route-to-market at a third of the cost and double the return on investment.
FMCG brands already recognize that maintaining the existing manual business model will leave their companies sitting ducks but have found it increasingly difficult to identify the best path forward to drive digital transformation. For example, on average, CPG companies have reported an 8% increase in digital technology budgets over the last three years, but only 25% have successfully executed a digital transformation (well below the 35% cross-industry average), and only 20% have created little long-term change.
Most FMCG brands today are still lagging in the stages of “passively digital” or “exploring digital” and are unable to cross to the “doing digital” stage because they lack a cohesive data capturing and analytics strategy, a critical component to supporting digital transformation. Any captured data is often scattered in spreadsheets, field agent reports, and even mobile phone pictures. Without access to real-time data syndicated across the value chain, no meaningful insights can be generated, and the company cannot respond in time to rapidly changing market demands or maximize growth opportunities.
In our work with FMCG brands in emerging markets to drive digital transformation across the entire business, especially in the sales, marketing, and supply chain function, we have identified four major steps that these companies must take to move from chaos to insights:
By taking these steps, CPG companies will:
The most critical question that FMCG leaders in emerging markets must now answer is this – what digital solution should we invest in that will provide the capabilities we need to drive true transformation?
The answer is Open Commerce.
Open Commerce is the only digital solution that provides everything FMCG brands in emerging markets need to drive digital transformation. Open Commerce is a new way of doing business that connects the entire FMCG supply chain on a single digital platform, making it possible for FMCG brands to sell to both new and existing retail customers online.
In addition to enabling online e-commerce sales, consumer goods companies and distributors who leverage Open Commerce can now access valuable, real-time customer and transaction data synced across every single point of sale. This means that for the first time, a manufacturer in an emerging market like Nigeria or Brazil can see who is buying their products in any geolocation, even the most remote ones, and create specific, targeted campaigns that will increase sales and drive growth.
RedCloud has built the world’s first Open Commerce platform, Red101 Market, a complete end-to-end digital solution that is easy to implement, cost-effective, and, most importantly, captures the data that legacy FMCG brands desperately need to stay competitive. Unlike other e-commerce solutions, CPG companies do not need to abandon their existing distribution network. Rather, Open Commerce gives you more control of and visibility across your supply chain, so you can build the much-needed data-analytics capabilities and rapidly scale across the entire organization in a matter of weeks, not years.
The future of Commerce is Open, and RedCloud is the pioneer of that future. Schedule a demo with us today to see how we can help you drive rapid digital transformation and unlock new levels of growth.
Every consumer goods company wants a supply chain that runs smoothly from end to end; however, various challenges, such as the rapid shifts in customer expectations and purchase habits, inflation and the rising prices of commodities, and a looming energy crisis, among others, have made planning for this almost impossible. The case is even worse in emerging markets, where FMCG brands depend on an inefficient manual distribution model to reach the fragmented retail market.
Research shows that supply chain disruptions that last a month or longer now occur every 3.7 years on average, with a cumulative cost to consumer goods companies of one-third of annual earnings every decade. As the costs of these disruptions continue to rise, FMCG leaders now recognize the need to prioritize resilience and adaptability. A survey of 60 senior supply chain executives shows that 93% plan to increase resilience in their supply chains, and the primary way for brands to build this resilience is by rethinking their planning practices.
Over the next decade, the existing planning capabilities that FMCG brands, especially in high-growth markets, have relied on will prove insufficient, and the increased frequency of disruption will only make things more difficult for supply chain managers in the consumer goods industry. Therefore, the only way to survive and drive growth is to completely reimagine planning operations and capabilities – a true end-to-end planning transformation.
Managing FMCG supply chains are inherently a cross-functional activity, as they connect the company’s internal functions – marketing, sales, and distribution and its key external partners – suppliers, distributors, retailers, and end consumers. Therefore, the only way to build a resilient supply chain capable of resisting disruptions and driving growth is by close alignment and coordination among all supply chain participants, both internal and external. However, while many FMCG manufacturers in emerging markets recognize that operating in organizational silos prevents their supply chains from performing well, they still struggle to coordinate among multiple departments and channel partners.
For example, where distribution centers want to control inventory levels to reduce handling costs, sales teams cannot accurately predict demand across the fragmented market in real-time, as they do not have visibility across the entire supply chain and must rely on physical visits by sales reps to distributors and retailers. This makes inventory planning harder, leading to increased handling costs or low service delivery to customers.
Ultimately, these disconnects, lack of visibility, and cooperation make it harder for FMCG companies to plan effectively and meet growth targets, as every department and channel partner seems to be pulling in a different direction.
The only way forward is with advanced supply chain planning, which can increase revenue by up to 4%, reduce inventory by up to 20% and reduce supply chain costs by up to 10%. In addition, a high-performing planning function can provide FMCG manufacturers with the ability to capture value across both the top and bottom lines.
To unlock this value and capture the much-needed growth, supply chain leaders in emerging markets must answer this question – how do you build advanced supply chain planning capabilities when the market is fragmented, and there is no visibility across the distribution chain?
Digital planning solutions hold the potential to dramatically improve the supply chain performance for FMCG manufacturers in emerging markets, but most brands are severely limited by the lack of choices available. In addition, most planning solutions, like ERP and SAP systems, tend to focus only on internal, individual processes but provide almost zero visibility across the entire supply chain.
To successfully transform planning and reach new levels of growth, FMCG brands need a solution that provides:
There is only one solution that provides all of these and more.
That solution is Open Commerce.
Open Commerce is a revolutionary digital commerce platform that unlocks the full value of the traditional supply chain by providing end-to-end visibility across the entire value chain. It is a new, digital way of trading that connects every player across the distribution chain and captures real-time live data across the market. Now, with Open Commerce, FMCG brands in emerging markets can dissolve data silos, gain full visibility into the needs and challenges of other channel players and build a truly resilient supply chain.
RedCloud has built the world’s first Open Commerce platform, Red101 Market, a simple, easy-to-use digital solution that makes advanced planning analytics possible. With Red101, brands can now provide distributors, wholesalers, and retailers with a digital platform where they can order their products anytime and anywhere instead of having to wait for field agents to visit their stores. However, unlike traditional e-commerce, where sellers lack visibility and lose control of their supply chains to third-party marketplaces like Amazon or Jumia, FMCG brands can now see in real-time where the demand for their products is across the entire market and build dynamic, resilient supply chains that ensure adequate levels of service delivery at the touch of a button.
Schedule a demo today to see how RedCloud’s Open Commerce platform can help you develop advanced planning capabilities and transform your supply chain.
Over the last few years, sustainability has become an important topic in the retail and consumer sector. Since 2020, interest in "ethical brands" and other sustainability-related issues has exploded, growing between 300% and 600% based on Google searches alone. The pandemic, extreme weather events, and a looming energy crisis, among several other events, have brought the need for a more sustainable economy to public attention, as 52% of consumers globally say that sustainability has become more important to them because of the pandemic.
But what exactly does sustainability mean, and how does it affect the consumer-goods sector?
For many people, sustainability is primarily about the use of natural resources and the climate impact of our actions, which is highly relevant for consumer-goods manufacturers and their supply chains, as the typical FMCG supply chain generates more environmental impact than in-house operations. For example, the supply chain is reportedly responsible for more than 80% of greenhouse-gas emissions and over 90% of the impact on air, land, water, and other geological resources.
Today's consumer brands face a challenge, as sustainability is no longer a nice-to-have but an essential part of every business's resilience and growth plan. This article explores why sustainability is crucial for consumer-goods brands and shows how digitizing the supply chain with Open Commerce can help brands rewire their existing systems to build sustainable, more resilient value chains that will allow them to thrive in the future.
Today's consumers no longer see sustainable products and brands as an alternative. Instead, they are basing their purchasing decisions, at least in part, on the sustainability of products and companies. Over 60% of consumers now say they are changing their consumption habits in favour of increased sustainability. This "eco-awakening" is not limited to consumers in developed economies but is also strong in emerging economies. A recent report by the Economist Intelligence Unit shows that demand for sustainable goods increased by 24% in Indonesia and 120% in Ecuador.
However, despite the increased attention being paid to sustainability, there is a "value-action" gap between consumers' sustainability preferences and their purchasing actions. For example, research shows that 65% of global consumers tried to buy sustainably packaged products, but only 29% could avoid plastic packaging. While some parties might see this gap as evidence that sustainability is not as important as consumers make it seem, it is more likely that there are significant barriers that prevent consumers from being as eco-conscious as they want to be.
This would mean a significant advantage for brands that can make it easier for consumers to make sustainable choices. For example, the 36% gap between consumers who tried to buy sustainably packaged products and those who could avoid plastic packaging is worth over $800 billion. By eliminating the barriers to sustainable retail behaviour and helping close the value-action gap, FMCG brands can unlock valuable revenue streams.
To successfully close the value-action gap and unlock the value-action gap, brands must first understand the varying environmental attitudes and actions. Recent research by Europanel, Kantar, and GfK defined three main consumer segments based on their level of concern for environmental issues.
From the study, more consumers will become concerned with sustainability in the consumer-goods industry, and brands need to identify and surmount the existing barriers preventing consumers from accessing sustainable products. In addition, brands that can communicate their dedication to meeting sustainability targets are more likely to drive growth and unlock new revenue streams.
While the need for brands to become more sustainable is clear, the path to achieving it is not. Brands, especially emerging markets, need increased visibility across their value chains to strengthen credibility and prove how they are achieving their sustainability targets. However, companies can only prove what they can measure, so data is crucial for sustainability efforts.
Daily across the consumer-goods industry, there are numerous opportunities for brands to apply data to supply chain sustainability problems, such as inaccurate demand and its effect on inventory planning, logistical and distribution challenges, packaging, and product waste, among others. The only way to achieve this is by integrating data across the entire supply chain – from brands, distributors, retailers, and other partners or suppliers. With real-time visibility and advanced analytics, brands can drill down into key sustainability metrics, mitigate risks, and identify and maximize new opportunities for improvement.
With real-time data syndicated across the supply chain, brands can better understand the demand for their products and what products customers are likely to buy. This data can then be leveraged to make data-driven decisions on inventory placement and optimize deliveries. It can also provide customers a more personalized product selection, which eliminates a major barrier for the eco-considerers' customer segment.
In emerging markets, FMCG brands typically lack visibility across their distribution chain and cannot identify who their customers are, what eco-awareness segment they belong to, and what types of products they would be interested in. Thus, these brands are unable to unlock the demand for sustainable products and maximize the valuable revenue streams previously inaccessible.
Until now.
RedCloud has built the world's first Open Commerce platform, a digital commerce solution built for the consumer-goods industry in emerging markets. With Open Commerce, brands and distributors can unlock the full value of the supply chain and capture valuable data in real-time. Instantly, brands can see into the retail markets, which is buying their sustainably produced goods across multiple geolocations and rewire their supply chains to meet the demand gap.
Schedule a demo today to learn how RedCloud can help you build a sustainable value chain and unlock valuable revenue streams.
A walk through any major market in any major market in any emerging economy will show the same scene, thousands of little shops and open-air stalls selling essential consumer goods. These small stalls and shops are responsible for over 80% of all consumer goods sold in emerging markets. In some markets, like Nigeria, that figure can rise to 97%, representing billions of dollars worth of trade done entirely manually.
However, the process of distributing these consumer goods to the retailers and merchants who sell to the final consumer across the fragmented retail market in emerging economies is a complicated task. However, distributing these consumer goods to the retailers and merchants who sell to the final consumer across the fragmented retail market in emerging economies is a complicated task. The traditional trade model heavily depends on inter-personal relationships between field agents and retailers, as well as, and physical visits to fill and collect orders from retailers. This model is grossly inefficient and causes erratic demand, which leads to empty shelves and lost sales opportunities.
This article examines how Open Commerce can help brands, distributors, and retailers become more effective, save costs, and increase revenue.
In emerging markets, multinational brands struggle to get their products to customers and face a bewildering kaleidoscope of strategic and operational challenges. They must grapple with a chaotic array of shops, open-air stalls, kiosks, and street vendors who seem to offer consumers a little bit of everything, from groceries to branded goods. The fragmented nature of these markets makes last-mile delivery slow and inefficient, and the total dependence on physical visits to distribute stock means that thousands of dollars and manhours are wasted daily.
Manufacturers and large distributors need a large army of field agents who travel long distances to serve the spread-out distribution network of stockists, wholesalers, and small retailers. These field agents often have to carry large amounts of cash paid by retailers and distributors, which can be risky and costly. Smaller shops and stall owners in rural areas are also faced with the same challenge: they have to travel long distances to the city center, often carrying large amounts of cash to purchase stock. This delay is even more complicated in major cities like Lagos, where traffic congestion is at an all-time high. A recent report shows that 14.12 million manhours and 3.834 trillion are lost daily and yearly due to traffic congestion.
Under this inefficient distribution model, retailers cannot place orders for stock at the point where it’s needed; instead, they are forced to wait for field agents to visit them to take orders. Sometimes, the field agents accompany the delivery vehicle and fulfill the order on the spot. Other times, the field agent has to take the orders and transmit them to the sales team, who then plan a delivery beat based on the orders generated across specific geolocations. However, this system is slow and cumbersome and leads to avoidable delays that prevent retailers from getting the products they need when they need them.
The solution to creating a more efficient distribution chain is to digitize the entire supply chain. By digitizing the distribution process, sales teams can see in real-time where the demand for their products is and create efficient delivery routes that ensure that lead times are shortened, and retailers’ shelves are kept stocked.
Brands that are able to adopt digital solutions to craft nuanced strategies aimed at traditional retailers can raise their revenues from emerging markets by 5 to 15 percent, and increase profits by 10 to 20 percent.
However, digitizing an entirely manual supply chain that has operated in the same way for decades is not an easy task. Many FMCG brands have attempted to build digital solutions or sales apps, but they almost always fail. Available statistics show that over 70% of all digital transformation initiatives by FMCG brands eventually fail due to three main reasons:
To build resilient distribution networks, improve end-to-end visibility across the supply chain and make retail business more efficient, we need a new type of digital solution.
We need Open Commerce.
Open Commerce is a digital commerce platform that unlocks the full value of the traditional distribution model. It is designed to enable brands, distributors, and retailers to connect and trade directly with each other on a digital platform.
Unlike other digital solutions, anyone can get started with Open Commerce because it is easy to use and provides clear, compelling value for everyone along the distribution chain. Brands gain real-time visibility across the supply chain with access to syndicated, real-time data at POS. Distributors can buy directly from brands and sell to retailers on the same app, making it easier to manage their entire retail business online. Retailers of any kind can log onto a simple app and, within 24 hours, access multiple distributors and brands and start placing orders for their stock.
RedCloud has built the world’s first Open Commerce platform, Red101 Africa. With Red101 Africa, retailers simply need to download an app, and they can manage their business right from their mobile devices. With Red101 Africa, a retailer in even the most remote locations can buy stock from any brand or distributor to restock their shelves,
With Open Commerce, you can make every single customer or field agent’s journey worthwhile because you know that you are responding intelligently to existing demand, which leads to consistent sales growth month-on-month.
Schedule a demo with us today to see how we build resilient supply chains in emerging markets and make retail businesses of all sizes more effective.
Imagine receiving a personalized email from your favorite coffee brand with a coupon for your next purchase, just when your coffee is running low. How likely are you to make that purchase? At least 60% likely, according to research. The research also shows that this type of personalized campaign is very effective and can deliver up to 48% more revenue for the brand.
Personalized marketing is crucial to driving revenue growth, as a study by McKinsey shows that fast-growing companies drive 40% more revenue from personalization than slow-growth brands. But unfortunately, the B2B brands in high-growth markets across LATAM and sub-Saharan Africa still lag the B2C industry in providing personalized marketing.
There is, however, a huge incentive to figure it out, as becoming a leader in personalized marketing can generate over $1 trillion in value. To unlock this value and generate top-quartile performance with personalization, FMCG brands need to build an excellent data capturing and analytics engine that will enable marketing leaders to tailor their offerings to reach the right individuals at the right time.
As online interactions surged in the wake of the pandemic, more customers became exposed to the personalization practices of the B2C industry - from personalized movie recommendations on Netflix to carefully curated music playlists on Spotify and recommended products on e-commerce platforms. As a result, research shows that 70% of customers expect personalization interactions more than ever, and 76% get frustrated when these interactions don’t happen.
Personalized marketing is even more critical in the B2B industry, as it’s a traditionally low-loyalty environment. FMCG distributors and retailers will often switch to carrying the products of any brand with the most attractive trade marketing campaigns or promotions. The data also supports this, as 72% of customers say they expect the brands they buy from to recognize them as individuals and create positive experiences that make them feel special.
However, creating personalized trade marketing promotions and campaigns is almost impossible for FMCG manufacturers in high-growth markets due to the lack of real-time, syndicated data across the supply chain and an integrated data analytics solution. It’s therefore not surprising that only 15% of B2B marketing leaders believe that their company is on the right track with personalization.
See how a lack of merchant engagement costs FMCG brands billions of dollars
Personalization is impossible with the ability to understand customers’ unique needs on an ongoing basis. With real-time data on what a consumer needs or will need in the future, FMCG brands can easily recommend products to meet those needs, leading to increased sales and higher revenue. For example, Amazon and other e-commerce platforms can provide valuable recommendations to shoppers based on the data generated by both the user and the others on the marketplace. These personalized recommendations are responsible for 35% of all sales.
Available data also shows that customers are happy to share data for a more personalized offer; however, FMCG brands across LATAM, Sub-Saharan Africa, and other high-growth markets lack the capacity to capture this vital customer data. For these manufacturers in high-growth markets, end-to-end visibility across the supply chain is almost impossible, as brands cannot access any data on their products once it leaves the warehouse to the distributor and retailers. The fragmented nature retail landscape also means that field agents cannot capture a detailed view of the market in real-time. Ultimately, FMCG marketing teams are left blind and can only design generic promotions and campaigns that cannot drive consistent, month-on-month growth.
Speaking on the data challenge that FMCG companies in high-growth face, Director of Sellers Marketing at RedCloud, Samantha Norman said, “One thing we see when we engage with FMCG brands and larger distributors is the “data darkness" that they have to operate in. It’s honestly quite astonishing to see these businesses, who trade millions of dollars in monthly transactions, lacking so much valuable insight into their product consumption trends.
As a marketer who understands the power of data, I have made it my mission to share with these businesses the true value of data and how they can leverage analytics with RedCloud's Open Commerce to improve marketing operations and outcomes for their supply chains.
Companies with advanced personalization capabilities have found proven ways to increase revenues by 5-15% and increase marketing spend efficiency by 10-30%, primarily by deploying direct, personalized communications and recommending the right products at the right time. The only way FMCG brands can unlock marketing success with personalized marketing is to develop systems that can collate and analyze real-time transaction data across the entire supply chain. Furthermore, brands need a data analytics engine that can identify changing demand patterns and deliver actionable insights based on the captured data on easy-to-understand dashboards.
That engine is Open Commerce.
Open Commerce is a new way of trading that unlocks the full value of the supply chain by connecting FMCG manufacturers, distributors, and retailers on a single digital platform. With Open Commerce, FMCG marketing leaders can access valuable data on their customers in real-time and leverage that data to create data-driven growth campaigns that work.
RedCloud has built the world’s first Open Commerce platform, Red101 Market, and decentralized digital trading in high-growth markets, making it easy for any retailer to trade digitally and directly access any brand or distributor.
With Red101 Market, we have taken the secret behind the success of e-commerce giants like Amazon, and placed it in the hands of every manufacturer, distributor and retailer. Unlike traditional e-commerce platforms, however, sellers gain visibility over who buys their products and where the demand for those products is. The platform captures real-time syndicated transaction data across the entire supply chain, and the in-built market intelligence software analyzes the data to provide actionable insights, which are then displayed on a customizable dashboard
Now, marketing leaders in the FMCG industry can better understand their customers and create promotions that drive growth. Sales teams can also function more effectively, as sales reps can evolve from simply visiting retailers or distributors to take orders. Instead, the sales reps are transformed into intelligent territory managers who can drive growth at scale.
The future of Commerce is Open, and RedCloud is unlocking that future. Schedule a demo today to discover how you can unlock personalized marketing at scale and drive consistent, month-on-month growth for your brand.
Every year, billions of dollars’ worth of consumer goods are sold in high-growth markets. However, the supply chain that moves these products from the manufacturers to distributors and eventually retailers is broken and no longer fit-for-purpose. The current traditional distribution model is inefficient, cash-based, and depends almost exclusively on manual processes.
This inefficient distribution system prevents brands from driving sales growth, as it provides zero visibility across the supply chain. As a result, distributors are forced to spend more time and money to distribute essential products to retailers across the highly fragmented market.
Digitizing the B2B supply chain across the retail market can increase its efficiency, but there are no digital solutions that empower brands to gain control of their supply chain and increase distribution effectiveness amongst existing channel partners.
But Open Commerce is changing this.
Open Commerce is a new way of trading that unlocks the full value of the traditional supply chain. With Open Commerce, brands and distributors can digitize the entire distribution process, making it possible to drive consistent growth and move goods from the manufacturer to the end consumer as quickly and cheaply as possible.
In July 2022, RedCloud sponsored a CEO’s event for Toiletries and Cosmetics manufacturers in Nigeria. At the event, our COO, Soumaya Hamzaoui, presented our bold vision for the future of the $3 billion toiletries and cosmetics industry. A future powered by Open Commerce, where brands and distributors have complete visibility and control over their supply chains and distributors.
The CEOs in attendance were very excited by the possibilities that Open Commerce presented for their businesses and asked several insightful questions. We’ve compiled some of the questions and the brilliant responses Soumaya gave.
Note: The questions and answers have been lightly edited for more clarity.
Soumaya: Regarding subscriptions, we do not have any. It’s Pay-As-You-Go. So, as you sell on the platform, we take a percentage on each transaction, a tiny percentage, which is much less than other e-commerce solutions take.
To help small businesses, we do more than just give them the technology and leave them to figure it out. Many of these small businesses operate in a world where everything is written on paper, so we’re investing in a solid team that will educate these retailers and show them how best to leverage the technology. Our field officers have worked with many small businesses and retailers to develop several use cases for our solution, and as a result, we’re happy to report massive growth of up to 40% for small businesses.
Soumaya: For retailers, a small business can be as small as a kiosk or a one-person mom-and-pop roadside shop. For distributors, it can refer to anyone doing anything from $30,000 worth of trade up to $500,000 and even more. So, we do not have a lower limit on who can use our technology. That’s why we put it on the Play Store, not behind a paywall, so anyone and everyone can access the benefits of Open Commerce.
Soumaya: Most e-commerce players today focus on the B2C market segment, but that is not our focus. The few players that are in the B2B sector, there are primarily set up as distribution companies themselves. They buy stock from brands in bulk and sell it at discounted rates into the market, but that is not our model.
Our model is to work with existing players across the distribution chain by providing the technology they need to grow their businesses. We don’t buy stocks and don’t have warehouses, we are a pure technology player, and this means that our partners do not need to worry about us hijacking control of their supply chain.
No company in Nigeria today unlocks the traditional distribution model in this manner, but I am confident that this is how business should be done. No single company can buy all the stock in the market or control the entire supply chain, nor should they be able to. Therefore, we firmly believe in decentralizing the supply chain and empowering brands, distributors, and retailers.
Soumaya: As I stated earlier, we are not focusing on only key accounts. We are focused on empowering every retailer, distributor, and brand with Open Commerce, no matter their size. We have a strong go-to-market team that is split into multiple levels. Some team members are specifically dedicated to looking after key accounts, while other members of the team look after the long tail of the distribution chain.
We are building a system that can sustain the entire supply chain from end-to-end. This is important because of the data that the market needs. Brands need to understand who is buying your products and what retailers are carrying your products. To provide this critical data and generate real value for everyone, we must do the hard work to go into every part of the market and provide brands with the insights that they desperately need.
Schedule a demo today to find out more about Open Commerce and how it can unlock the value in your supply chain and drive growth for your brand.
By 2025, for the first time in world history, the number of people in the consumer class will exceed the number of those still struggling to meet their basic needs. Over 1 billion new consumers will be created in emerging markets over the next few years, representing a huge growth opportunity for consumer goods manufacturers.
However, capitalizing on this attractive growth opportunity can be challenging, especially for more prominent FMCG brands, due to the fundamental difference in how emerging and mature markets operate. CEOs of large multinational consumer brands acknowledge that despite their greater size, and larger capital bases, they often struggle to hold their own in emerging markets. Available data shows that smaller brands captured 45% of growth, and the private label grew by 30%. This contrasts with larger brands, which have only generated 25% of growth over the same period.
In this article, we examine the peculiarities of selling and distributing consumer products across markets and provide a playbook on how FMCG brands of any size can leverage data to unlock new sales opportunities and drive growth.
Most emerging markets still follow a traditional trading model, where brands depend on channel partners to deliver last-mile delivery to small retail outlets and roadside shops scattered around rural and urban areas. This value chain, which has remained unchanged for decades, prevents brands from fully penetrating the market and capturing public demand.
One striking feature of the retail landscape in emerging markets is the fragmented distribution network comprising various channel partners. These channel partners often include large and small distributors, wholesalers, dealers, stockists, and smaller retailers, who are the eyes and ears of the manufacturers. As a result, they help brands achieve much-needed market visibility across multiple geolocations and understand the rapidly changing demand patterns in the market.
Find out how you can build resilient supply chains for your FMCG brand
However, the traditional market structure doesn’t provide enough visibility across the market to enable brands to make strategic data-driven decisions in real-time. The fragmented nature of the distribution network means that once a product leaves the manufacturer’s warehouse, the brand loses almost all visibility on that product as it moves from one channel partner to the other.
To win in emerging markets, it’s imperative that FMCG brands build dynamic supply chains, where individual channel partners, both large and small, work together to provide valuable data across the value chain and implement corporate data-driven strategies on the ground.
Most FMCG brands already recognize the need to capture data across their supply chain, with 86% of B2B companies believing that they can do much better with data. They want to know what’s happening in the distributors’ vans and the retailer’s shelves because that data can help reduce distribution costs, exploit price opportunities, and unlock granular pockets of unmet demand.
Unfortunately, many of the existing channel partners who make up the nerve center of the distribution network still rely on manually jotted down sales notes to make critical inventory decisions. A surprisingly large number of distributors don’t even have an email address to send or receive invoices.
Therefore, FMCG brands need a strategy that changes the mindset of distributors on data-driven collaboration and an easy-to-use digital solution that has apparent incentives for the distributor. Accomplishing this will require sales and marketing teams to go a step beyond simply creating an app and throwing it at distributors. Instead, they must devise a development plan that leverages existing technology and lays the foundation to hand-hold small distributors and train them to build simple workflows based on easy-to-use digital solutions.
However, the million-dollar question is, what digital solution is available?
For years, many FMCG brands have tried to digitize their distribution networks with little success. Market data shows that, on average, 70% of all digital transformation initiatives by FMCG companies eventually fail to deliver on the promised results – and it gets worse.
The rise of e-commerce marketplaces adds another layer of complexity to driving digital transformation, leaving brands with an important question.
Should FMCGs sell their products on e-commerce marketplaces? They can, but they risk losing total control of their supply chains, as most e-commerce companies own their fulfilment networks and often don’t share market data with the brands who sell on their platform.
On the other hand, building a digital solution in-house hasn’t been met with much success, as distributor and retailer adoption rates remain critically low.
The solution is Open Commerce.
Open Commerce is a new, digital way of trading that unlocks the full value of the traditional distribution chain. Unlike traditional e-commerce, Open Commerce allows brands to directly engage their distributors and sell to them digitally, so they retain control of their supply chain and can even build dynamic, resilient distribution networks at the touch of a button.
But it doesn’t end there.
RedCloud has built the world’s first Open Commerce platform, Red101 Market. It’s a new way of trading that connects brands, distributors, and other channel partners on the same platform, making collaboration possible. With Red101 Market, distributors can buy products directly from brands on the B2B marketplace and sell to retailers on the same platform, providing end-to-end visibility across the entire supply chain.
RedCloud’s Open Commerce platform allows brands to see the consumption patterns in real-time across the market. We also have an inbuilt marketing intelligence system that analyses the data generated to provide actionable insights that can be leveraged to identify growth opportunities in the market and capitalize on them.
Red101 Market has also solved the distributor adoption problem by providing distributors with valuable incentives that will compel them to switch to digital commerce. We also enable them to sell to more retailers across multiple geolocations, which leads to consistent growth. Finally, RedCloud has solved the cash payment problem, making it possible for retailers and other small shop owners to pay for their products online, even if they don’t have a bank account.
To learn more about how RedCloud has helped numerous brands unlock the growth opportunity across emerging markets, schedule a demo with us today, and let’s unlock outsized growth for your brand.
UK-headquartered Global Technology firm, RedCloud Technologies, has partnered with Thokoman Foods PTY (LTD), South Africa’s 2nd largest peanut butter manufacturer to help digitize their supply chain and increase distribution efficiency.
This partnership will see Thokoman Foods easily penetrate more retail markets across South Africa by leveraging the world’s first Open Commerce platform built by RedCloud.The Open Commerce platform, Red101 Market, unlocks the full value of the traditional supply chain across emerging markets and will enable Thokoman Foods to build more efficient distribution channels, reach new retailers and deliver sustainable sales growth.
Thokoman currently distributes its products to 128 hypermarkets, 2133 supermarkets, 8966 mini-markets, 417 wholesale outlets, and 26,856 grocery stores. However, the brand has identified the need for a digital solution that provides increased visibility and real-time insights into the supply chain across multiple geolocations. RedCloud’s Open Commerce technology will provide Thokoman with an easy-to-use platform that captures real-time data from every distributor, retailer, and sales outlet and analyzes that data to provide actionable insights that can be leveraged to improve supply chain efficiency and drive sales growth.
Speaking on the partnership, Alan Devraj, the Sales Director at Thokoman Foods, said, “We look forward to our partnership with Redcloud and are excited to be a part of their forward-thinking in making the supply chain faster, simpler, and more efficient.”
Thokoman Foods also plans to introduce a new range of high-quality and responsibly-packaged food products into the South African market, and, according to the company, adopting RedCloud’s digital commerce solution is a critical part of this plan, as it enables them to easily build an e-store where any distributor and retailer can access their brand’s food products.
Samantha Hamzaoui, the Chief Operating Officer at RedCloud, said, “We are excited to partner with Thokoman foods to help digitize their entire supply chain and make the previously complex distribution process more efficient with the world’s first Open Commerce platform. At RedCloud, Our mission is to digitize the FMCG supply chain across emerging markets so that our business partners reach more customers, build better relationships across their supply chain players, and drive business growth. This partnership allows us to achieve that on a large scale.”
The Red101 Market App is the world’s first Open Commerce platform and is currently live in over five markets, with over 100,000 actively trading retailers signed onto the platform and hundreds more joining daily. With Red101 Market, RedClod is delivering on its promise to help FMCG brands, distributors, and retailers increase revenues, reduce costs, and drive business growth.
RedCloud is a global technology company committed to enabling commerce everywhere, especially in emerging markets, by digitally connecting FMCG brands, distributors, and merchants that enable them to sell smarter, buy better, and pay simpler. With its proprietary Open Commerce platform, RedCloud is poised to drive economic growth in the FMCG industry by providing new levels of visibility and enabling strategic decision-making based on real-time data analysis syndicated across the distribution chain.
A few years ago, the beauty industry (comprising toiletries, cosmetics, fragrances, and personal care) was the fastest growing FMCG sector and the primary diver of the overall FMCG growth. However, COVID changed everything. With more people staying at home and covering their faces with masks, one of the best-performing sectors found itself struggling. As a result, overall retail sales fell by 15 percent, and revenues dropped by up to 30 percent as brands were forced to deal with closed stores and reduced demand.
Fortunately, the beauty sector is resilient, and experts predict a return to growth in 2022 as sales continue to increase, especially in emerging markets like Latin America. However, the expected rapid growth will be driven majorly by e-commerce and other digitalization trends rather than a return to brick-and-mortar stores. For example, data from PayU, one of the largest payment processors, shows that online spending in Latin America’s beauty category grew by 133% in 2020. Other external analysis showed that the predicted online spend on cosmetics and other beauty products would reach $4.3billion by 2022, up from $3.8billion in 2020.
This article will show how brands in the beauty sector can unlock the hidden growth potential of digital commerce in emerging markets to increase sales and maintain market share.
Across emerging markets, toiletries and cosmetics manufacturers face a major supply chain challenge. The retail market is fragmented, and the supply chain that ensures that products get to retailers’ shelves in time has become increasingly vulnerable to disruption. Rising prices due to supply chain issues also pose a problem, as emerging market consumers are price sensitive, and a slight price increase can shift consumers to a competitor.
Find out how digitalized distribution can help reduce the prices of goods.
The traditional route-to-market depends on manual processes that don’t give toiletries and cosmetics brands visibility or control over their supply chain. For example, sales teams don’t know who their distributors sell their products to, and the brand loses visibility and control of its products immediately after the delivery trucks leave the warehouse.
Without the ability to identify where the demand for their products is or what retail channels are the most effective, driving sales growth becomes significantly more challenging.
Sales teams now must depend on data generated by third parties, which can be costly and often not useful for decision-making in real-time.
The only alternative is to wait for sales reps and field agents to cover a few geolocations, as the retail market is too fragmented to cover. Unfortunately, gathering data through these physical visits is costly and inefficient as the data is often collected and entered manually, making it prone to errors and personal biases.
Learn how the traditional supply chain leads to slower sales growth.
Our conversation with smaller, local cosmetics and toiletries brands reveals that there’s often a problem of low-quality imitations sold by some retailers, which hurts the brand image.
Take the case of Linda, a consumer who walks into a small retail store and unfortunately purchases a low-quality imitation of a locally branded cosmetic product. Like many younger consumers, Linda will likely switch to a competitor if she believes the brand can no longer be trusted. But, more than that, she is more likely to talk about her experience with other consumers online and convince them to switch brands.
Beauty brands need a more efficient way to communicate with their distributors and engage merchants to drive sales. A digital solution that enables manufacturers to see where the demands for their products are and effectively control the distribution of their products will unlock the growth already predicted in the sector.
Learn how to increase brand loyalty and drive merchant engagement with Open Commerce
Open Commerce is the solution to the challenges beauty brands face in emerging markets. This new digital way of trading unlocks the full value in the traditional supply chain by digitizing existing business relationships between brands and distributors and opening new retail channels across multiple geolocations.
RedCloud has built the world’s first Open Commerce platform that enables brands, distributors, and retailers to trade directly without any restrictions. Unlike other e-commerce solutions that attempt to hijack the supply chain from brands, our platform is decentralized and provides a level playing ground for everyone.
See how traditional e-commerce is hijacking control of the distribution chain from brands.
RedCloud also empowers beauty brands to build a new and efficient route-to-market by providing increased speed, flexibility, and visibility across the entire supply chain.
Open Commerce is what your beauty brand needs to capture the enormous growth opportunity in emerging markets. Schedule a demo today to see how RedCloud can help you increase sales and unlock consistent, month-on-month growth.
If you wanted to buy an expensive item that you ordinarily couldn’t afford, like a $300 leather jacket, how would you pay for it? While many people would pay with a credit card, more consumers are switching to Buy now, Pay Later (BNPL) services.
BNPL, just like credit cards, allows shoppers to spread the cost of a purchase over multiple (usually four) installments. However, unlike credit cards, most BNPL options are interest-free and don’t require credit checks, making them an attractive option for consumers.
BNPL services mainly target smaller consumer purchases but can potentially deliver the credit that retailers and small businesses across emerging markets desperately need. This article examines why BNPL is so popular and shows how it can be used to provide retailers in emerging markets with the credit they need to grow their businesses.
BNPL has become increasingly popular over the last few years, with reports showing that the BNPL industry is currently worth over $100 billion and accounts for over 2% of all e-commerce payments. The industry is also expected to grow to 15 times its current size to account for around $680 billion in transaction volume by 2025, or 14% of all e-commerce payments.
The rapid growth of BNPL is due to several factors, some of which include:
Fintech brands, and other large companies, have recognized the huge opportunity BNPL presents and continue to enter the space, with Square acquiring BNPL provider Afterpay for $29 billion, and Apple announcing Apple Pay Later, its internal BNPL service launching by the end of 2022.
John is a small retailer in Soweto who sells biscuits and receives orders when sales reps visit his store every month. However, the biscuits are in high demand and are usually sold out within two weeks of his order. Without direct access to the sales reps or visibility on the next delivery, he must wait for the next order and often turns customers away due to the biscuits being out of stock. John is also limited to the little cash he makes from his business as he doesn’t have a bank account. Without formal financial records, he cannot access loans to order more biscuits and grow his business, so he keeps losing customers.
Across emerging markets, over 200 million estimated business owners like John, cannot access traditional forms of credit and are excluded from the formal financial ecosystem. The gap between the credit needed by these micro, small, and medium enterprises (MSMEs), and the credit available, is estimated to be above $5 trillion.
Available data shows that digital financial services like BNPL and digital payments can provide low-interest credit and financing options to over 1.6 billion small retailers like John and increase the volume of credit available in emerging markets by over $2 trillion. Like how existing BNPL services allow consumers to buy products and pay in installments, brands and distributors could allow retailers to buy more stock or other items needed for their stores, like refrigerators, and pay in installments.
However, making BNPL work for B2B retail in emerging markets would require digitizing the traditional supply chain. BNPL services work for consumers because more people are willing to shop for products and pay online. In contrast, most retailers in emerging markets don’t trade digitally, which is a significant barrier to providing access to the credit that they need.
Digitalizing the traditional retail supply chain in emerging markets has been a significant challenge for FMCG brands, despite numerous efforts to penetrate the largely informal market. FMCG brands and distributors have created mobile apps and digital payment platforms and even partnered with e-commerce providers to bring digital trading to small retailers with little success. This failure to penetrate the market has made providing credit to retailers at scale an almost impossible task.
Until now, that is.
RedCloud has brought digital trading to retailers in emerging markets with the world’s first Open Commerce platform, Red101 Market. Open Commerce is a new, decentralized digital trading system where brands, distributors, and retailers can directly trade together on a single platform. While traditional e-commerce hijacks control of the entire supply chain and restricts brands and distributors from directly engaging with retailers, Open Commerce is focused on digitalizing the existing distribution chain and enabling brands and distributors to reach new and existing retailers.
We have also solved the low adoption rate of digital trading among retailers by providing a compelling value proposition that incentivizes retailers to start trading digitally. With Red101 Market, John can directly connect to brands and distributors to order products when he needs them and can pay online. In addition, Red101 Market has made digital payments easier than ever by building the world’s largest local payment network, so retailers like John in over 100 countries can walk into any of our 2 million pay-in points, digitalize their cash and pay for their FMCG products digitally, even without a formal bank account.
By providing a digital trading platform that retailers want to use, and an easy-to-use digital payment platform, brands, and retailers can now identify high-performing retailers and offer BNPL services. The payments can also be deducted automatically from the retailer’s wallets, making it easy for retailers to continue accessing even more credit.
With Open Commerce, brands can identify areas of high demand and provide high-performing retailers with targeted upsell and cross-sell offers that will drive sales growth and increase revenue.
Schedule a demo today to see how RedCloud can help your brand unlock the full value of your supply chain and drive sales growth by providing retailers with BNPL services at scale.
The CPG industry is at a digital-commerce tipping point after lagging behind other sectors for years, accelerated by the long-lasting effects of the pandemic and its lockdowns on consumer behavior. While the total share of FMCG goods sold online still hovers under 10%, it’s expected to more than double globally over the next few years. Digital Commerce is also expected to grow twice as fast in emerging markets as in developed markets, as smartphone and internet penetration continues to accelerate in developing economies.
Online FMCG growth potential exists in nearly all markets, and most major FMCG players, especially in emerging markets, recognize that digital commerce will play a key role in driving growth in the future. However, the current e-commerce model in the retail market doesn’t help brands, distributors, or retailers grow their businesses or solve the existing supply chain problems delaying growth.
This article examines how traditional, centralized e-commerce cuts off millions of buyers and sellers. It also introduces a new, open model of e-commerce that provides brands, distributors, and retailers across emerging markets with the tools they need to manage their supply chains and grow their businesses.
E-commerce holds a lot of promise for the consumer goods industry, as it enables brands and distributors to create faster, more seamless buying experiences for retailers and can even reduce the prices of goods by creating resilient supply chains. However, with e-commerce marketplaces accounting for 52% of all online retail sales and the top 100 marketplaces accounting for over 95% of those sales, it’s become harder for brands and distributors to reap the benefits of digital commerce.
Large e-commerce platforms like Amazon, AliExpress, Mercado Libre, and many others are hijacking the supply chain and eliminating distributors by selling directly to consumers. Manufacturers aren’t safe either, as brands who use these platforms as sales channels also lose control of their entire supply chain. The current e-commerce model is centralized and restricts manufacturers and distributors from accessing valuable data on who’s buying their products or where the demand for their products is across multiple geolocations. Instead, the e-commerce marketplace often controls this data and uses it solely for its own benefit.
Recent reports claim that one e-commerce giant in India used proprietary data of other brands on its own marketplace to replicate best-selling products under private label owned exclusively by the marketplace. The private label products were then rigged to appear at the top search results on the marketplace, effectively destroying the rival brands on the platform.
E-commerce marketplaces also charge high commission fees on each sale, up to 20% in some cases, in addition to other marketing costs. However, there’s often no visibility over the impact of this marketing, and brands cannot access any insights that can be leveraged to grow their business or better manage their supply chains.
This monopoly power exerted by centralized e-commerce marketplaces shows that the traditional e-commerce model is broken. Many brands and retailers are stuck and completely dependent on the marketplace, just an algorithm change away from seeing all their online sales evaporate. So, it’s not surprising that brands and retailers rank the dominance of large e-commerce marketplaces as the top concern in their efforts to drive business growth with digital commerce.
With traditional e-commerce, brands in emerging markets are faced with a dilemma. They can upload their SKUs to a third-party marketplace and reach an increasing number of consumers who want to buy online. However, they’ll have little or no visibility over their digital sales and inevitably lose control over their sales growth to the platform. In addition, the brand would still depend on the inefficient, traditional supply chain to reach the vast maturity of their current market – a true lose-lose situation.
FMCG brands and distributors need an e-commerce solution that unlocks the full value of the traditional supply chain and makes distribution more efficient without alienating current channel partners.
This solution is Open Commerce.
RedCloud has built the world’s first Open Commerce platform, where brands, distributors, and retailers can directly connect and trade together on a digital platform without unnecessary restrictions. Unlike traditional e-commerce marketplaces, Open Commerce is decentralized and is focused on digitalizing your current supply chain rather than hijacking it.
With Open Commerce, brands can now sell to both new and existing distributors and retailers while also reaping the full benefits of digital commerce. FMCG manufacturers and distributors will gain granular visibility syndicated across the entire supply chain in real-time, as every distributor and retailer across the fragmented retail market is transformed into a data point. This will enable sales and marketing teams to identify precisely where the demands for their products are across multiple geolocations and leverage the data to create data-driven go-to-market strategies.
Open Commerce also solves the digital payment challenge that e-commerce marketplaces have been unable to solve for decades. RedCloud has built the world’s largest payment network with over 2 million pay-in points across 100 countries. Any retailer, even in the most remote locations, can instantly digitize their cash, even without a bank account, and use that cash to pay for their FMCG products anytime.
Retailers also have nothing to fear and everything to gain from Open Commerce, as they can manage their stores from their mobile phones. Using the Red101 Market app, retailers can directly access any brand or distributor, place orders for their stock at the best possible prices and make online payments. In addition, top-performing retailers can access loans, supply-chain financing, and other credit facilities from brands, distributors, and other financial services providers, which would help them grow their businesses.
Schedule a demo today to see how RedCloud is helping thousands of FMCG brands, distributors, and retailers unlock the full potential of digital commerce .
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Every day, consumer goods manufacturers across emerging markets produce billions of consumer products that need to be moved to retailers’ shelves. However, the supply chain responsible for moving these goods is broken and no longer fit-for-purpose. The fragmented nature of the retail industry, lack of visibility across the supply chain, and an overwhelming reliance on cash payments have led to delayed delivery and increased prices of consumer goods.
Recent global supply chain disruptions have revealed the shortcomings of this broken distribution model, as over 40% of all FMCG brands have experienced supply chain disruption in the last few years. This has also slowed business growth, as larger FMCG brands have grown by only 0.4% in the last few years.
It is, therefore, no surprise that CPG companies in emerging markets now recognize the need to embrace digital commerce and digitally transform their supply chains to make them more effective and cost-efficient. A recent survey of over 500 FMCG CEOs showed that end-to-end visibility was ranked as the top factor responsible for a successful supply chain. Another survey also showed that 90% of FMCG brands plan to change their supply chain networks, and over 40% plan to increase their investment in supply chain management with the primary aim of increasing visibility and improving resilience.
To build more agile and resilient supply chains, FMCG brands in emerging markets need a digital solution that connects all supply chain players and provides full visibility across the distribution chain. With these insights, stock shortages, changing customer demand, and other important information will be captured and communicated in real-time so that brands can adjust their distribution strategies.
The only platform that offers all these features, and more, is Open Commerce. RedCloud’s Open Commerce platform, Red101 Market, has helped numerous brands digitize their supply chains and gain valuable, real-time insights that can be leveraged to increase distribution efficiency, increase sales, and drive business growth.
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Recently, RedCloud’s CEO, Justin Floyd, and COO, Soumaya Hamzaoui, visited the LATAM region to speak with FMCG brands, distributors, and retailers to discover how they’re leveraging the trade freedom and powerful opportunities that Open Commerce provides. Soumaya talked at length with Gabriel Netto, the Sales Manager at Lagostão Pescados, one of the fastest-growing seafood distributors in Brazil, about the value that RedCloud brings to the brand.
Here is a lightly edited transcript of the conversation:
Soumaya: Why did you partner with RedCloud, and what do you expect from this partnership?
Gabriel: We’re happy with this partnership, as we had been searching for exactly what Red101 Market is offering us - greater visibility across the supply chain with a digital solution. We believe in embracing the latest market innovations, which is why we closed this partnership, and we’re confident that RedCloud will help us gain new customers and drive significant sales growth.
By partnering with RedCloud, we also expect to become a pioneer of supply chain digitalization in our market.
Soumaya: Would you walk me through how your customers use the product in their businesses?
Gabriel: For us, getting our customers to use the Red101 Market app is easy because we’re in the food business. Many of our clients are restaurants who need various types of food products and want to know the different matches they can do. So, when our clients need us, we would offer consultancy services.
Sometimes they’re looking for a specific product, but with our consultancy team, we can suggest other possibilities for food recipes that work better. With Red101 Market, the client can easily make an order for the suggested products right on the call, which has helped us increase our sales significantly.
Soumaya: What features are you more excited about in the app?
Gabriel: Definitely real-time payments. With real-time, online payments, we get to receive orders with payments completed in full, which is a great improvement to the former manual payment method. Now, we don’t need to rely on only the CNPJ credit analysis, which means that we can process the order faster and deliver orders within 24 hours in most parts of the region here in São Paulo.
This feature allows us to meet our customer’s demands faster, make more sales, and get paid on time.
Soumaya: What new features do you want to see in the app going forward?
Lagostão Pescados spokesperson: We’d love to see credit card and credit analysis regarding CNPJ consulting on the Serasa platform for us to be more competitive and offer better price options to new, loyal customers as we do with our current customers.
It would also be amazing if we could cross-sell and upsell related products as our customers are checking out soon. That way, we could offer our standard consultancy through Red101 Market and present other food options related to the ones the customer was searching for.
(CNPJ is TAX ID used in Brazil that can be used to analyze a company’s credit rating via a national credit analysis database. Using this rating, distributors can then offer credit facilities and better prices to retailers.)
Soumaya: It’s interesting that there’s a difference between your prices and your competition’s prices. Can you tell me more about that?
Gabriel: Yes, there is a difference. Typically, it’s a small difference, and we advise our customers that if they notice a huge price difference, it’s probably a low-quality seafood product with high water level. Some companies deliberately input high water levels into their products, which is illegal, and then sell them cheaper.
We experimented a while ago, where we measured the difference in water levels in our products and that of other seafood distributors. We found that their products had up to 15% more water than ours, which is significant.
So, our customers know that with Red101 Market, they’re getting high-quality products from Lagostão Pescados.
Soumaya: What are the next steps your brand is taking with Red101 Market?
Gabriel: We plan to add Global Pescados as a brand onto the Red101 Market platform. Global Pescados is a second brand that we’ve built, which is associated with Lagostão Pescados, and focused on selling seafood in small quantities in supermarkets and malls. Of course, restaurants, hotels, and other market sectors can buy the brand, but we’ve packaged the products into little packs, which is more attractive to supermarkets.
These supermarkets will be able to order Global Pescados right on the Red101 Market app and pay online. This means that we don’t have to physically go into the supermarkets, saving us time and money.
Soumaya: Thank you so much for taking the time to speak with me today. It’s great to hear all the amazing ways Open Commerce is helping Lagostão Pescados digitize the supply chain and drive sales.
Gabriel: You’re welcome, Soumaya. It was great talking with you too. We’re excited about this partnership and its opportunities for the future!
Schedule a demo today to learn more about how Open Commerce can help your FMCG brand control the supply chain and increase sales.
Global technology firm, RedCloud, has announced a new business partnership with South African detergent manufacturer Kwality Brands, to increase sales and expand market reach with the world's first Open Commerce platform, Red101 Market.
This partnership will see Kwality Brands, one of the top brands in the South African soap and detergent industry, gain access to a wide network of retailers across South Africa who already use RedCloud’s Open Commerce platform, Red101 Market, to trade digitally in their stores.
Kwality Brands is the manufacturer of Exello and Exceed, a line of laundry products, and is one of the few local manufacturers of washing liquid, powders, and detergents in South Africa. They’ve been seeking to increase market share amid fierce competition from other multinational brands, and RedCloud was the perfect partner to help Kwality Brands achieve this, as the partnership will provide Kwality Brands with over 1,000 potential new points of sale via the Red101 Market app. In addition, by joining the world's first Open Commerce platform, the brand will gain end-to-end visibility across their supply chain and see in real-time who is buying their products and where the demand for their products is, segmented by geolocation.
Rafiq Tayob, the CEO of Kwality Brands, expressed delight at the opportunity RedCloud presents for the company’s expansion plans. Rafiq, who had previously invested heavily in other digital marketing efforts without generating any significant returns, said, "We at Kwality Brands have been attempting to enter the informal sector with our Exello and Exceed product range. However, we were unable to find a suitable partner to drive this strategy. Red101 Market presented their strategy to us, and with their local and international exposure, skilled workforce, energy-driven team, knowledge in the FMCG market, and incorporation of digital marketing, we at Kwality Brands took the decision to partner with Red 101 Market to achieve our objectives. I look forward to growing our brand through their platform and networking.”
RedCloud is committed to bringing digital commerce to millions of FMCG brands, distributors, and retailers in emerging markets who currently trade offline. To achieve this, RedCloud has built the world’s first Open Commerce Platform, Red101 Market, a decentralized, open trading environment where brands, distributors, and retailers can connect and trade directly. With Open Commerce, the consumer goods supply chain in emerging markets is made more efficient, and FMCG brands like Kwality Brands can grow their business and reach a wider market without increasing costs.
Commenting on the partnership, the CEO of RedCloud, Justin Floyd, said, "We’re glad to partner with Kwality Brands to unlock the market and drive business growth with Open Commerce. Kwality is a great brand with an incredible product line, and we’re confident that our solution will enable them to expand its market reach, improve sales, and grow the brand. In addition, the Red101 Market app provides the brand with unprecedented visibility into their distribution chain, so they can identify and maximize growth opportunities in real-time."
RedCloud is a global technology company committed to enabling commerce everywhere, especially in emerging markets, by digitally connecting FMCG brands, distributors, and merchants that enable them to sell smarter, buy better, and pay simpler. With its proprietary Open Commerce platform, RedCloud is poised to drive economic growth in the FMCG industry by providing new levels of visibility and enabling strategic decision-making based on real-time data analysis syndicated across the distribution chain.
RedCloud Technologies has recently announced its business partnership with V-Martins Supplies, a large beverage distributor in Nigeria, to increase market reach and drive revenue growth by leveraging the world’s first open commerce platform, Red 101 Market.
The partnership was driven by V-Martins Supplies’ desire to expand its market reach and drive revenue growth without increasing costs. With RedCloud’s Open Commerce technology, V-Martins Supplies have a new digital sales channel that enables them to reach a wider network of retailers across multiple geolocations.
Since 2003, V-Martins Supplies has been committed to distributing its premium beverage brands across Southwest Nigeria. However, in a bid to expand operations and reach more retailers and markets within the country, they’re looking to incorporate digital solutions to address the operational and logistical challenges typically experienced in the FMCG industry.
V-Martins will successfully digitize the entire supply chain by leveraging RedCloud’s decentralized Open Commerce platform that connects brands, distributors, and retailers directly on a single platform. They will also gain the ability to see where the demand for their products is in real-time and create targeted, cost-effective growth campaigns to drive sales growth and increase revenue. In addition, this partnership with RedCloud provides V-Martins with direct access to over 10,000 retailers across Nigeria who already use the Red101 Market app to buy FMCG products for their stores.
V-Martins is also excited to leverage RedCloud’s advanced supply-chain financing program, where brands and distributors can offer micro-loans and credit facilities to their most loyal retailers, enabling them to grow their businesses. Commenting on the partnership and the exciting opportunities it presents, Victor Udeh-Martin, the Managing Director at V-Martins Supplies LTD, said, “The joy of being in business is an effective expansion of your sales/marketing network, and we know that our partnership with RedCloud will effortlessly bring this expansion to us.”
Also talking about the partnership, Justin Floyd, co-founder, and CEO of RedCloud, emphasized the commitment of the company to facilitate open trade in emerging markets.
He said, “With our decentralized open commerce platform, FMCG brands and distributors worldwide get to experience business growth and expansion on their own terms, free from the undue restriction that traditional e-commerce places on businesses. Open Commerce empowers distributors to build resilient supply chains and reach a wide network of retailers that were previously inaccessible to them under the traditional, fragmented distribution model.”
“We’re confident that V-Martins Supplies would benefit greatly from this partnership as they distribute their products to even more retailers. They can expect to gain more visibility, penetrate new markets across Nigeria, and even reward their most active retailers with advanced supply chain financing and micro-loans to help them grow their businesses.”
Red101 Market, the world’s first Open Commerce platform, is currently live in over five markets (including Argentina, Brazil, Nigeria, South Africa, and Peru) with plans to expand to over 20 markets by the end of 2022. Red101 Market also has over 270,000 registered merchants trading and growing their business with the unique opportunity that RedCloud provides.
RedCloud is a global technology company committed to enabling commerce everywhere, especially in emerging markets, by digitally connecting FMCG brands, distributors, and merchants that enable them to sell smarter, buy better, and pay simpler. With its proprietary Open Commerce platform, RedCloud is poised to drive economic growth in the FMCG industry by providing new levels of visibility and enabling strategic decision-making based on real-time data analysis syndicated across the distribution chain.
Shopping for food items and other essential consumer goods has become a luxury for millions of people in emerging economies worldwide, as prices have risen steadily over the last few years and spiked in the last few months. Reports show that 9 out of 10 FMCG manufacturers have increased, or plan to increase, their prices this year, and this isn’t the first hike, as 66 percent have increased prices two or more times in the last two years.
While the increase in prices of food items and other consumer goods is global, it will likely have a higher effect on consumers in emerging markets, especially across the Middle East, Sub-Saharan Africa, and Latin America. According to a report by the Economist Intelligence, food items account for over 40 percent of consumer expenditure in these regions, and the sharp rise in prices of FMCG goods means that many low-income consumers may not be able to afford essential goods.
This is certainly the case for Um Ibrahim, a 60-year-old widow and street vendor in Egypt, who says that feeding her children has become much harder. She says that the prices of everything has risen, from clothes to vegetables and even poultry eggs. For many consumers like Um, going to bed hungry or being unable to feed their children is a frightening but real possibility.
This article examines how the fragmented, inefficient distribution chains typical of emerging markets have contributed significantly to the price hike and shows how digitizing the consumer goods supply chain can help keep prices low.
Global prices of consumer goods have been rising rapidly for the last two years, fuelled by the COVID-19 pandemic, international trade wars, significant energy crises, and supply chain disruptions. In addition, the conflict in Ukraine and Russia has also caused the prices of essential agricultural commodities like grains, corn, and oil, to soar. For example, available data shows that global prices of corn and soybean have risen by 17 percent, while wheat prices have risen by up to 40 percent. These commodities are the key raw materials used to produce consumer goods like packaged food, toiletries, beverages, cleaning, and laundry products, among many others.
As the costs of these commodities rise, FMCG companies in emerging economies where there is a significant dependence on food imports (e.g., sub-Saharan Africa, the Middle East, and North Africa) will spend more to produce consumer goods, and these costs get passed down to consumers.
However, the increased costs of raw materials alone are not responsible for the rising prices of consumer goods. According to the IMF, pass-through price increases from manufacturer to consumer are only about 20 percent. The remaining 80 percent of the hike in prices of consumer goods is due to shipping costs of agricultural commodities, processing and marketing of the goods, and final distribution costs.
Distribution costs have risen steadily as supply chain disruptions have multiplied, with 40 percent of retailers blaming high prices and out-of-stocks on supply chain issues. The fragmented distribution chain in emerging markets makes distributing consumer goods significantly costlier and more complex, as brands and distributors depend on a completely manual and inefficient distribution model to get consumer goods to small grocery stores.
The current outlook for prices of consumer goods doesn’t look good, with economic analysis showing that the food prices and inflation will increase significantly across emerging markets. This is particularly problematic, as economists say that increased inflation and the rise of prices of essential goods, in particular, can fuel the risk of social discontent, such as what happened in the Arab Spring in 2010-2012, as the disposable income of consumers were eroded.
Tackling the rising prices of consumer goods will require concerted efforts from all stakeholders along the supply chain. But, more importantly, FMCG brands and distributors in emerging markets must take steps to mitigate the impacts of supply chain disruptions and reduce distribution costs. The best way to do this is to redesign their supply chains to be much faster and more resilient.
The route to market for consumer goods in emerging markets is fragmented, with over 80 percent of all consumer goods sales occurring in small roadside shops and small grocery stores. This makes distribution inherently complex, as multiple small intermediaries have to cover the same routes and serve the same retailers. The current distribution model also leans towards manual processes, which are slower and more prone to inconsistency and inefficiency than digital and automated processes.
Digitalizing the supply chain can help brands and distributors increase the efficiency of the distribution chain by aggregating orders, creating a lower cost to serve small retailers, which will result in lower prices at outlets. Building a digital distribution chain also provides convenience when ordering stock and reduces the chances of essential items being out-of-stock, so consumers can access the products they need at the prices they can afford.
Leveraging digital technologies can also help FMCG brands and distributors build flexible supply chains. From automated sales plans to dynamic delivery routes, digital distribution makes it possible to intelligently allocate resources to reduce costs and, by extension, lower prices.
However, for many CPG companies and distributors, adopting digital distribution isn’t easy, as there are no solutions that provide end-to-end visibility across the distribution chain in real-time. The few solutions that provide limited visibility are costly, often requiring investments in hundreds of thousands of dollars, and are often too complex for sales reps and marketing staff to use effectively.
This is why we need Open Commerce.
Open Commerce is a new way of buying and selling online – a decentralized digital commerce platform that empowers brands, distributors, and retailers in emerging markets. Unlike traditional e-commerce, Open Commerce is decentralized and doesn’t charge huge commission charges or high transaction fees. Instead, every player along the supply chain can interact and trade directly without undue interference from the platform, leading to lower costs and prices.
RedCloud has built the world’s first Open Commerce platform, Red101, which provides FMCG brands and distributors with end-to-end visibility across the supply chain, increasing distribution efficiency and reducing distribution costs. RedCloud’s integrated marketing intelligence engine captures outlet-level information in real-time and performs advanced-level analytics to produce clear, actionable insights that inform strategy.
With Open Commerce, inventory management becomes easy, as retailers can place orders for the products they need when they need them. This enables distributors to deliver right on time, preventing stock-outs at the shelves. RedCloud has also eliminated the high costs and risks associated with cash payments in emerging markets by building the world’s largest payment network. This payment network has over 2 million pay-in points across 100 countries, so retailers can physically digitize their cash and pay for consumer goods online using the Red101 Market app.
Schedule a demo with us today to see how RedCloud is helping brands and distributors digitalize their supply chain, reduce distribution costs, and tackle the rising prices of consumer goods.
Global technology firm, RedCloud partnered with three FMCG distributors in the Santa Fe province of Argentina to drive business growth with Red101 Market, the world’s first Open Commerce platform.
RedCloud has announced a partnership with Calfra, Florida, and Irlanda, three large FMCG distributors in the Santa Fe province of Argentina. These distributors are large players in the food and beverage market and carry over 800 SKUs combined. This partnership will enable these distributors to grow their business without increasing costs by providing access to a vast network of retailers across Argentina who already use the Red101 Market app.
Speaking on the partnership, Maximiliano Calviño, the CEO of Calfra says, “I expect to gain new customers from this partnership with RedCloud and grow as a distributor by being more responsive to customer needs and offering better products and services. We are in a critical growth stage, and we want to provide retailers with the goods they want to sell on an easy-to-access digital platform, and RedCloud helps us achieve that.”
Florida’s CEO, Facundo Perez, also said “What we are looking for with RedCloud is to expand our market reach and get to places that we are not reaching today, so that more retailers get to know us and buy from us. We believe we that our business has incredible growth potential, and we are confident that RedCloud can help us take the next big step"
The traditional B2B distribution process in Argentina and LATAM provides brands and distributors with little to no visibility across points of sale and no direct relationships with customers that can be leveraged to drive growth. By joining RedCloud’s Open Commerce platform, these distributors will be able to digitize their entire B2B supply chain and gain in-depth visibility across the market to see in real-time where the demand for their products are.
Soumaya Hamzaoui, COO of RedCloud, says “These partnerships are the proof of our commitment to empowering distributors across Latin America with a digital platform that expands their market reach and drives business growth. Our revolutionary Open Commerce platform is the answer to the broken traditional distribution chain has left distributors without visibility across the supply chain, unable to unlock new markets and maximize growth opportunities.”
This expansion aligns with RedCloud’s mission to enable trade everywhere, especially across emerging markets with open commerce technology, so brands, distributors, and retailers can trade openly and without restrictions. Red101 Market is the world’s first Open Commerce platform that connects brands, distributors, and retailers on a single platform and enables open frictionless trading.
With the Red101 Market App, brands and distributors can create a digital store where new and existing retailers across multiple geo-locations can access all their products anytime. In addition, retailers on the platform can also access more products from different brands and distributors, order for stock right on their mobile phones, and pay digitally or on delivery, as they prefer.
RedCloud is a global technology company committed to enabling commerce everywhere, especially in emerging markets, by digitally connecting FMCG brands, distributors, and merchants that enable them to sell smarter, buy better, and pay simpler. With its proprietary Open Commerce platform, RedCloud is poised to drive economic growth in the FMCG industry by providing new levels of visibility and enabling strategic decision-making based on real-time data analysis syndicated across the distribution chain.
Pretoria, May 2022 – Global technology firm, RedCloud, has partnered with Liquor Boss, a large distributor of alcoholic beverages in South Africa, to help drive rapid growth and increase market reach with open commerce technology.
Liquor Boss, a large distributor of alcoholic beverages in South Africa with over 2000 SKUs, has signed a new partnership agreement with RedCloud. This partnership will see Liquor Boss joining the world’s first Open Commerce platform, Red 101 Market, to digitize the entire supply chain and increase market reach.
Liquor Boss is seeking to increase its customer base and drive rapid sales growth but has been limited to the traditional distribution processes, which are inefficient and provide no visibility across the value chain. By joining RedCloud’s revolutionary Open Commerce platform, Liquor Boss can unlock the full value of the traditional supply chain and gain access to a wide network of retailers.
Speaking on the partnership, Luka Medak, the CEO, and MD of Liquor Boss says “I'm looking forward to growing my existing business by partnering with RedCloud. These days it's becoming increasingly more difficult to grow as a distributor and I'm hoping that RedCloud will help me make that journey easier.''
By joining Red101 Market, Liquor Boss will be able to see in real-time where the demand for their products is across multiple geolocations and generate actionable insights that can be leveraged to drive growth and increase revenue. In addition, these insights will make it possible for Liquor Boss to offer better prices to retailers based on geolocations and create targeted campaigns aimed at capturing existing demand for their products.
Justin Floyd, the CEO of RedCloud, said “We are glad to partner with Liquor Boss to provide end-to-end trust and visibility across the supply chain whilst increasing their market reach across South Africa. RedCloud is on a mission to enable anyone to trade anywhere, and with our open commerce platform, distributors like Liquor Boss can grow their businesses at lower costs.”
RedCloud’s Open Commerce platform is the world’s first decentralized digital commerce platform, where brands, distributors, and retailers can directly connect and trade with each other without undue interference from any third party. Unlike traditional e-commerce, Open Commerce empowers the 1 billion retailer economy by unlocking the business potential of 1 billion small retailers globally and meeting the growing demand for consumer goods in emerging markets.
RedCloud is a global technology company committed to enabling commerce everywhere, especially in emerging markets, by digitally connecting FMCG brands, distributors, and merchants that enable them to sell smarter, buy better, and pay simpler. With its proprietary Open Commerce platform, RedCloud is poised to drive economic growth in the FMCG industry by providing new levels of visibility and enabling strategic decision-making based on real-time data analysis syndicated across the distribution chain.
Sao Paulo, May 2022 – Global technology firm, RedCloud has announced a partnership with Lagostão Pescados, a large seafood distributor in Brazil, to increase sales and drive business growth.
This partnership will bring Lagostão Pescados, one of the fastest-growing seafood distributors in Brazil onboard the world’s first Open Commerce platform, Red101 Market, built by RedCloud. Lagostão Pescados currently carries over 100 SKUs and will gain access to a wide network of retailers across Sao Paulo and Brazil who already use the Red101 Market App.
Lagostão Pescados currently supplies seafood to one of the largest restaurant chains in Brazil, with over 80 outlets, but the distribution process is manual and costly. As a result, they had been seeking to digitize their existing B2B supply chain and expand into new markets, and RedCloud’s Open Commerce Platform was the perfect partner to help accomplish this.
Speaking on the partnership, Gabriel Netto, Sales manager for Lagostão Pescados says “All of us at Lagostão are happy with this partnership, as we had been searching for exactly what Red101 Market is offering us - greater visibility across the supply chain with a digital solution. We believe in embracing the latest market innovations, which is why we closed this partnership. From the first contact, we have had extreme confidence that we needed to take this step further, and we trust that this will be the platform we need to drive consistent growth, I have no doubt that it will be a successful partnership.”
Unlike traditional e-commerce, RedCloud’s revolutionary Open Commerce platform is completely decentralized and provides an open trading environment where distributors like Lagostão Pescados can directly connect to retailers to take their orders, track stock levels in real-time, and gain in-depth visibility at point of sale.
RedCloud CEO, Justin Floyd, had this to say about this new partnership: “We are excited to partner with Lagostão Pescados expand their market reach with the world’s first Open Commerce platform. Open Commerce and decentralization is an accelerated way to fix the broken consumer goods supply chain for brands, distributors, and distributors, by building a single point of digital engagement for all parties to trade together.”
The Red101 Market App is live in over five markets, and over 200,000 retailers are signed up to the platform, with more joining every day. This makes RedCloud the only solution that allows brands and distributors to digitize the traditionally fragmented B2B supply chain, reduce costs with efficient inventory management, drive growth with real-time POS visibility across multiple geolocations, and better manage their inventory to reduce costs, and drive growth.
RedCloud is a global technology company committed to enabling commerce everywhere, especially in emerging markets, by digitally connecting FMCG brands, distributors, and merchants that enable them to sell smarter, buy better, and pay simpler. With its proprietary Open Commerce platform, RedCloud is poised to drive economic growth in the FMCG industry by providing new levels of visibility and enabling strategic decision-making based on real-time data analysis syndicated across the distribution chain.
Over the last few years, traditional FMCG distributors have faced numerous challenges, such as unpredictable demand, massive supply chain disruption, and increased competition from new, digital players in the market, which has led to ever-shrinking margins. In addition, retailers and customers are beginning to expect the same speed and efficiency they are used to receiving in their personal lives. This has put a strain on distributors to become easier to do business with, offer additional services, and provide increased personalization levels, all potentially at the cost of their bottom line.
Wholesale distributors in emerging markets also face an added complexity as more competitors are entering the B2B space with a keen focus on disrupting the low end of the market with low-cost offerings, which further push margins down.
Developing advanced pricing capabilities is crucial for distributors to regain profit margins and increase profitability, as no other lever can do more to raise earnings. Studies show that distributors who embark on end-to-end pricing transformations can expand earnings by up to 50 percent with negligible impact on volume. However, most distributors are yet to realize this and take a “one-size-fits-all” approach rather than tailoring pricing to each customer and situation.
Pricing is the most powerful way to improve overall margins and increase profits, as a 1 percent price increase across a product portfolio has more impact on bottom-line margins than a 1 percent reduction in SG&A costs or a 1 percent increase in volume sold. A McKinsey study also shows that a 1 percent increase in price would yield a massive 22 percent increase in EBITDA (earnings before interest, taxation, depreciation, and amortization) margins and increase a distributor's overall company value by up to 20 percent.
However, a 1 percent reduction in price will require a distributor to increase sales by a minimum of 6 percent, or reduce fixed costs by 7.5 percent, just to maintain the same profit outcome. So, seeing that price transformation is one of the best ways to raise margins and deliver value, why aren’t more distributors embarking on price transformation initiatives? We have spoken with countless distributors across emerging markets, and the answer is almost always the same: it’s too complex.
Raising margins and delivering value through dynamic pricing for hundreds of SKUs and thousands of retailers is so complex that most distributors are not capable of attempting it. This is especially true for emerging market distributors who rely on manual processes and lack visibility across the supply chain. To successfully deliver value to the company and its customers via dynamic price transformation, distributors need a data analytics solution that provides end-to-end visibility across the entire supply chain and generates actionable insights that can be leveraged to make the best pricing decisions.
Delivering maximum value to the company and customers through data-driven pricing will require distributors to rethink their prize optimization strategies and overcome existing misconceptions. For example, many distributors traditionally depend on sales reps to decide pricing based on their personal experiences or gut feelings, leading to lower prices. In addition, experienced salespeople often believe that raising prices means losing deals, especially when competitors offer similar products. This bias often makes sales reps argue for aggressive price cuts to reach their volume targets.
Unfortunately, continually reducing prices is a race to zero margin. In the long run, it makes more sense to build pricing strategies based on real-time demand data and an understanding of the other-non-price factors that retailers value the most. Qualitative and quantitative research shows that quality of service, availability of stock when needed, and the other personalized services are more attractive to retailers than just lower prices, and low prices alone rarely win customers. A McKinsey survey of over 200 customers shows that pricing ranks sixth overall in what retailers look for in a distributor.
Price is still a critical factor in driving sales of key value items (KVIs), which represent the top 20 percent of products a distributor carries, and 80 percent of a retailer’s purchases. However, it is a less critical factor for the other 80 percent of items that distributors carry, which is where distributors have the most opportunity to raise their margins.
Under the traditional pricing strategy, most sales reps focus on the handful of high-turn products they are familiar with and take a shorthand approach to the remaining SKUs, which can mean overpricing some items, and underpricing other items.
The way to create value, and win with pricing, is for distributors to identify pockets of strategic pricing opportunities and focus less on pricing thousands of items the same way. This would require a dynamic pricing system that harnesses digital tools and analytical benchmarks to give sales reps the market intelligence and customer insights they need to drive both volume and margins.
Most traditional distributors across emerging markets have little or no digital analytics capabilities and depend almost entirely on manual efforts by sales reps to reach retailers and distribute products. This distribution model provides zero visibility across the chain and, in many cases, forces sales reps to set prices based on personal experiences and gut feelings, which can lead to overpricing or underpricing.
Adopting digital analytics into their operations has long been a challenge for traditional distributors, as most of the digital commerce solutions available, like e-commerce, seek to eliminate traditional distributors. The few data analytics solutions available are often too costly and sophisticated to be a truly viable option for most distributors, as they often require retraining of sales reps and building sophisticated IT infrastructure.
What distributors need is Open Commerce.
Open Commerce is revolutionary technology changing how distributors in emerging markets buy, sell, and pay for FMCG goods. With Open Commerce, distributors gain complete visibility across the supply chain and can see in real-time where the demand is at a granular level.
RedCloud has built the world’s first Open Commerce platform, Red101 Market, where distributors across emerging markets can sell to retailers digitally and access real-time data at every single point of sale syndicated across the entire market. The Open Commerce platform has an in-built powerful marketing intelligence engine that analyzes the generated data to deliver actionable insights that sales teams can leverage to deliver dynamic pricing across the different product portfolios, customer segments, and geolocations.
Retailers can order stock from distributors via the app when they need it, ensuring product availability. In addition, the increased market visibility Open Commerce provides sales reps a deeper understanding of each retailer and allows distributors to offer personalized services, which can be more valuable to retailers than lower prices.
Schedule a demo today to see how RedCloud can help you deliver more value with data-driven pricing and increase your earnings.
Across emerging economies, the traditional retail market remains highly fragmented, as over 80% of all FMCG products are sold by small retailers in roadside shops. The industry still relies on manual processes like van sales, physical visits to retailers by brand and distributor sales reps, and costly cash payments. This model is inefficient and has had devastating effects on the supply chain, as three out of every four large FMCG brands have recently had strongly negative impacts on their businesses due to supply chain disruption and plan to downgrade their growth outlooks. Smaller retailers also suffer, as reports show that they are grossly underserved by brands and are often unable to order products when they need them.
The rise of e-commerce has done little to help retailers and distributors in emerging markets. The current e-commerce model favors a direct-to-consumer approach that sidelines retailers and eliminates distributors from the supply chain. Moreover, with e-commerce, brands cannot capture point-of-sales data or leverage deep industry relationships to gain valuable insight into market consumption patterns. The result is a complicated and fragmented ecosystem that runs partially on bits of paper at the distributor and retailer level, and disjointed digital systems at the brand level.
Open Commerce seeks to unlock the full value of the traditional distribution chain by creating a ‘trade anywhere’ economy where brands, distributors, and retailers can trade freely on a single platform without undue control or restrictions from centralized entities. With open commerce, brands can finally gain end-to-end visibility across their supply chain, gather valuable data on real-time demand trends across the markets, and leverage the data to identify and maximize growth opportunities. Distributors and retailers can also access the products they need, when they need them and make digital payments, even without a bank account.
RedCloud CEO, Justin Floyd and CFO, Stan Mlatac, visited South Africa to talk to FMCG brands, distributors, and retailers in person to discover how they are extracting value from the world’s first open commerce platform. Justin spoke in detail with the officers who are in the field on the widespread acceptance that Open Commerce has received from our customers.
An edited version of the conversation follows:
Justin: You have been doing some fantastic work on the field these last few weeks, but what has the response been like from customers? What are their reactions to the prototype?
Field officer: Oh, they love it. They are fascinated by it. We offer convenience at the click of the button, which is more than they could have imagined before RedCloud. We also offer better pricing and a wide array of products to choose from, which makes every distributor and retailer we’ve spoken to very excited to test the platform.
Justin: So, it’s about price, choice, and convenience. That’s why they are interested?
Field officer: Yeah, absolutely. We’ve done our best to get the best prices in the market, and the retailers and distributors are thrilled. They also really love the idea of being able to sort through their stock from the convenience of their own home, on their beds even. So, it’s a big sell. And as soon as they grasp what the app is about, they’re sold.
Justin: What are the top features of the open commerce platform that retailers and distributors love?
Field officer: Digital payments is one of the top features and a huge gamechanger. Paying in cash has always been problematic for these businesses because it’s not secure, and our customers feel safer when they can transact and pay for their products digitally.
Justin: Have you encountered any challenges or hiccups when talking to people about the idea of open commerce or the app?
Field officer: No, actually, we haven’t, which was very interesting and a little surprising. Usually, when introducing a new way of doing business, there’s significant friction or hesitation to adopt the technology, but we haven’t faced any major pushback.
Justin: That’s interesting. Could you tell me more about that?
Field officer: I think it’s because we preserve the existing distribution chain rather than dismantle it. Many other digital platforms either focus on getting retailers to sell directly to customers, which means they must compete with other bigger e-commerce players and the platform itself or focus on getting brands to sell directly to the consumer, eliminating the retailers and distributors from the supply chain. Open commerce and the Red101 app is the only solution that allows retailers, distributors, and brands to leverage digital commerce while still working with the existing supply chain that has kept the FMCG industry running for decades.
Justin: That’s incredible. We’ve always maintained that traditional e-commerce is terrible for small businesses, and it seems like our customers agree.
Field officer: Yeah, totally. The fear of e-commerce platforms stealing all their customers and putting them out of business is a real threat to these small businesses. They already must compete with malls and bigger supermarkets, so digital commerce has always seemed like another attack on their business, but they have a fighting chance with open commerce.
Justin: So, what are the things that we need to improve to make the experience even better for our customers?
Field officer: There are two main issues that our customers mention often. The first is that you need a mobile data subscription to use the app, and many of them rarely use the internet, so they don’t always have data. So, a solution that allows them to use the app offline would be perfect.
Secondly, we haven’t fully computerized the back end for distributors, so they haven’t been able to explore all the features that we have in real-time, but we have promised them that those functionalities will be added soonest. They are excited by the value that open commerce provides and once the development team makes the updates, we will become their best friends.
Justin: Yes, we are working on a USSD solution so they can use some features of the app even while offline, and I expect that it would be of tremendous help. Another feature that we’ve promised in the future is the ability for brands and distributors to upsell/cross-sell by recommending new products that were bought together as the retailers are checking out. How do our customers like that?
Field officer: Yes, absolutely, that’s a great feature, and the distributors can see the potential. By automatically recommending products that other retailers have bought together, they can get more sales from a single customer, while retailers get to discover new products and expand their product line. So, it’s a solid win-win for everybody.
Justin: Thank you so much for talking with me today. It’s exciting to hear that our customers love what we’ve been building and can’t wait to get more of it.
Field Officer: You’re welcome, Justin. We are proud to be a part of this commerce revolution and talk to people about this fantastic product that can drive a difference in the lives of small businesses and retailers across South Africa.
Schedule a demo today to learn more about how RedCloud is transforming the FMCG industry in emerging markets with the world’s first open commerce platform.
Emerging market and developing economies (EMDEs) make up 84% of the world’s population, but only contribute 37% of the Global GDP. In these markets, as many as 2 billion people and 200 million small businesses are entirely cut off from the formal financial system, lacking access to savings, investment, and credit facilities. The gap between the credit needed by MSMEs in developing economies and credit available is estimated at over $5 trillion. Closing this gap is crucial, as it will drive growth for MSMEs who provide over 80% of all full-time and help eliminate social and economic challenges among some of the poorest people in the world.
The solution to this problem is already in the hands of many – a mobile phone. Across emerging markets, mobile phone penetration is estimated to reach 80% by 2025, and more people will have mobile phones than bank accounts. Through digital finance, payments and other financial services delivered via mobile phones and the internet, we can help increase the rate of financial inclusion and sustainably provide over $2.1 trillion in credit to over 1.6 billion unbanked individuals and 200 million excluded businesses.
Digital finance and payments hold significant promise for everyone and can increase the GDPs of all emerging economies by 6% or $3.7 trillion by 2025 and create up to 95 million new jobs across all sectors of the economy. This is equivalent to adding a new economy to the world larger than all the economies of Africa.
Governments also stand to gain over $110 billion every year by reducing leakage through the shadow economy. Digital Financial Services Providers (DFS) can better assess credit risk for a wider pool of borrowers and make up to $4.2 trillion by expanding their customer base.
Over the last few years, there has been a rapid expansion of new technologies and innovations in the digital payments industry. With card and mobile-based payment solutions, more consumers and businesses in emerging markets can now access and use digital finance.
However, getting the financially excluded retailers to use digital payment solutions often means competing directly with cash, which is almost impossible. Therefore, to solve the financial inclusion problem and unlock growth for millions of unbanked MSMEs, DFS providers must first understand why cash remains king and build solutions that complement rather than outrightly replace cash.
Cash remains the preferred payment method for small retailers in emerging markets. Available data shows that more than half ($19 trillion) of the $34 trillion global B2B retail payments made by Micro, Small & Medium Retailers (MSMRs) are done in cash. This is because cash is convenient, instant and universally accepted. Furthermore, no digital payment method offers similar versatility and universal acceptance, leading to lower adoption rates.
Different manufacturers and larger distributors across the retail industry often build their digital payment solutions or partner with other third-party DFS providers to eliminate the huge cash handling costs. However, the payment solutions often have low adoption rates of less than 10% because there is no real incentive for the retailer, who usually gets paid in cash by consumers. Retailers are then faced with the challenge of digitizing cash and learning how to use multiple payment platforms for the different brands or distributors they buy from.
Switching to digital payments will also require retailers to rethink their relationship with money, as many DFS providers charge fees on each transaction. This appears as a charge for spending their own money to the average retailer and is a thoroughly unattractive proposition.
There is not enough incentive for retailers to switch to digital payments in many cases, so they stick with cash. However, if we can build a new ecosystem that provides solid incentives for retailers, FMCG brands, and distributors to switch to digital finance, we can drive widespread adoption of digital payments, increase financial inclusion, and drive MSME growth. This is what RedCloud has built – a new system of commerce that unlocks the full value of the traditional supply chain in emerging markets and empowers everyone, from the smallest retailer to the largest FMCG brand to sell more and grow their businesses.
At RedCloud, we have taken the first step to drive rapid adoption of digital payments among small retailers by providing several compelling incentives. We built the world’s first open commerce platform that allows small retailers to directly access FMCG brands and order their stock in real-time. Merchants no longer have to wait for physical visits from sales reps and can pay digitally on the same platform.
Next, we built the world’s largest local payment network with over 2 million cash-in/cash-out (CICO) points across 100 countries. Retailers can walk up to any CICO agent and digitize their cash in minutes for free without needing a bank account. We realize that a strong cash-in/cash-out network plays a critical role in the transition from cash-based to fully digital payment systems, and retailers in emerging markets will only switch to digital payments if they can convert their cash into e-money and back again, as needed.
Finally, we created compelling use cases that incentivize retailers to digitize their cash and make digital payments. With our merchant app, retailers can sell digital products to their customers and make a commission on every sale, providing a new income stream. In addition, the digital trading profile generated as retailers continue to use the platform can be used to access credit risk and provide access to credit facilities even without a formal bank account.
With open commerce, financially excluded retailers in emerging markets can finally access the credit and financial services they need to grow their business.
Schedule a demo with us today to see how RedCloud is accelerating economic growth across the globe, and empowering over 270,000 retailers in emerging markets to trade digitally and grow their businesses by up to 40%.
Today, across emerging markets, over 2 billion individuals and 200 million small businesses are excluded from accessing critical financial services, leading to high levels of inequality, and increased social and economic challenges. Micro, Small, and Medium Enterprises (MSMEs), which constitute over 90% of all businesses, and provide over 50% of the employment in emerging economies, cannot access the financial services they need to grow their businesses. The World Bank estimates that about half of all formal MSMEs lack access to formal credit, with an unmet financing need of $5.2trillion every year, and the gap is even larger when informal enterprises are considered.
This article discusses the importance of financial inclusion and how digital payments can help accelerate the rate of inclusion in emerging economies. The article also shows how RedCloud is driving the adoption of digital payments inthe world’s biggest product category by providing FMCG brands, distributors,and retailers with a revolutionary digital commerce platform.
Research from the World Bank shows that increasing financial inclusion can drive economic development and increase the GDP in emerging markets by up to 14%. The United Nations has identified financial inclusion asa critical factor in achieving no less than 7 of the 17 Sustainable Development Goals, as financial exclusion remains a key enabler to the extreme poverty rates and lack of economic development.
The overwhelming dominance of cash payments contributes significantly to financial exclusion, as low-income earners and informal MSMEs, who often constitute a large portion of the population, do not see any need to enter the formal financial system. Available data shows that over 90% of all consumer goods sold in emerging markets are paid for in cash, and annual cash payments are more than $19 trillion, or more than half of all global retail payments.
Digital payments can potentially reach over 1.6 billion new retail customers in emerging markets and reduce the existing $5 trillion credit gap by increasing the volume of credit accessible to businesses and individuals by $2.1 trillion. This will enable more small businesses to access the financial services they need to grow their businesses. The advantage of digital finance is not limited to individuals and MSMEs alone. Companies that build digital finance capabilities and provide digital payment solutions canaccess new revenue streams and increase revenues by $4.2 trillion.
Digital finance can also reduce the costs of doing business for both larger brands and smaller retailers, as cash payments cost consumer goods brands up to 20% of annual revenue, while small retailers lose up to 15% of their total revenue to cash handling and shrinkage. Evidently,there is a massive opportunity for digital financial service (DFS) providers,FMCG brands, and small MSMEs to increase revenues, reduce costs, and grow their businesses.
While digital payments represent a huge opportunity in emerging markets and can help increase financial inclusion, it has yet to achieve widespread adoption. Millions of small businesses still pay for their goods in cash, and FMCG brands still require sales reps to collect those payments and transport them to reconciliation centers.
Digital payments have not caught on in emerging markets for several reasons, some of which are:
To fully adopt digital payments and increase financial inclusion levels, we need a new industry standard in commerce payments that provides significant incentives for both brands,retailers, and consumers.
Open commerce is a new type of commerce platform that revolutionizes trade across emerging markets. Unlike other traditional centralized digital commerce platforms, open commerce is built on decentralization and open trade principles to create a sell anywhere economy where small retailers can directly access the brands and products they need to grow their business.
RedCloud has built the world’s first open commerce platform powered by the world’s largest local payment network with over 2 million pay-in points across 100 countries. This allows retailers and merchants in the most remote locations to digitalize their cash and make digital payments, even without a bank account.Retailers can digitize their cash in any accepted pay-in point with no transaction fees deducted and then use the digital cash to access a wide range of products and services from global brands.
We have incentivized digital payments for retailers and small businesses in emerging markets by providing access to global brands and distributors, so they can order the products they need, when they need them, at prices they can afford.Retailers can also accept digital payments from customers, manage their stores digitally, and grow their businesses with our integrated marketing intelligence tool. They can also sell digital products to consumers in their stores and earn a commission on each sale.
By providing small business owners, many of whom are financially excluded from the formal financial system, with a reason to adopt digital payments and start trading on the open commerce platform, we are opening a new world of financial products and services. This includes a Buy Now Pay Later scheme that allows retailers to access the credit facilities they need to grow their business.
Schedule a demo with us to see how RedCloud has empowered over 270,000 retailers in emerging markets to start trading digitally and grow their businesses.
Across the FMCG industry, sales growth is directly tied to overall company growth, as 50% of all the value created by an FMCG company rests on the sales force. Driving next-generation sales growth will require CPG companies to develop advanced insight, agility, and technology capabilities. An industry survey shows that brands willing to shakeup their traditional sales models and embrace these next-gen capabilities are growing their revenue at twice the rate of GDP. The survey also shows that that top-performing sales organizations have developed and perfected the ability to make data-driven decisions at scale.
An analysis of these top-performing organizations show that their sales teams base at least 60% of their decisions on relevant market data, while laggard companies base a startling 70% of their decisions on gut feeling. Unfortunately, the vast majority of FMCG sales teams in emerging markets, up to 58%, still rely on gut instincts and personal relationships with retailers to drive sales.
This over-reliance on instinct and personal relationships rather than data-driven decision-making, can lead to inconsistent sales performance across the organization. Available research shows that focusing on data-driven decision-making provides a 2–5% sales boost and integrating analytics into the sales process can deliver a 10–20% boost in productivity.
Therefore,FMCG brands must leverage data-driven decision-making at scale to gain a strategic advantage over their competition, increase market share and drive growth. This is especially important for sales reps, as they, in many cases, represent the only contact retailers and sellers have with the brand.
Over the last few years, the consumer-goods industry has experienced significant change.The pandemic has revealed the inefficiencies in the traditional FMCG sales model and amplified many trends that have been disrupting the industry for close to a decade. As demand and consumption patterns change rapidly, gut feeling and instinct are no longer enough to predict where the demand for products is or guarantee sales growth.
An analysis of the fastest-growing CPG companies shows that they invest in centralized data analytics 19% more than the slow-growing companies. By clustering workflow integration, data science, business intelligence, and other cross-functional skill sets, sales teams can identify new growth opportunities faster, iterate, and exploit them at scale. Sales leaders that build data analytics capabilities also report greater confidence in their ability to harness the incredible potential of available data and analytics to drive consistent sales growth, and are 1.4x more likely to outperform the competition.
Having established the importance of data-driven decision-making among FMCG sales teams, the next question is, where do you begin? Several data-analytics solutions on the market promise to provide the insights you need but choosing the best solution for your brand can be tricky. Furthermore, you must select a solution that is easy to use and will be widely adopted across the entire salesforce. Many digital transformations eventually fail due to a lack of adoption by sales reps who find the solution too complicated or cumbersome to use.
To choose the best solution that will enable data-driven decision-making at scale, FMCG sales leaders must first look inwards to determine what data type is the most relevant to driving sales growth. As an FMCG brand in an emerging market, your sales teams need to know:
Your FMCG brand needs a solution that provides the sales team with real-time, in-depth visibility across the distribution chain to increase data-driven decisions and drive sales growth. The solution must also integrate seamlessly with your existing technology stack and be easily adopted by sales reps, many of whom may not be technically sophisticated.
The only platform that combines all these features is open commerce.
Open commerce is a new type of digital commerce that will revolutionize how FMCG brands, distributors and retailers buy, sell, and pay for products. The traditional e-commerce model is broken, as it is heavily centralized and controlled by a small number of players who restrict brands and merchants from trading directly with each other.
Under traditional e-commerce, brands are often blocked from seeing who is buying their products and cannot create targeted campaigns to drive sales. With open commerce, FMCG brands, retailers, and merchants can trade directly on an open platform without any artificial restrictions enforced by the platform.
RedCloud has built the world’s open commerce platform, Red101 Market. With this revolutionary platform, brands in emerging markets gain full visibility across their distribution chain and can see where the demand for their products is,who is buying their products, and the micro-consumption patterns in the market.
The Red101 Market app allows merchants and retailers to directly order stock from the manufacturer without needing a visit from sales reps, leading to a massive boost in productivity as reps can now spend more time on revenue-generating activities. Our open commerce platform also provides real-time sales data atPOS, analyzes the data, and makes it accessible to the entire sales team on easily customizable dashboards. This enables sales reps to make more data-driven decisions and identify growth opportunities in real-time. With real-time, actionable data at their fingertips, sales leaders can also create target promotions and campaigns that drive sales growth.
Schedule a demo today to see how RedCloud can help your FMCG brand make more data-driven decisions and increase sales by up to 25%.
Across the FMCG industry, sales representatives are some of the most important value drivers for brands and distributors, as sales reps sell $34 trillion worth of FMCG goods to over 1 billion micro-sellers every year. Research shows that sales-team effectiveness is crucial for growth, as over half of the company’s value creation is tied to the sales force. Despite the importance of sales representatives to company growth, many FMCG brands, especially those in emerging markets, cannot increase the effectiveness of their sales force.
Many sales reps, especially in emerging markets, are restricted to manual, inefficient methods of driving sales, where more time is spent on the road or generating reports than on revenue-generating activities like speaking to customers or creating growth campaigns. This can lead to high sales costs of between 30 to 40 percent.
Adopting a transformational, company-wide data-analytics strategy can help improve sales-force effectiveness, as data shows that companies with mature digital capabilities in sales operations are two times more successful than their non-digital counterparts. Adopting a digital analytics and automation solution has also been shown to improve sales efficiency by 15%.
However, the fragmented nature of the retail industry in emerging markets makes it difficult to identify and select the right data analytics solution that increases sales efficiency. FMCG brands must take the lack of visibility across the traditional distribution chain and the low technical sophistication of both the sales reps and their customers when choosing a digital analytics solution for their sales teams.
Driving revenue growth and increasing sales will require that FMCG sales reps have access to up-to-date, reliable information on their products and customers and the ability to make data-driven decisions within the shortest possible time. The lack of these capabilities under the traditional FMCG distribution process reduces the overall effectiveness of FMCG sales teams, with reports showing a considerable performance spread among sales reps.
Research shows that the top 30% of reps out perform the bottom 30% by as much as a factor of four, and many sales leaders do not know what top sales reps do differently or how to replicate that success across the team to drive additional revenue growth.
A data analytics solution that can incorporate multiple data inputs such as consumer behaviors, sales data at POS, and seasonal demand changes to provide actionable insights in real-time is invaluable to improving the efficiency of sales teams. With actionable data at their fingertips, sales reps can correctly prioritize what customers to visit, determine how much time to spend with each retailer, and offer the best personalized promotion-pricing mix that generates maximum growth.
An analysis of the top-performing FMCG sales reps shows that they spend 22 percent more time connecting with and directly engaging customers. This personalized, real-time knowledge of the market and individual customer needs enables them to create specific promotions that take advantage of micro-consumption patterns in the market. With a well-integrated data analytics solution, this capability can be extended across the entire sales force at scale, increasing the efficiency of the whole sales team.
Cash management is another significant obstacle to driving growth for FMCG brands across emerging markets, as 90% of all retail transactions are made in cash, and cash management can cost up to 9% of annual revenue. Sales reps often have to physically transport the money back to the company office for reconciliation, leaving them vulnerable to attacks and robberies. A Better than Cash alliance report showed that Coca-Cola delivery drivers in Nigeria get robbed as often as once a month, as they are responsible for carrying cash.
Many FMCG brands have identified the need to adopt a data analytics solution but are stuck with traditional systems, such as SFA tools, that require sales reps to manually input their reports and can only analyze historical data. This reliance on legacy data often leaves teams working with outdated insights and results in many missed opportunities. This is why you need open commerce.
Open commerce is a new type of digital commerce solution that unlocks the full value of the traditionally fragmented distribution chain. Unlike traditional e-commerce, open commerce is decentralized and built on the core Web3 principles of open and equal access. With open commerce, FMCG sales reps can pull real-time demand from every retailer and seller across their target market.
Inefficient manual sales visits and inaccurate manual reporting are eliminated as sales reps know in real-time where the demand for their products is, and reports are generated automatically. Open commerce also solves the cash problem by enabling digital payments at scale. Distributors, retailers, and other ecosystem partners can pay on the same network, eliminating the risks and costs of carrying and reconciling cash.
Open commerce is also built to drive easy adoption. Many traditional data analytics solutions are designed for sophisticated, tech-savvy users, but sales representatives may not possess that expertise. As a result, adoption rates remain low, and any investments made into data analytics may eventually be wasted.
RedCloud has built the world’s first open commerce platform that empowers sales reps to sell smarter and increase revenue. With RedCloud, merchants and sellers can pull demand by placing orders for the platform, which eliminates the extra time that sales reps spend visiting retailers and taking orders.
Now, sales teams have real-time visibility across the entire distribution chain, can see who is ordering their products, and properly segment their addressable market according to seller size, order frequency and order volume, among other key metrics. This increased visibility makes it easier to create better promotions and offer more competitive pricing to each seller. With RedCloud, your sales representatives are transformed from simply taking orders to intelligent territory managers who can make data-driven decisions to drive growth at scale.
We have also built the world’s largest payment network, with over 2 million pay-in points across 100 countries, so that merchants can make digital payments seamlessly, even without a bank account.
Schedule a demo today and see how RedCloud’s open commerce platform can increase your sales force efficiency by up to 15% and grow sales by up to 25%.
Managing and reducing costs are vital aspects of any business, especially for FMCG brands and manufacturers. By reducing costs, brands increase their profits, and can set competitive prices which are attractive to customers. It also means better numbers for the company, which is attractive to investors. Therefore, cost reduction and management efforts are crucial to every business’s strategy.
However, reducing costs is not as simple as it sounds. Traditionally, cost management strategies have focused on cost cutting or cost reduction. Unfortunately, these methods often backfire and result in reduced service, poor quality goods, loss of market share and eventually reduced profits. Therefore, to remain competitive with their pricing without compromising quality and value, brands need to be smarter and more strategic with how they manage costs.
This article examines the traditional methods of cost management and shows why businesses must employ strategic cost transformation in these times.
While brands have experienced revenue growth in previous years, their costs have grown significantly as well, which has made cost reduction a priority for many FMCG brands, but just how effective are these programs?
In 2019, Oliver Wyman conducted a survey of the leaders of CPG companies who had recently implemented significant cost cutting programs, and 76% of them said the program failed to deliver the value expected, and only 6% had better results than anticipated. Moreover, the programs that didn’t meet expectations missed the mark by significant margins. On average, these companies missed the target by 36% when compared to the savings the programs were expected to make.
This analysis shows that there is obviously a disparity between cost reduction intentions and reality. This is because the traditional approaches to managing and reducing costs are becoming increasingly inadequate. The tools that brand leaders and executives used to address cost in the previous decades will no longer produce expected results and, in the future, delivering effective cost management solutions will require new thinking and fresh approaches. Fortunately, the emergence of newer and more effective cost management models is paving the way for dramatic improvements in how companies view and approach cost management.
If brands will generate the results they want from their cost management initiatives; they need to take a strategic and holistic approach to programs. According to PwC, the crucial priority is not what costs are taken out, but where resources are focused to stimulate growth and differentiation, this is strategic cost transformation. By recognizing the need to view cost in a fundamentally different and holistic way and drive dramatic improvements, the rewards can be enormous.
When setting cost transformation goals, business leaders tend to be conservative, which is a recipe for disappointment. By setting ambitious yet realistic goals, the entire team is focused on identifying creative step-changes on how each process is run rather than incremental savings actions. And can optimize processes for increased efficiency and attain cost reduction targets.
To create and drive successful cost transformation programs, the customer must be the focus. Even though this might sound counter-intuitive at first, assessing cost reduction options via a ‘customer lens assessment’ will provide important input for prioritizing and redesigning how the company carries out its processes, both internally and externally.
Finally, to design successful cost transformation programs, brands must embrace digital solutions. Innovative solutions when rapidly adopted and implemented improve efficiency, streamline processes, and provide better visibility across the entire business operations, so that executives can make better decisions. Adopting better technology also reduces risk, and inefficiencies, which directly saves costs, and moves the brand closer to achieving their cost management goals.
One of the sectors that can help brands reduce costs is in their distribution chain. By digitizing the distribution chain, brands can cut costs by 10 – 20%, which is why you need RedCloud.
At RedCloud, we’ve built the FMCG industry’s first open commerce platform. With this digital ecosystem, brands now have real-time visibility over their distribution chain and better control over their inventory. Adopting an open commerce platform allows the brand to unlock the full value of their distribution chain and transform each existing industry relationship into a potential data point. Utilizing this data, brands can then reduce inefficiencies, streamline their operations and save costs.
To find out more about RedCloud and our innovative industry solutions here that help brands, distributors and merchants sell smarter and improve visibility along the distribution chain, please get in touch via this contact form.
Today, more than ever, CPG companies are struggling to achieve profitable growth, with the industry’s economic profit growth dropping to 3.2% between 2010 and 2019, a sharp decline from the 10.2% growth recorded in the previous decade. One of the reasons for this is that the traditional methods of driving growth are not as effective as they were in the past.
CPG companies typically used to invest anything between 11% and 27% of their gross revenue on trade promotions in a bid to drive growth. Unfortunately, 72% of trade promotions end in losses, and retailers are demanding more trade promotion support from CPGs than ever, increasing the CPG’s cost of serving retailers without any real return from the gross revenue growth.
In today’s market, leading CPGs are adopting Revenue Growth Management (RGM) as a discipline to improve growth. This article looks at RGM, and how digitization of RGM can help CPGs further drive growth in the current industry landscape.
Revenue Growth Management (RGM) is the process of analyzing data to understand how customers perceive a product’s value, predict the customer’s purchase journey, optimize the product and take advantage of shopping occasions for profitable revenue growth. Revenue Growth Management has four fundamental elements: pricing, product assortment, promotions and trade investment. By implementing revenue growth management strategies, CPGs are learning to capture significant value.
One of RGM’s core principles is the align the price of a product to the customer’s perception of value. While there is no direct link between customer value perception and pricing in traditional trade promotion, value perception is foundational to all analytics in RGM. Understanding the RGM paradigm provides brands with an outside-in and deeper micro-segmented understanding of the consumer and the factors that influence their buying decisions.
To get the maximum impact out of RGM, it must shape the company’s commercial strategy, rather than just enabling it. This is called strategic RGM and is built on deep insights that provides CPGs with more granular choices about where to compete and how to win. These insights can only be gotten detailed analyses of data from both primary and secondary sources from the company itself and its industry partners, which gives a clear picture of the available opportunities.
In the context of customers, strategic RGM requires an in-depth understanding of ‘purchase structures’ - such as how customers make buying decisions. Which products are substitutes for each other, and what happens when a customer can’t find a particular product? Do they choose an alternative or leave without buying anything? With these and other types of insights, brands can design and execute several short- and long-term initiatives to drive market growth.
Strategic RGM provides the right foundational elements to unlock and deliver commercial growth for CPGs, but are FMCGs equipped with the processes, capabilities, tools, and skills to drive a successful RGM agenda? Only a third of business leaders think so, and without proper equipping such as access to all important data, brands will lack the ability to drive revenue growth and their RGM strategies will not deliver expected results.
In today’s market, it is vital that brands build the competencies, skills and processes needed to run successful RGM initiatives. Retailers are increasingly getting better at all the elements of (RGM), as many have embraced new technologies, including data gathering and analytics systems. By doing so, have overtaken brands in their knowledge of what, why, and how consumers buy.
Therefore, brands must increase their digital capabilities across the fundamental elements of RGM. Unfortunately, the RGM digitization approach is uneven across companies and levers, as many CPGs have disconnected systems and insights, and lack the capacity to respond quickly to market shifts and deliver the right assortment promotions, pricing, and trade terms to accurately understand and predict market shifts, driving customer growth.
At core of any successful RGM strategy is the need for deep insights across the entire distribution chain, and the ability to predict and understand shifting market conditions. This is what RedCloud delivers via our innovative open commerce platform, we allow brands, distributors, and merchants to sell smarter, buy better, pay simpler.
With this platform, brands gain real-time visibility into their distribution chain and understand exactly what is going on at every point in the chain, from the distributors to the POS. This way, brands maintain control over their order and inventory management as each existing connection across their industry is transformed into an existing data point. With RedCloud, marketers also gain insights into buyer behavior, and can devise successful buyer-specific campaigns and promotions, one of the fundamental elements of revenue growth management.
For more information on how RedCloud can help your FMCG brand, please contact us by filling this form.
The pandemic had a significant impact on the CPG industry, causing rapid shifts in consumption patterns. While many companies had to deal with reduced demand for their products, other companies had to ramp up production to meet an unprecedented spike in demand. These changes occurred at the same time consumer packaged goods (CPGs) companies were looking to come out of a decade of slow and inconsistent growth as the CPG industry economic profit growth was only 3.2% between 2010 to 2019.
To achieve and maintain long-term growth, CPG companies must make strategic plans to adjust to the rapidly shifting market to take advantage of the potential opportunities that appear in the market. Brands must adopt a comprehensive and analytics-driven approach to increase their revenue, and the first step to this is to understand the contours of the next phase of post-pandemic reality. This article looks at how FMCGs can drive and consolidate growth in the long term as the world struggles to find its new normal.
The landscape of the consumer goods landscape company has been reshaped by the pandemic, which has had diverse effects on revenue and growth of different CPG companies. Some product categories, such as non-perishable groceries, and household & cleaning supplies experienced significant growth of 25% and above as more people stayed at home due to lockdown measures, while other consumer categories like alcoholic beverages experienced significant drop in demand as bars and restaurants remained closed. The pandemic also had a significant impact on channels, as e-commerce and omnichannel sales have increased significantly, while in-store sales have experienced a drop in sales as foot traffic into physical stores also dropped significantly.
The most significant change that the pandemic brought, however, is the change to consumer behavior and consumption patterns. As consumers had their daily routines affected, their consumption patterns also changed, which affects their demand for products and services. As retailers and merchants also begin to attempt to implement digital solutions like ecommerce platforms and delivery services, they can begin to understand their customers better and provide them with more personalized services.
Experts continue to predict that the consumption patterns will continue to shift in the days ahead as more channels open and customers discover new products and services. To drive growth and consolidate on it for the long-term, brands must have real-time visibility over their distribution network to understand the shifting market conditions, identify bottlenecks and take advantage of potential opportunities.
Currently, FMCG brands, especially those in emerging markets operate with a linear distribution model that is inefficient. They do not have real-time order and inventory management, neither do they retain control over their goods as it passes along the distribution chain. This lack of visibility also means that they cannot accurately predict real-time changes of consumption patterns and buying habits and cannot react in time to capitalize of any opportunities that appear, which is a crucial competence that brands need to have in a post-pandemic world. This lack of real-time, reliable data also means that marketing teams do not have enough insight into their customers to carry out effective marketing campaigns.
Therefore, the traditional model that businesses employ leaves them handicapped when driving long-term MoM growth as they keep losing revenue, and market share. The solution to this problem is to adopt a digital solution that allows brands to predict, see and analyze market occurrences in real time. Which is what RedConnect does for brands, distributors, and marketers.
RedCloud has built the CPG industry’s first open commerce platform that allows brands, distributors, and merchants to sell smarter, buy better, and pay simpler. Different from other digital marketplaces or ecommerce solutions, our revolutionary open commerce platform unlocks the full value of the distribution chain by transforming every industry connection and partnership into a potential data point that provides real-time visibility over order and inventory management. Brands now have insights into what happens to their products from their stores up to the retailer’s shelves.
With these powerful insights, brands can easily identify inefficiencies and eliminate bottlenecks so that their processes are faster and smoother, and with additional knowledge of consumer behavior, marketing teams can create buyer-specific marketing strategies and devise new trade marketing campaigns that can increase sales by up to 20%. With RedCloud, brands now have the power and the insights to consolidate on the growth they have experienced in the past to drive long-term growth.
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In the midst of a health contingency period, the United Kingdom Department of International Trade (UK DIT) , Grupo Financiero Banorte and the Monterrey Digital Hub , joined forces in the joint ScaleUp Bridge program , with the aim of supporting five British fintechs to connect them with Mexico's digital entrepreneurship ecosystem. Banorte, one of the largest banks in the Mexican financial system, promotes this program by providing specialized advice and mentoring to fintechs to reactivate the economy through innovation and attracting talent.
Scaleup Bridge is a joint program of the British government, Banorte and Monterrey Digital Hub, through which the English FinTechs with the highest growth projection were identified and selected to promote their growth under the areas that the institution identified as essential for this program: payments and remittances, scoring , identity and fraud, corporate financial management and crowdfunding , and serving the needs of the Monterrey Digital Hub business community.
The companies selected for this business linkage program between the United Kingdom and Mexico are:
The binational program was presented at an event with the assistance of Juliana Correa (Director of the International Trade Department of the British Embassy in Mexico), Guillermo Güémez (Deputy General Director of Innovation of Grupo Financiero Banorte) and Eduardo de la Garza Sánchez (Manager General of the Monterrey Digital Hub).
To read this press release in full please click on this link!
The food and beverage industry is one of most critical industries globally, supplying food and drinks to millions of consumers worldwide. The industry is huge with many sub-industries and product categories which include alcoholic & non-alcoholic beverages, grain products, dairy food, meat, poultry, seasoning, oils, and so many more. This already huge industry is expected to keep growing, having grown from $5.94 trillion in 2019 to $6.11 trillion in 2020 at a compound annual growth rate (CAGR) of 2.9%. Furthermore, the CAGR is expected to rise to 7% from 2021 as economies continue to recover from the COVID-19 pandemic.
To drive this growth though, players in the food and beverage industry must be willing to adopt new and innovative strategies to improve the efficiency of their operations and offer more competitive products. This article examines the current trends and obstacles in the industry, and how digital solutions can offer solutions to the challenges common to the food and beverage market.
In recent years, there has been an increase in the availability of clean-label, organic, and non-GMO products due to increased demand as more consumers are educated about their potential benefits. The consumption of alcohol beverages, including beers, spirits and wines has also increased significantly.
On the economic side, there is strong economic growth from emerging markets as 70% of all FMCG sales and profit is expected to come from emerging and developing markets. As of 2020, 60% of the top 600 cities were in developing markets, which represents 735 million households and 1.3 billion consumers that will belong to the new middle class that can afford to consume more products from manufacturers in the food and beverage industry. We have also seen the rise of organized retail brands providing more value-based services to consumers, as well as the increased influence of digital marketing and social media on consumers’ buying habits.
On the other hand, negative trends in the food and beverage market include changing regulatory requirements, especially in emerging markets, which introduced a level of instability to the market, a lack of sufficiently skilled workforce to take advantage of new innovation and technologies available. The complexity of acceptance and purchase intentions of consumers is also a potential problem that players in the food and beverage industry face, in addition to dealing with the coronavirus pandemic and how it affects consumption patterns.
One of the biggest challenges that face the food and beverages industry, especially in emerging markets is the inability of manufacturers to detect changes in consumption patterns across customer segments and product categories due to their inability to receive and process real-time market data from industry partners, distributors and merchants.
The distribution network is the livewire of the entire industry, connecting manufacturers to distributors, distributors to wholesalers, retailers and eventually the end consumer. However, the traditional distribution network in emerging markets is slow, inefficient and still underdeveloped. For example, in many developing markets, almost all transactions are cash based, with merchants paying cash to distributors, and distributors doing the same to manufacturers. This means there’s a risk of mismanagement, fraud and theft, leading to avoidable losses. To solve this problem, players across the food and beverage industry must adopt digital solutions. By digitalizing the distribution network and their operations, efficiency is increased, and losses are avoided.
Manufacturers, distributors and merchants in the CPG industry in general and the food & beverage industry need a solution that allows them to buy better, sell smarter and pay simpler. This solution should provide players in the industry with the data and intelligence needed to make strategic decisions. This is where RedConnect from RedCloud comes in.
RedCloud is a digital ecosystem that solves most of the problems already identified, allowing businesses in the food and beverage sector to sell smarter, buy better and sell simpler. With this digital solution, the value of the entire distribution network is unlocked. Now, brands have access to real time consumption data, so they know what product is being sold, how fast it’s sold and who is buying them. This is done by transforming every industry connection into a potential source of data, providing valuable insights that they need to make strategic decisions. With access to the data that RedCloud provides, marketing teams can design user-specific campaigns, and identify new avenues for upselling and cross-selling their products.
RedConnect also provides real time visibility of order and inventory management. Rather than having to create and comb through tons of spreadsheet data, our digital platform provides all the information needed in a simple, clear and easy-to-understand manner. Distributors and retailers can also do away with cash-based transactions, as the platform comes with a secure and easy-to-use payment system. Now, instead of drivers or delivery personnel collecting cash, which is risky, they can simply make payments on the app, even if they don’t have a bank account.
In conclusion, there is tremendous potential for growth in the food and beverage industry, and by adopting RedConnect, players at all levels can increase efficiency, streamline operations and drive sustainable growth.
To find out more about how RedConnect can help your brand, please get in touch via this contact form.
Consumer-packaged-goods companies today are dealing with a lot of challenges, including economic uncertainty, rapidly changing consumption patterns, increased cost pressure due to retailer consolidation. As a result, the rate of growth in the industry has slowed down considerably, dropping to a meager 3.2% in the past decade. To achieve accelerated growth in this decade, players in the CPG industry are beginning to recognize the need for more robust data analytics tools and processes. A McKinsey survey of the most successful CPG companies of the last decade shows that they outperform their competitors in the categories that they compete, such as the usage of sophisticated analytical tools for setting prices and collecting data from retailers.
Incorporating data analytics into their processes provides CPG manufacturers with a mix of direct and indirect benefits. For starters, gathering and analyzing data means marketing teams can constantly produce never ending growth opportunities by designing buyer-specific campaigns and promotions. Businesses can also analyze the market situation in-real time and react to rapidly changing consumption patterns. An example of this was seen in the pandemic where change in the consumption habits of consumers led to rapid spikes and fall in demand in some product categories. Without access to real-time data analytics, manufacturers cannot react in time to match rising demand, leading to potentially huge losses.
Executives of consumer-packaged goods companies need access to powerful data analytics tools to make data-driven and well-informed decisions if they will emerge as true business leaders, as one poor decision in the fast-paced CPG industry can be disastrous. Therefore, employing a data-backed business strategy is crucial for success in a business landscape where there is almost no room for wrong decisions.
As important as digital data analytics is, the CPG industry still has a lot of catching up to in terms of digital maturity. A 2020 Digital Quotient survey by McKinsey shows that the consumer goods industry is the third lowest digitally mature industry and is only fifth place when it comes to analytics maturity.
While almost all business leaders in the CPG industry agree that investment in digital analytics is vital, more than half believe that these investments haven’t yielded the desired results. Research shows that only 40% of CPGS that have invested into building data analytics tools and processes have achieved returns above their capital cost. Here are some of the challenges that businesses face with adopting digital analytics processes that deliver.
Many B2B brands in the FMCG sector fail to connect their digital analysis programs to the enterprise strategy, treating digital analytics efforts a side, pet-project rather that seeing it as a tool that enables strategic goal setting and achievement. Other companies swing to the opposite side and invest data analytics tools and processes without understanding what their business’s unique needs are or how they will use the data generated to drive growth and provide significant impact.
Another challenge that brands face when adopting digital analytics is underinvesting in managing change. Senior executives often say that they wish they spend as much or even more on change management as they did on new technology. If the most senior business executives do not have a comprehensive plan to encourage the adoption of technology by the frontline workers, new techniques and tools won’t get maximized.
As consumers rapidly adapt to new tech-enabled ways of shopping, the consumer purchasing path has become more complex, making it difficult for brands to know exactly where to adjust their efforts to compete more effectively. It's important for CPG brands to use data from various sources to influence their decisions in order to avoid wasting resources on unnecessary endeavors.
In the CPG industry, there are three main sources of data: social data, machine data, and transactional data. Social data comprises of a consumer’s online behavior, transactional data is generated by online and offline transactions and records. Unfortunately, these two types of data sources are limited in providing meaningful insights into the $760 billion CPG market, especially in emerging market where most of it isn’t captured or reported back to the manufacturers. Most brands simply lose sight of their stock the minute it’s shipped out, creating a lack of visibility across the entire distribution chain.
Thus, what the CPG industry needs is a digital solution that captures real-world behavior across the entire distribution network, provide brands with visibility they need into the behavior of distributors, retailers and the end consumer. In other words, they need RedCloud.
RedCloud has built RedConnect, the industry’s first digital ecosystem that allows brands to see exactly what is happening across their distribution network in real time, unlocking the full value of the network and providing the much-needed visibility. Now, marketing teams can do trade marketing with ease, and know what areas are consuming their goods the most, and design campaigns to better target those regions. Operations teams now have more visibility and control over order and inventory management.
With RedConnect, brands, distributors, and merchants can now sell smarter, buy better and pay simpler.
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To effectively meet consumer demand, CPGs must be able to successfully manage their inventory and control their stock. Without effective ordering and inventory management, brands run the risk of either having excess inventory causing product spoilage or having insufficient inventory which can lead to potentially huge losses due to their products being out of stock.
A survey conducted by the Association of Supply Chain Management (ASCM) of over 2,400 distribution chain professionals shows that inventory management is a top technical skill needed in this field. Without proper inventory management, brands would experience excess storage costs in times of low demand, and losses from out-of-stock situations in times of excess demand.
To properly manage their inventory, brands need to understand consumer patterns to synchronize available inventory with market demand. However, in the wake of the pandemic, buying and consumption patterns have changed rapidly, and brands do not have the capabilities to predict demand. The traditional systems that FMCGs, especially those in emerging markets, use to manage their inventory and satisfy market demands are not equipped to match the current market realities.
If brands are going to meet customers’ demands while maintaining and consolidating growth, they need more visibility across the entire distribution chain.
Traditionally, FCMGs try to manage their inventory by following data based on seasonal changes of demand. Unfortunately, this method is built on local planning practices which is slow and inefficient since brands depend on manual methods of collecting data. This method has significantly longer lead times, which means brands can only look backwards and not forwards to understand shifts in consumption patterns. Because of this, sales and marketing teams are often incapable of predicting and adapting to changes in demand.
The last few years have seen rapid shifts in consumption patterns across the entire CPG industry, irrespective of the product category. The increasing dominance of technology and the consumer’s relationship with media means that consumers now have access to more products from different brands across multiple channels. The proliferation of social media, viral marketing, and the sharing economy also means that consumers are influenced from various sources about which products to choose, all of which makes it harder for brands to predict buying patterns. The effect of the pandemic on customers’ buying habits is that consumers are now willing to try out new products and buy from different channels.
The fast-paced nature of the CPG distribution chain coupled with the rapid changes in demand means that brands need a solution that provides them with increased visibility over the entire distribution chain. With increased visibility, brands can easily cope with market demands because teams can see in real-time the demand for their product, making managing inventory easier. To do this, FMCGs need a digital solution that connects them to their entire network of distributors and merchants. This way, every interaction across the distribution network creates a new data point that can be captured and analysed to reduce errors, improve efficiencies, and better manage their inventory.
This is where RedCloud comes in. At RedCloud, we have built the CPG industry’s first connected digital ecosystem that gives brands unparalleled visibility over the entire distribution chain. With our platform, every connection and transaction is turned into a potential data point. You can now see which retailer or merchant is buying your products and where there is a high level of demand, as well as the location of each sale. All this data provides sales, marketing, and operations teams with an incredible amount of knowledge to reduce errors, increase efficiencies, and hit their targets. By granting increased visibility, marketing teams also have all the information needed for better trade marketing to create better campaigns and generate more ROI from their promotions.
Find out more about how RedCloud helps brands buy better, sell smarter, and pay simpler by filling out this contact form.
LONDON, June 2021 – RedCloud Technologies, the UK-headquartered global technology company has announced the extension of its local open commerce platform to Mexico to economically empower merchants of any size by enabling them to offer digital commerce to their customers through a single connected app.
RedCloud’s platform has already helped over 40,000 registered merchants to digitally serve over 1.2 million customers. The company has one of the world’s largest payment networks, allowing global brands to deliver a localized experience to the most vital parts of their retail chain. Stores and sellers are able to trade instantly with recognized brands, fast tracking them to the digital economy.
With the Red101 connected app, merchants provide commerce instantly through any connected device, selling electronic recharges of main brands like AT&T, Unefon, Virgin, Maz Tiempo, and Movistar to their customers.
Businesses on RedCloud’s open commerce platform can now meet the accelerating demand of consumers who want a faster and more personalized way to buy from their favourite stores, while enabling sellers to trade and pay in the new digital economy.
This move is certainly welcome, coming at a time when Central Bank of Mexico (Banxico)* is investing and building infrastructures so that “every Mexican can send and receive electronic payments regardless of their economic background or any other conditions.”
CEO of RedCloud, Justin Floyd said, "RedCloud's mission is to economically empower the world's small businesses by seamlessly connecting them to global and local consumer brands and be part of the open commerce revolution. Mexico is a market full of entrepreneurs who need a better way to trade, pay and finance their businesses to meet the accelerating consumer demand. We are delighted to partner with Banorte bank and Monterrey Digital Hub to make commerce universally accessible.”
Recently, RedCloud was selected by the United Kingdom Department of International Trade (UK DIT) as one of the top five British FinTech’s in the ScaleUp Bridge program, a joint program between the UK DIT, Grupo Financiero Banorte, and the Monterrey Digital Hub. The ScaleUp Bridge program aims to support five British FinTech's and connect them to Mexico’s digital entrepreneurship ecosystem. Banorte, one of Mexico’s largest banks promotes the program by providing specialised advice and mentoring to the FinTech's to reactivate the economy through innovation and attracting talent.
Eduardo Silva, the Chief Sales Officer at RedCloud, has also stated that “The Mexican market provides unique opportunities to partner with Mexican manufacturers, distributors and merchants to increase their revenue helping them to sell smarter, buy better and pay simpler. We want to be their partner of choice to make their sales channels work more efficiently, make better decisions with consumer data, and take marketing actions that raise sales velocity.”
The five FinTech's selected to join the program where those with the highest growth projection in essential areas such as payments and remittances, scoring, fraud and identity management, corporate financial management, and crowdfunding.
RedCloud is committed to bringing global commerce to local markets, empowering local merchants to provide more value and better services to their customers. This expansion into Mexico is in line with RedCloud’s aggressive growth plans.
RedCloud is a global technology company headquartered in the UK, committed to developing solutions for FMCG brands, distributors, and merchants that allow them to buy better, sell smarter, and pay simpler. With its proprietary solution, RedCloud is poised to enable global commerce locally, connecting local merchants to more customers and distributors, and retailers to manufacturers.
*https://www.pymnts.com/news/banking/2021/how-mexicos-central-bank-plans-to-move-payments-to-digital/
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Your sales team are at the heart of your FMCG business, opening up new avenues for sales opportunities. For your sales team, the power of syndicated data and unlocking the benefits of it proves invaluable. The real question is, are your sales team left in the dark when it comes to analysis of the data made available to them?
Granular analysis of syndicated data will give powerful insights into:
- Where, geographically sales are decreasing
- Which of your products are in the highest demand and why.
- Why sales are decreasing.
A healthy sales pipeline is built upon data-led insights and decisions which have enabled sales teams to re-strategize based on analysis of product consumption trends, merchant behavior, stock levels and overall sales performance.
Many organizations are utilizing some form of analytical or Business Intelligence tool to provide them with data insights into the many stages of their distribution chain. Typically, most of these tools ‘do what they say on the tin’ and deliver a very high-level overview of the distribution chain. Unfortunately, these tools are unlikely to provide any actionable insights for a sales team.
That said, studies show that sales teams who use some form of data tool in planning have a 54% greater forecast accuracy. Imagine what that percentage could be if the data were analyzed properly?
For example, data which highlights a decrease in sales of a particular product is useful, however, wouldn’t you like to know:
- Why is there a decrease?
- Geographically, where is there a decrease?
- What can we do to improve?
If you had a solution which could empower you with actionable insights, you could;
- Locate the geolocation in which sales have decreased.
- Redirect your sales and marketing efforts to new geolocations which would prove more fruitful.
Perhaps, you could have even communicated directly with your merchants to understand their challenges at POS?
This is just one of many examples of how analysis of syndicated data is invaluable to your sales team. Actionable insights fuel new strategies which subsequently, deliver the sales results your business needs to survive.
With the help of data analysis, sales leaders can make better decisions when it comes to their sales strategy. Proving this point, teams that use data analytics tools in their planning record 19% greater success in meeting their annual targets (51% vs. 43%) and 27% higher win rates (47% vs. 37%).
RedCloud is the world’s first open commerce platform, specifically designed to unlock the value of the distribution chain by turning each stage into a data collection point.
You’re delivered actionable, real-time data insights throughout your distribution chain and a platform which empowers you to communicate directly with your merchants – giving you insight where you need it the most.
Want to discover more? Contact us today to find out how we can increase your sales by up to 25%*.
*Statistic based on research conducted by Oliver Wyman.
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Many FMCGs already use data analytics tools to provide some data on their marketing performance, but the information received is not always actionable, often leaving more unanswered questions as the data is hard to interpret and turn into actionable points. The tools are disconnected, and the data gathered is not syndicated across each point in the distribution chain, resulting in significant gaps in the data produced that keeps your marketing in the dark.
For many marketing teams, the tools available provide too much unnecessary information, tracking metrics that are not useful and generating ‘noise’ that keeps you from getting a clear picture of your marketing performance or understanding buyer behavior throughout the customer journey. Another problem is that the analytics tools available cannot provide data in real-time, so marketers only have access to legacy data that only allows them to look back, not forward. The inability to perform predictive analysis means that you cannot rapidly respond to shifts in demand or create new routes to market, restricting you from becoming a true market leader in the competitive CPG industry.
Despite the seeming abundance of data, marketing teams don’t know where the demand for their products is, or which campaigns deliver the most revenue. This situation persists even though marketing data and analytics is a key investment area by FMCGs. A 2020 survey of over 400 marketing leaders showed that CMOs ranked data and analytics as the most important area to invest in. However, more than half the senior marketers surveyed, including CMOs and VPs of marketing, are unimpressed at the results generated.
To create better campaigns that maximize sales opportunities and meet revenue targets, you need more than a tool. You need a connected commerce platform that doesn’t leave you in the dark but gathers syndicated data to shed light on every stage of the distribution chain.
For example, knowing that there is an increase in sales of a particular product is certainly advantageous, but it will be better to know:
With a market intelligence solution that gives actionable insights in real-time, you can:
Syndicated data gives you the power to create specific campaigns targeted at the right buyers, drive consistent merchant engagement, and reduce the cost to serve each customer, thereby expanding your customer base!
This is just an example of how granular insights with data captured across the entire distribution chain can increase the effectiveness of your marketing. With these insights, you can create new data-driven marketing strategies and open new routes to market, taking advantage of the micro consumption patterns in the market to create new demand for your products.
RedCloud has built the world’s first open commerce platform that unlocks the full value of the distribution chain, allowing you to gain valuable data from every point of the distribution chain. With the actionable insights provided, you can now identify and maximize opportunities to upsell and cross-sell your products in real-time, identify gaps and opportunities within the market, create new demand for your products, target the right merchants with specific campaigns, and even drive merchant behavior with automated communications.
By partnering with RedCloud, you can bring your marketing out of the dark and increase your revenue by up to 25%.
In my next blog, we will explore how best to utilize data to increase engagement and sales.
Lack of sales automation is the reason many sales leaders are struggling with slow sales cycles and the inability to spot new sales opportunities.
Many FMCG sales leaders report that a substantial amount of sales time is absorbed through manual administrative tasks, such as visits to their sellers' stores to; chase orders, obtain information on stock levels and to gather feedback on product consumption trends.
As a result, many are suffering from:
- A slow sales cycle: because orders are being taken manually, through store visits.
- An inefficient sales team: because they are spending too much time on administration and reporting.
- A lack of new sales opportunities: because the team are unable to obtain enough data to drive data-led, strategic decisions.
Brands who adopt sales automation early on consistently report a 10-15% increase in efficiency, a sales uplift potential of up to 10% and a reduction in order processing time from 2-3 days to just 1-2 hours.
With SG&A costs absorbing up to 25% of total revenue, brands need to rapidly adapt to new and more efficient ways of working to protect revenue.
Not only manual data capturing methods are time-consuming for sales, but they often provide inaccurate and very little insight into the entire sales cycle, which, of course, sales rely upon to build an effective sales strategy.
Research shows that around one third of sales tasks can be automated and that if automation was implemented, FMCGs could free up valuable time for their sales teams – which, could be spent on the generation of NEW sales opportunities.
By automating your data you are securing it, as the data is in a central source and no longer in the hands of staff on paper files. By centralising your data, the data becomes more accessible across not only the sales team, but across the entire organisation, including marketing. The utilisation of this data at every point of the sale, unlocks new opportunities and increases customer engagement, through sales activation. Your data becomes live and you are able to track movement in real-time.
RedCloud is the world’s first integrated open commerce platform, specifically designed to unlock the value of the distribution chain by transforming each stage in the POS into a valuable data collection point and by connecting brands to their; distributors, retailers, and sellers.
Here are some examples of how automation with RedCloud can help to increase your sales by up to 25%*.
- Digitalisation of the order and payment process for sellers, via an app
- Digitalised and granular statistics on product consumption trends and real-time visibility of inventory
allocation and inventory flow
- Automated and data-led marketing engagement and communication with sellers
- Automated SLA tracking
Want to discover more? Contact us to learn how we help FMCG brands and distributors globally to accelerate their sales by up to 25%*.
*Statistic based on research conducted by Oliver Wyman
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Cash payments remain prevalent across the developing world because retailers want it. It’s convenient, instant, and accepted everywhere, which makes it preferable. This poses a problem to brands and distributors, as most digital payment solutions don’t have the same widespread acceptance, therefore, merchant adoptions of digital payments remain extremely low.
In many cases, an attempt by FMCG brands and distributors to solve the cash problem follows this pattern:
Merchant acquisition is low, with less than 10% of merchants using the platform consistently, making it cost-inefficient
Every day, similar scenarios play out across the world, from Latin America to Africa and Asia. A large FMCG in Argentina that I have spoken to, hires delivery trucks that move around every day, transporting substantial amounts of cash to a central warehouse for processing and reconciliation. This a huge concern, as the cost implications are enormous. Even the most conservative estimates put cash handling costs at 2% of total revenue, which means that an FMCG that processes $300 million worth of business annually loses $6 million to cash payments.
A critical look at the state of cash payments in the CPG industry shows that merchant adoption is crucial to the success of any payment digitization process. Unfortunately, many retailers still prefer to use cash for cultural and historical reasons and don’t have any incentive to switch to digital payments.
While retailers lose a significant amount of money due to cash handling, these costs are hidden and hard to identify, making cash payments seem preferable. The three main reasons I have identified as to why retailers are not transitioning to digital payments are:
Solving the cash payments problem can only be accomplished when brands partner with all the players along the distribution chain. Distributors and merchants along the chain must:
Building this partnership is accomplished in 3 ways:
The old way of throwing an app at merchants to solve the cash problem has proven not to work in the long run.
An advantage of switching to a digital payment system is the access to financial services such as supply chain financing, loans, and other credit facilities. Access to finance remains one of the biggest obstacles to growing their business for many MSMEs, with the credit gap for MSMEs estimated at $5 trillion, 1.3 times the current level of MSME lending. Relying on cash payments means there are no accurate records or credit history, which prevents businesses from accessing financial services. Digital payments build upon financial records, which can be collateralized to access credit facilities.
Digitalizing the entire distribution chain is the only way brands can permanently solve the cash payment problem. Instead of building stand-alone digital payment platforms that never get adopted, what you need is an integrated commerce platform that unlocks the value of the entire distribution chain.
By opening new communication channels with merchants, providing credit facilities, and providing real-time market insights that can help businesses grow, merchants will see the advantages of digital payments, leading to widespread adoption. This is will in turn lead to faster payments, increased sales velocity and more revenue for FMCG brands.
RedCloud has built the world’s first integrated open commerce platform solves the cash problem with an integrated payment system. In addition, we also unlock the entire distribution chain and deliver value to brands, distributors, and retailers with access to real time data and insights that support strategic decisions. This increases the sales volume and frequency for all players across the chain, leading to true business growth.
Merchants who already use RedCloud have reported a 40% increase in business and are willing to recommend it to other merchants. This positive engagement with existing merchants helps to increase the adoption of digital payments through recommendations and repeat business. By partnering with RedCloud, FMCG brands can reduce costs and increase revenue by up to 25%*, a true win-win for everyone in the CPG industry.
In my next blog, I will be discussing the hidden costs of money and how retailers are losing up to €80 billion globally to cash payments.
*Statistic based on research conducted by Oliver Wyman.
The FMCG industry is changing rapidly, and with the rise of digital, brands must build better relationships with their merchants and distributors while offering personalized experiences. Achieving this at scale is impossible via manual methods, which is why automation is crucial to remaining profitable.
According to Forbes, 63% of the companies outgrowing their competition use one or more automation tools, and 78% of high-performing marketers indicate that these tools have helped increase their revenue. Another study reported that B2B marketers also contributed to a staggering 44% of the sales pipeline by implementing marketing automation, which is a 10% increase over those who have not yet adopted this approach.
By adopting marketing automation, you can:
Automation accelerates your marketing with personalized messages that increases order velocity and frequency which directly leads to increased revenue for the brand. Ad Week published a study that shows personalized marketing campaigns can:
The question to you is: do you have the capability to target your merchants based on product consumption trends, stock levels, and product popularity? Can you run targeted, buyer-specific promotions based on granular data insights?
If the answer is no, then you need to accelerate your marketing with RedCloud.
RedCloud is the world’s first open commerce platform that unlocks the full value of the distribution chain, transforming every interaction into an intelligent data collection point and connecting brands to their distributors, retailers, and merchants.
With built-in market intelligence, you have access to real-time, actionable insights that allow you to:
Want to learn more? Contact us today to discover how partnering with RedCloud can increase your sales by up to 25%*.
*Statistic based on research conducted by Oliver Wyman.
Accepting and managing cash payments is expensive, costing many retailers between 4.7 and 15.3 percent of total revenue, meaning that for every $100 sold, the business pays between $4.70 and $15.30 to manage their cash. Every year, retailers lose $99.56 billion to shrinkage, with over 34% of this shrink attributed to cash theft. These costs are mostly borne by ‘mom-and-pop’ shops and other independent small businesses that operate in poor, rural areas and cannot afford sophisticated security and cash transportation systems. Despite these issues, most small and medium retailers still prefer cash as costs are hidden and are perceived to have certain advantages.
To successfully solve the cash problem for retailers, payment providers must accomplish 3 things:
- Educate merchants and retailers on the costs of using cash.
- Provide value-added services to drive merchant adoption of digital payments.
- Provide the technical support needed to make the switch easier.
Any provider that succeeds in digitizing payments for the retail commerce space would unlock a massive opportunity – the $19 trillion in cash payments made in the retail industry, which is almost 500 times the total volume of payments made across the entire mobile money industry.
While the promise of solving digital merchant payments is clear, how to succeed in the space is not. Many successful digital financial services (DFS) players have found out that cash works well enough in retail commerce for merchants. Moreover, to drive merchant adoption rates to sustainable levels, being just as good as cash is not enough - digital payments must be significantly better than cash. Behavioral inertia is significant but can be overcome with a genuinely compelling value proposition.
Compelling value propositions must be built into the payment element and must solve merchants’ challenges. These value-added services should speak to the specific pain points and use cases of the prospective users. 3 major challenges that merchants experience that can be addressed by digital solutions are:
The most common challenge that small and medium retailers identify is the lack of access to working capital and credit facilities. 40 percent of MSMRs globally have unmet financing needs and the global credit financing gap for MSMRs is $5 trillion, 1.3 times the current lending rate. Digitizing merchant payments is key to unlocking financial access for these underserved businesses by generating detailed revenue data that support low-cost credit scoring.
Merchants also face several challenges around inventory, which include keeping track of their stock in real-time, reducing lead times on orders, and paying for inventory when delivered. I know a brand in Africa that has up to 16% of orders returned because merchants do not have enough cash on hand to pay for the products when delivered, leaving the brand to bear the cost of unfulfilled orders.
A digital payment solution reduces friction and the cost of doing business, especially when adopted across the entire distribution chain. With an integrated payment and ordering platform, a merchant can communicate directly with the distributor to place an order, pay via the same platform, and receive their inventory quicker.
The inability to identify loyal customers and target them with discounts and promotions is a significant barrier to increasing sales. With digital payments, records of customers and their transactions are recorded automatically, and the POS data can be used to target loyal customers with communications that drive sales. For example, if a merchant knows their top 10 customers, they can send customized SMS messages advertising a new inventory and offering a discount, potentially increasing sales by up to 10%.
By bundling customer relationship management capabilities into a digital solution, merchants will be more likely to adopt the platform, a win-win for the entire industry.
In developing economies, most merchants only have a vague idea of their business’s health and their ability to drive growth. Much of this perception is based on intuition, rather than detailed analytics. However, DFS providers can build solutions that generate detailed analytics from payment data. This analysis can show how sales this month compared to sales in previous months, for example, and could even compare the merchant’s performance to others in the area. More advanced analytics can use transaction data to analyze micro consumption patterns in the market and give recommendations on product and pricing opportunities to merchants. This sort of market intelligence is invaluable to the small and medium retailers who operate on razor-thin margins.
A critical look at these pain points shows that the 3 main areas that retailers have challenges: buying, selling, and paying, and these are the 3 areas that RedCloud focuses on delivering value.
RedCloud has built the world’s first integrated open commerce platform that unlocks the value of the retail distribution chain, enabling brands, distributors, and merchants to sell smarter, buy better, and pay simpler. More than just a payment platform, RedCloud tackles the cash problem from both ends by connecting the informal retail sector to the digital economy, eliminating the significant cost brands and distributors incur due to cash processing fees or lost orders and provides value-added services that incentivize merchants to accept digital payments.
RedCloud provides real-time data insights and unparalleled visibility into the distribution chain, turning every transaction into a data point. Now, merchants can communicate effectively with brands, distributors, and their customers, leading to shorter lead times on orders, instant payments, and access to credit via supply chain financing.
We’ve also gone one step further in driving merchant adoption, by enabling merchants to expand their offerings to include digital products like airtime, digital TV services and earn a commission on each sale. Merchants that use Red101 have recorded business growth rates of up 40% within 6 months and even express their willingness to invite their friends.
By empowering small and medium retailers across the emerging world with business intelligence capabilities, faster payments, access to credit facilities, and commissions on digital product sales, we’re building the future of retail – seamless, end-to-end digital commerce that works for everyone.
Partner with RedCloud today to see how we can increase your revenue by up to 25%.
FMCG brands today are dealing with a host of challenges – including rapidly shifting consumption patterns, intensified cost pressure due to retailer consolidation, and the rise of hard discounters. This has led to stagnant growth over the past few years, with economic profit nosediving from a 10.4 percent growth rate per year from 2000 to 2009 to a meagre 3.2 percent per year from 2010 to 2019.
The impact of marketing on sales in the FMCG industry is two to three times that of other industries, with some product categories such as beauty having 45 percent of sales attributable to marketing. Thus, marketing teams are constantly under pressure to operate quickly and generate ROI on marketing spend. To achieve their targets month-on-month, and drive sales successfully, data-driven, innovative marketing strategies are a must-have.
A recent research study by Google shows that developing and implementing data analytics capabilities at scale can drive over 10% of sales growth for FMCGs, of which 5% comes directly from marketing. In the face of modern industry challenges - the impact of the COVID-19 pandemic, rapid growth of technological capability, and fast-changing consumer trends, leveraging data analytics is not just beneficial for marketers; it is essential.
Access to real-time data-driven insights can help drive growth and help set targets, yet brands are faced with several challenges, such as:
These challenges mean marketing teams are stuck, unable to create innovative data-driven marketing strategies, drive growth and increase revenue.
90% of FMCG leaders consider data collection, activation, and scaling as key obstacles to achieving their marketing goals. While many brands have begun the journey of identifying tactics and use cases that can leverage data, there is still a considerable gap between what can be achieved with existing tools that provide outdated and unactionable data and what brands really need – actionable insights from real-time, syndicated data.
Innovative marketing that delivers results requires more than just a tool. Brands need a connected digital commerce platform that allows them:
An analysis of the most successful FMCG brands in comparison to the competition shows an overwhelming dominance in the capture and use of data in their marketing strategies. Winning brands collect up to 47% more data from retailers, analyze buyer attributes in more depth and generate more granular insights than their competitors.
Utilizing data analytics in marketing can increase revenue by up to 25%*, but achieving this requires your brand to adopt a digital commerce solution that:
This is what partnering with RedCloud brings to your organization – a connected open commerce platform that helps marketing teams gather valuable data-driven insights to sell smarter
RedCloud is the world’s first integrated open commerce platform that unlocks the full value of the distribution chain, connecting brands to distributors and retailers in new and more powerful ways. With RedCloud, marketing teams can finally gain access to real-time data analytics across the entire distribution chain and POS, leveraging these insights to improve campaign performance, increase ROI on marketing spend and drive sales.
Contact us to find out how RedCloud can drive innovation in your marketing, helping you sell smarter and increase revenue by up to 25%*.
*Statistic based on research conducted by Oliver Wyman.
Developing markets hold tremendous growth potential for the FMCG industry and are likely to generate new consumer sales of $11 trillion by 2025, an equivalent of 170 Procter & Gambles. However, local competitors and smaller brands will fight for that business in ways that established multinational FMCG brands have not seen. Smaller brands currently account for 19% of dollar sales and more than half the growth (53%) in the FMCG industry.
These changes in the FMCG industry have prompted sales leaders to re-assess their strategy and create an opportunity for sales teams to discover new business models, leverage technologies, and further corporate learning for long-term growth and brand loyalty. Brands must equip their sales force with in-depth market insight delivered in real-time to enable them to deliver consistent results month after month.
As new competitors enter local markets with locally relevant products and win market share, established brands need to respond and compete with a strategy that helps maintain market share while identifying new growth pockets to leverage.
FMCG sales teams struggle to hit their targets and capture market share due to the lack of real-time data across the distribution chain. Identifying and maximizing growth opportunities is almost impossible as sales teams lack insights on:
SG&A costs also remain high, up to 20% of revenue, as sales reps spend a considerable amount of time physically visiting merchants, collecting POS data manually, and then entering them into spreadsheets. The lack of actionable, syndicated data insights coupled with the manual data collection efforts leave sales teams unable to capture new geolocations and drive growth.
Succeeding in this competitive marketplace will require sales teams to re-evaluate their route-to-market strategy, leverage the wealth of consumer data available to identify areas of new demand, and take advantage of these growth pockets with real-time, data-driven insights. To expand into new geolocations and increase market share, sales teams need a solution that
By capturing POS data syndicated across the entire distribution chain and identifying the micro-consumption patterns in the market, sales teams can create new sales opportunities by:
Seeing just how important real-time, syndicated data analytics is to create and optimizing new sales opportunities, brands need a solution that gives in-depth views into sales data to uncover unmet needs and identify growth opportunities. Simply put, your business needs RedCloud.
RedCloud is the FMCG industry’s first digital open commerce platform that unlocks the value of the distribution network and transforms each industry connection into potential valuable data points. Our intelligent platform captures real-time data syndicated across multiple data sources in the distribution chain – distributors, retailers, and merchants and provides actionable recommendations to sales teams. With access to actionable, data-driven insights, sales teams can better allocate their Inventory across the value chain, moving beyond simple reactive operations to take proactive decisions.
RedCloud also makes entering and competing in new geolocations easier by enabling you to evaluate the distribution landscape, identify the strongest distribution channels for your business and prioritize the best retail partners to ensure success.
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The FMCG industry has had a long history of generating reliable growth through mass brands. In 2010, the FMCG industry was responsible for creating 23 of the top 100 global brands and had grown the total return to shareholders (TRS) by almost 15% per year for 45 years. However, shifting consumer behaviour, retailer consolidation, and the rise of hard discounters is placing increasing pressure on this traditional value-creation model. As a result, in 2016, 62% of FMCG companies missed their revenue growth target, and most of those companies were not first-timers, as 59% of the brands in question had missed 4 of their last 8 top-line quarterly targets.
FMCGs must re-evaluate their go-to-market strategy, especially in emerging markets and embrace an agile digital-first operating model that increases market share and drives sustainable growth.
The FMCG industry generated tremendous growth in previous decades with a value creation model that involved:
In recent times, however, this model has lost steam with top-line growth slipping in most subsegments. Large food-and-beverage manufacturers, which account for about 50% of total category sales, have remained stagnant with an average growth rate of only 0.3% per year. In contrast, midsized companies expanded sales by 3.8% and small companies by 10.2%.
The growth of major FMCG brands is slipping as the traditional model is being disrupted by technology-driven trends. Over the last few years, companies with a net revenue of $8 billion and higher grew at only 1.5% (55 percent of global GDP), while companies under $2 billion grew at twice that rate, showing that large FMCGs face a serious growth challenge.
Important trends that have disrupted the traditional value-creation model are:
While many FMCGs have started to adopt digital technologies, there is still a long way to go, especially in embracing truly data-driven marketing and sales processes.
To effectively drive growth in this competitive retail landscape, FMCG brands must adopt a new model that places digital at its center. We have identified 3 main drivers for FMCG brands that are essential to driving growth and increasing market share.
Achieving all of this is not an easy task, and so, this is where RedCloud comes in.
RedCloud is partnering with FMCG brands to change the way you do business. With the world’s first open commerce platform, we unlock the value of the entire distribution chain, transforming existing industry relationships into potential data points.
Now, brands can access POS data in real-time and understand the micro-consumption patterns in the market to make strategic decisions to drive growth. Sales and marketing teams are no longer in the dark, as campaign performances and shifting demand patterns can be analysed in real-time to generate actionable insights – insights that are invaluable to penetrating new markets.
With RedCloud, your brand can finally compete by leveraging innovative technology to improve profitability and drive market share.
Contact us today to see how we drive business growth and improve revenue by up to 25%*.
*Statistic based on research from Oliver Wyman.
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The global FMCG industry is predicted to grow at an incredible 5.4% each year to reach $15 trillion by 2025, with much of this growth coming from developing markets, according to a report from Allied Market Research. However, historic data shows that large FMCG brands are stagnating rather than growing, with small companies generating two to three times their fair share of growth. According to a Nielsen report, the majority of growth (53%) in FMCG sales comes from the smallest manufacturers who seem to be cannibalizing sales from the largest food and beverage brands, whose market share dropped to 31% and contribute only 2% of the sector growth.
Smaller brands and e-commerce giants have outpaced large FMCG brands in driving growth due to their digital-first approach. With consumers changing the way they shop, digital technology has allowed smaller companies to remove their dependence on traditional distribution routes and gain faster routes-to-market, which is invaluable in developing economies. To remain competitive and recover market share, FMCG brands must fundamentally revisit their way of working and transform their distribution chain. If they continue with the traditional model of mass marketing, large FMCG sales teams will struggle to drive growth effectively.
The traditional FMCG distribution chain in emerging markets is characterized by a complex maze of intermediaries and players, including distributors, sales reps, wholesalers, and retailers. Despite the importance of the CPG industry, much of it is unorganized, with local convenience shops and mom-and-pop shops still playing a dominant role. The abundance of middlemen and the fragmented nature of the distribution chain continues to impose a challenge to the growth of FMCGs due to:
To maintain market share and drive growth in developing markets, FMCGs must embrace an agile, digitalized distribution chain to optimize their distribution processes, increasing efficiency and reducing risk and cost.
The annual consumption in developing markets is expected to hit $30 trillion by 2025, one of the largest growth opportunities in history. To maximize this potential, brands must transform their distribution processes and rethink how they interact with retailers.
Adopting digitalized distribution allows companies to meet rapidly changing consumer demands and address the challenges that traditional distribution could not solve, leading to a distribution chain that is:
To achieve growth targets by digitalizing the distribution chain, brands need a fully integrated system that connects manufacturers, distributors, wholesalers, and retailers, unlocking the value of the distribution chain. This integrated system needs to provide real-time, syndicated data to a granular level across the entire value chain, which can be broken down per distributor and even per retailer. While many FMCGs are beginning to adopt digitalizing their distribution processes, this level of in-depth insight into the value chain is almost impossible. Until RedCloud.
RedCloud is the world’s first open commerce platform that unlocks the full value of the distribution chain, connecting brands, distributors, retailers, and merchants. With RedCloud, you have access to real-time data captured across the entire value chain, giving sales and marketing teams:
RedCloud is the partner your brand needs to digitalize the entire distribution chain, drive growth, and increase revenue by up to 25%*. To learn more about our solution and how it can help your business, request a demo today.
*Statistics based on research from Oliver Wyman.
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Distributors in emerging markets are facing a major disruption in their distribution model, with key metrics showing that challenges to the traditional models have eroded the financial health of distributors. The rise of modern trade and digital commerce threaten traditional distribution and have driven gross profit margins down by an average of 4% per year, resulting in direct EBITDA reduction of 1 to 2 percent, showing that distributors cannot maintain profitability levels.
The average return on invested capital (ROIC) for distributors ranges from 20-30 percent – significantly lower than other businesses, while SG&A costs as a percentage of revenue have remained high (10.5%) over the last five years. Now, more than ever, distributors must look to the future and adapt to a new way of doing business to remain profitable.
Distribution in emerging markets has remained the same for years; other than some basic technology interventions to track sales, very little has changed. In many markets, distributors still manually order products from FMCGs, hold stock till retailers make manual orders, deliver the orders via van sales, and collect cash payments – an extremely inefficient model. Unfortunately, this ineffective model provides little to no insight into the distribution chain, with distributors lacking an overview of their business performance, productivity, and growth – areas where their modern competitors excel.
The pandemic proved that companies which embrace the digital revolution are more resilient than those that do not. Amazon, the world’s leading digital distributor, almost doubled its sales in a single month at the height of the COVID-19 crisis due to years of investing in digital selling and analytics. While traditional distributors do not have the same resources as Amazon, there is one thing they have in common: treasure troves of transaction data across products, brands, and consumers that can help anticipate consumer needs and create new strategies to match market demand. However, without a system in place to capture and utilize these valuable transaction data points, traditional distributors are flying blind, unable to unlock productivity in inventory planning, reduce warehouse costs, or save on delivery costs.
Digital-first distributors will continue to offer capabilities that traditional distribution cannot match, as e-commerce and online retail do in B2B what they have accomplished in the consumer world – personalized, data-driven processes that create an addictive experience. To compete favourably and remain profitable, distributors in emerging markets must rewrite the rules of traditional distribution and undergo radical restructuring driven by digital ecosystems and market networks that enable hybrid forms of cooperation and competition.
Today, distributors are under immense pressure as the balance of power shifts to brands and retailers, leading to reduced margins over the years. Major FMCG brands underperformed the market in recent years and are beginning to finetune their distribution model by embracing direct distribution, reducing gross margins, and increasing the costs transferred to distributors. Larger wholesalers and retailers also have more bargaining power and are negotiating for increased trade spend while developing higher-margin private-label products - leading to reduced margins for distributors.
The only way out is for distributors to digitalize their distribution chain and gain access to the deep data insights that are inaccessible under the manual distribution model. This new digitalized chain provides distributors with:
With real-time visibility across the value chain, distributors can finally step into the future and compete in the digital economy. However, adopting a digital distribution model can be challenging, especially for traditional distributors who currently operate through linear value chains, which is why you need a framework that seamlessly brings all the components of the digital distribution chain together.
RedCloud is the world’s first integrated open commerce platform built to unlock the full value of the distribution chain by providing distributors with deep data insights and real-time visibility across the entire value chain.
The COVID-19 crisis has demonstrated how vulnerable the traditional distribution chain is, as many distributors could not anticipate rapidly changing demand patterns or supply-chain disruptions. Preparing for the future will require building digitally enabled distribution chains that harness real-time market insights, advanced analytics, and digital payments to deliver significant benefits, and RedCloud does this in 3 major ways:
The future of distribution is digital, and only those who are proactive enough to take bold steps will be the winners of the new digital commerce economy. This is the RedCloud advantage, a better, more efficient way of doing business for the traditional distribution sector.
Partner with RedCloud today to build the future of distribution and increase your revenue by up to 25%*
*Statistics based on research from Oliver Wyman.
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The distribution chain is the heart of the FMCG industry, keeping retailers’ shelves stocked and end consumers satisfied. For decades, FMCG brands in emerging markets have operated through a traditional distribution model dependent on a manually connected network of intermediaries to move products from the manufacturers to end consumers. However, the pandemic has tested the ingenuity, resilience, and flexibility of this distribution model and found it wanting as brands and distributors have been unable to keep up with rapidly shifting demand patterns and consumer behavior.
To maximize the $30 trillion growth opportunity that exists in emerging markets, brands must fundamentally revisit their distribution models and transform themselves. If they stay with the traditional, manual model of distribution that relies on van sales and cash sales, they will struggle.
Fundamental changes in consumer behavior, and the limitations of traditional distribution model are knocking brands and distributors off-balance, leading to significant friction in the value chain such as:
· Lack of visibility: Under the current distribution model, data is still very fragmented, and visibility is dependent on stakeholders providing information manually. Therefore, brands and distributors are essentially flying blind, unable to identify rapidly shifting demand patterns or make strategic data-driven decisions in real-time. This leaves sales teams unable to meet their targets as growth opportunities are left untapped and market share is lost.
These challenges underscore the need for FMCGs to accelerate the adoption of digital distribution and value chain transformation to outmaneuver uncertainty and maximize existing growth opportunities.
The traditional distribution model is no longer enough in today’s competitive retail market, with reports showing that 75% of the largest FMCG brands have had negative or strongly negative impacts on their businesses due to distribution chain disruptions, and plan to downgrade their growth outlooks. In contrast, e-commerce and smaller brands that employ digital distribution models have experienced significant growth as consumers in emerging markets made the greatest shift to e-commerce and digital commerce, and United Nations Conference on Trade and Development (UNCTAD) reporting that digital commerce’s share of retail trade grew from 14% in 2019 to 17% in 2020.
Eliminating friction by digitalizing the distribution chain requires stakeholders to build sufficient flexibility by leveraging a technology-led platform that connects the entire value chain and supports applied analytics to provide in-depth insights at POS. This is what RedCloud, the world’s first open commerce platform provides – an innovative platform that transforms existing industry interactions into potential data points and placing valuable data insights at your fingertips.
RedCloud eliminates the friction in the distribution chain by:
To learn more about how our proprietary platform is eliminating distribution chain friction and driving revenue growth by up to 25%, schedule a demo today.
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For decades, strong brands and product innovations were the recipe for success in the consumer goods industry. More recently, tried-and-true traditional distribution models in emerging markets accounted for three-quarters of revenue growth, but a new era has since dawned that requires a new strategy.
Large FMCG brands and distributors now recognize the need to embrace digitalization, as it speeds up and shifts the market, with 60 percent of CEOs surveyed saying they plan to transform their organization within the next few years. The reasons for this are obvious, as online providers in the CPG industry recorded 34 percent growth in the past six years, while conventional companies barely grew by 0.4 percent. The smallest outfits in the industry currently benefit the most from digital marketing and digital distribution channels, accounting for over half of industry growth.
However, to digitally transform their companies, FMCG industry leaders must embrace a new breed of transformation to build a sustainable competitive advantage while avoiding common mistakes that companies often make when attempting to lead transformation initiatives.
FMCG brands and distributors realize the need to digitally transform their companies, as 38 percent of industry leaders say they aspire to generate 50 percent or more revenue within the next few years from digital technologies and services, which is 40 percent higher than the present number. Two-thirds of companies also state that they expect the digitization of core business processes will be (or is already) essential to maintaining economic viability.
Digital transformation can unlock significant value when rightly implemented. However, this is not an easy task, as there have only been a few successful cases of digital transformation and many notable failures from otherwise high-performing companies. Research shows that 70% of digital transformation initiatives fail to reach their stated goals due to a lack of employee engagement, inadequate support from management, poor cross-functional collaboration, lack of accountability. Furthermore, sustaining the impact of a transformation initiative requires a major company-wide mind and behavior shift – something that only a few leaders know how to achieve.
While digitization is inevitable, business leaders need to accelerate the rate and scale of transformation as only 8 percent of company leaders say their current business model will remain economically viable if the industry keeps digitizing at its current course and speed.
Successful digital transformation programs will require business leaders to embrace the idea of holistic change in how the business operates as traditional transformation approaches deliver sub-optimal results. To deliver extraordinary change that builds sustainable competitive advantage, brands and distributors in the FMCG industry must see digital transformation as a business-model transformation that cuts across all parts of the business, including the sales and marketing processes, route-to-market, and distribution chain model. This is the only way to remain relevant in the digital economy and take advantage of the enormous growth opportunity in emerging markets.
Another key learning point for FMCG brands and distributors is that digital is transforming industries into ecosystems, upending the fundamentals of supply and demand. A McKinsey study shows that digital ecosystems could account for more than $60 trillion in revenues by 2025, which is more than 30% of global corporate revenues. Businesses that successfully adopt digitalization will have the scale to reach a nearly limitless retailer base, and benefit from frictionless distribution chains. The rise of digital platforms that allow industry players move easily across market borders is disrupting the traditionally manual distribution model with the key benefit of aggregating incredible amounts of data from distributors, wholesalers, and retailers to generate detailed, data-driven insights.
To successfully drive digital transformation, companies must strive to establish key digital infrastructure made up of people, processes, and tools that enable the successful execution and sustainability of results as opposed to cost-cutting or short term, tactical improvements as the main compass for change.
Digital transformation has the power to directly affect sales and increase revenue, with a Nielson study showing that 60 percent of FMCG sales can be affected at the store level. Unfortunately, large FMCG brands and distributors have only 20 percent visibility into their distribution chain, and virtually none at POS, as opposed to the 90 percent visibility needed to address key points of volatility where costs and revenues are at risk, such as out of stock situations at retailers’ which causes an annual loss of $1 trillion.
According to an IBM C-suite study, 84% of distribution chain officers have stated that a lack of visibility across the distribution chain is the biggest challenge they face, which has to led to inefficiency and waste. Digitizing the distribution chain will save FMCG manufacturers and distributors significant resources, reduce wastage and increase revenues.
RedCloud is the world’s first integrated commerce system that unlocks the value of the distribution chain, leveraging on existing industry relationships to connect manufactures, distributors, and retailers digitally. Our proprietary solution enables the real-time data capture and integration delivering end-to-end visibility across the value chain. Brands and distributors can see in real-time, which of their products are in highest demand, where the demand for their products is, who is buying the products, and why sales are increasing or decreasing.
With syndicated geoanalytics data, sales teams can adjust inventory allocation to the areas of high demand to maximize growth opportunities while marketing teams can implement targeted, automated communications to drive retailer engagement and increase order velocity. RedCloud is the partner you need to digitally transform your distribution chain from a manual, inefficient model into a hybrid, agile digitalized model that delivers up to 25% increase in revenue*.
Schedule a demo today to see how RedCloud is transforming the FMCG industry and empowering over 1 billion merchants in emerging markets by connecting them to the digital economy.
*Statistic based on research conducted by Oliver Wyman.
To maintain competitive advantage, drive growth and capture market share, marketing leaders of large brands must devise new strategies to engage merchants directly and increase visibility at POS.
The fragmented nature of the traditional FMCG distribution chain leaves marketing teams unable to engage directly with merchants. Manual communication and data collation methods means marketers can only reach and engage large distributors and tier 1 retailers, leaving tier 2 and 3 retailers with sub-optimal engagement levels. However, the insights required to make data—driven decisions such as:
· which products are in high demand?
· where, geographically, the demand for their products is?
· what types of retailers are buying their products?
· which of their marketing campaigns are working?
Are only accessible when marketers can engage directly with smallest retailers and have insights to real-time data collated at POS.
The inability of marketing teams to engage their merchant network directly across multiple channels leads to lower sales, with industry reports showing that marketers that use 3 or more channels to drive campaigns had a 287 percent higher purchase rate than those using a single-channel campaign.
Without direct merchant engagement, marketers are also unable to react to rapidly changing demand patterns as there is no real-time visibility into consumer behavior. This leads to loss of market share to nimble, digital-first startups that can authentically target and engage tight segments to win over channel partners.
Syndicated data and direct merchant engagement allow marketers leverage on existing demand to upsell, and cross-sell their products with personalized campaigns, with studies showing that personalization, when executed well, can increase retailer satisfaction by over 600%. For example, if an FMCG brand discovers an increase in demand for one of their products, (say baby food), this valuable insight provides a great opportunity to target that specific retailer segment with a personalized campaign for a related product, say baby diapers to increase the average order volume and value and drive sales.
Increasing direct merchant engagement leads to improved brand loyalty and retailer retention, which increases revenue as a 5 percent increase in retailer retention can increase revenue by over 25% and the top 10 percent loyal customers have an lifetime value worth over 6 times the industry average.
To increase direct merchant engagement, FMCG marketers need a solution that provides access to real-time, actionable data collated at POS while also enabling direct engagement with all the merchants in the distribution chain. While many FMCGs have attempted to launch digital platform or apps to engage with retailers, adoption remains low as retailers do not want to engage with multiple apps from multiple brands.
This is where RedCloud, the world’s first open commerce platform excels. We unlock the full value of the traditional distribution chain, directly connecting FMCG brands, distributors, and retailers on a single platform that preserves industry connections while providing powerful digital capabilities. With brands and their merchants on the same platform, marketing teams have real-time visibility across the value chain, and can access collated data at POS. In addition, the open commerce platform allows marketers directly engage merchants with personalized, targeted campaigns that take advantage of the micro-consumption patterns in the market to increase sales velocity and order volume.
In my next blog, I’ll explore how marketers can increase app adoption to further enhance merchant engagement, increase customer retention and generate brand loyalty.
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Every day, sales representatives in FMCG companies are responsible for developing and sustaining long-lasting relationships with distributors and retailers to ensure orders are filled and sales targets are met. In emerging markets, however, much of this communication is manual, as sales reps must visit retailer stores to interact with merchants and gather feedback.
Even though many FMCG brands recognize the need to digitalize their business, digitization of the sales communication and customer interaction process does not receive much attention. A Google survey of over 2700 B2B sales managers found that many top sales leaders underestimate the strategic importance of digitalizing sales interactions.
FMCG brands must now answer the question of how to reach customers quicker via digital channels and respond to their requests in real-time as research shows that sales leaders that effectively implement digital transformation drive five times more revenue growth than their peers who do not.
The manual communication methods used by sales teams in emerging markets are slow and ineffective, and risk losing sales as lack of real-time communication is by far, the biggest frustration for FMCG customers. 30% of B2B buyers surveyed say they prefer to buy from distributors because manufacturers’ sales reps took too long to respond to their requests.
Digitization has made providing consistent, high quality customer interactions a competitive differentiator, irrespective of the sales channel, and FMCG companies need to adjust to this reality. Without digital means of communicating with their customers, sales teams do not have access to raw POS data, or the visibility needed to manage sales profitably and accurately determine the most effective ways to allocate sales resources.
B2B brands that are unable to replicate the convenient and personalized customer experience offered in the B2C industry are already losing to non-traditional players that can. E-commerce giants like Amazon, and smaller digital-first brands are already cashing in on this trend by providing their customers with simple and convenient digital platforms to make commerce easier and faster.
Digitization is a decisive factor for driving sales growth in the long term as it enables brands improve communication with distributors and retailers to gain line of sight across the distribution chain and gather vital information about consumer behavior and purchase decisions. Companies that successfully digitally transform their sales processes and implement digital sales communication generate five times more CAGR and 8% more shareholder returns than companies that do not.
On the other hand, brands that fail to make the switch to digital communication will find their market share taken over by smaller, digital-savvy brands that directly engage merchants through multiple digital channels. Statistics show that the smallest brands now account for over 53% of FMCG sales growth, and e-commerce’s share of retail trade has grown to 17% - showing that the future of sales communication is indeed digital.
Fortunately, all is not lost, as industry reports shows that B2B customers desire a combination of great digital interactions and the human touch – a field that FMCG brands have excelled at for decades. Sales leaders must employ fresh, out-of-the box thinking to combine digital platforms with the existing relationships in their distribution networks to increase visibility across the distribution chain and empower sales reps to make targeted, data-driven decisions based on real-time feedback gotten from all merchants.
This is RedCloud’s mission – a highly efficient, digitalized distribution chain that connects FMCG brands directly to every single distributor and merchant across the value chain. We have achieved this by building the world’s first digital open commerce platform that allows sales team gain real-time insights into the entire distribution chain. For the first time, sales teams have line-of-sight to the smallest merchant and can access actionable data at POS. In addition, you can directly segment customers and communicate with specific merchants to cross-sell, and up-sell your products, which can yield up to 60 percent higher revenue.
Schedule a demo today to see how RedCloud is revolutionizing the distribution chain and partnering with brands to increase revenue by up to 25%.
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The distribution chain is the heart of the CPG industry, and at the center of that chain are distributors. Distributors are responsible for moving approximately $6 trillion in goods between manufacturers and consumers but have recently been struggling to remain profitable.
The global pandemic has only accelerated market trends that put more pressure on distributors. Slower economies mean reduced demand for distribution services, amplifying the forces that have eroded the margins of leading distributors over the last two decades. To remain competitive, it’s more crucial than ever that distributors learn how to adapt to the changing marketplace, and that starts from understanding the reasons for the decline of the distribution chain.
Given the important ‘middleman’ position that distributors occupy in the industry, you would expect them to benefit greatly from the relatively strong economic growth that has been seen in the past few years. Unfortunately, this is not the case as key metrics show that traditional distribution models have been challenged by the changing marketplace, eroding the financial health of distributors.
Looking at gross margins and EBITDA margins, we can see a decline over the past 5 years, which is worrisome as companies go through the economic effects of the pandemic with reduced margins.
Looking critically at the distribution industry, there are two major factors are responsible for its disruption.
The first factor eroding the financial health of distributors is the rise of price transparency that allows customers to efficiently find the best deals, which contributes to the rapidly shifting consumer behavior. Traditionally, distributors have the impulse to do everything to gain and retain customers, and this often gets in the way of pursuing profitable growth. For example, when surveyed, customers say that the most important value a distributor provides is a wide array of products and services, and the price is only the third-most important attribute. However, when making major purchase decisions, even customers agreed that price is the most important factor they consider.
This contradiction is an example of the pressure that distributors face when trying to satisfy their customers. Customers are placing distributors under increased pressure to provide a wider assortment of products and services but at lower prices. As distributors try to meet these demands, their already shrinking margins are impacted even more.
As more become more comfortable with buying online, customer demand has shifted to ecommerce and true omni-channel experience. Customers now expect a seamless experience irrespective of where they interact with their distributor, whether it is full online, a hybrid of online ordering and physical pickups, or completely offline. E-commerce has also raised the standard for customer experience, providing multiple buying choices, real-time package tracking, 24/7 support and easy service interactions, and so on.
However, online distributors have lower operating costs than traditional distributors, which also puts pressure on prices and margins. The technology and infrastructural investments that traditional distributors need to put in place to compete with other e-commerce players puts even more pressure on EBITDA margins.
To remain competitive, distributors need to adapt to the changing marketplace and become digitalized. By digitalizing their operations, distributors can provide a seamless experience to their customers, while providing competitive prices. Also, digitalizing the distribution chain means more insights into point of sales so that you can identify areas of high and low demand. This helps reduce inventory and potentially improve margins.
However, many distributors cannot build the entire IT infrastructure they need to properly connect the distribution network, which is where RedCloud comes in.
By partnering with RedCloud and our industry-leading commerce platform, you have valuable and actionable insight into the distribution chain. Distributors can see and respond to orders in real time, anticipating and responding to customer demand, reducing lead time and inventory cost.
RedCloud is enabling distributors to buy better, sell smarter, and pay simpler, so they can reduce inefficiencies and increase their margins.
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In recent times, changes in consumer behavior and the retail landscape have put increasing pressure on CPG companies. Today’s customers have veered from the traditional linear path-to-purchase that CPG companies controlled. Brand loyalty is also waning now that customers interact with multiple channels along the purchasing journey and price plays a more critical role in buying decisions, as customers can compare prices easily. All these factors mean that CPGs are facing more uncertainty than ever on the rate of consumer spending on their products.
Retailers are also increasingly focusing on white-label products as they try to increase their bargaining power with popular FMCGs. They are changing their product ranges and adding more products to their shelves to differentiate themselves from other retailers. These factors, combined with varying input prices, means manufacturers are now faced with the challenges of growing their margins, winning the price war for consumers, and getting their products on the retailer’s shelves.
All these trends make one thing clear; power is shifting from CPG companies to retailers and consumers, and pressure is mounting on marketing teams to figure out innovative strategies to retain their market share and drive month-on-month growth. CPG’s need to engage more with their customers, for them to engage directly with their buyers they need more robust analytics capabilities that will make it easier to define buyer specific campaigns.
For marketing teams to increase the ROI and meet their monthly and yearly targets, they need access to first-class data analytics tools and processes. In many cases, marketing teams are limited to manual methods of tracking their success and have almost no visibility at the point-of-sale, one of the most critical points on the distribution chain. While some brands have made some efforts to adopt digital tools to increase their visibility, these tools are usually limited in scope.
This is why there is RedCloud. RedCloud is the CPG industry’s first digital ecosystem that connects brands, distributors, and retailers on a single platform, unlocking the full value of the traditional distribution chain. With RedCloud, brands have visibility across the entire distribution chain and can derive insights at point-of-sale. Marketers can make smarter decisions on their trade marketing campaigns based on real-time data, while also identifying new opportunities for up-selling and cross-selling their products.
RedCloud is helping the CPG industry sell smarter, buy better, and pay simpler.
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The COVID-19 pandemic has had significant effects on top brands in emerging markets, wiping out 12 percent of brand value, or $5.5 billion from Africa’s largest brands between 2020 and 2021. FMCG brands, especially food and beverage manufacturers were some of the hardest hit, as their route-to-market has been severely hampered. Lockdowns, social distancing, and other restrictions have introduced a new complication in markets that already had low visibility across the value chain due to data limitations, fragmented front ends and last mile execution issues.
However, there is hope on the horizon, as emerging markets offer enormous growth opportunities that large FMCGs can maximize on. Household consumption across Africa is predicted to grow at 5 percent per year in real terms to reach $2.5 trillion in 2030.
As the crisis recedes, there will be a dramatic change in the shape of demand at the front line and how brands respond to that demand, as the pandemic has significantly disrupted traditional sales and marketing activities. While there are many unknowns ahead, one certainty is that route-to-market (RTM) approaches must fundamentally change.
Africa is more than just another emerging market opportunity. It is an incredibly complex continent comprising of over 50 markets – each socially, culturally, and economically unique. The logistics alone are daunting, not to mind the intricacies of multiple operating models, distribution networks and marketing strategies that must be applied to unique markets. This complexity can be overwhelming for many FMCG brands due to the numerous route-to-market challenges they face.
The consumption patterns in Africa differ greatly from other emerging markets, influenced as much by local culture and consumer preference, as it is by economics and market sophistication. For example, while Moroccans prefer to purchase tea and coffee in traditional markets, Kenyans and Nigerians buy most of theirs at supermarkets. Ethiopians on the other hand, buy almost all of theirs at kiosks. To set up the right RTM and successfully expand into new markets, brands must understand how their product is consumed by different consumer segments and in different markets.
Lack of actionable data is also a major challenge to driving growth in the emerging African market. Accessing, compiling, and analyzing market data is like solving a mystery as sales and marketing teams are left in the dark, with no visibility into where the demand for their products is, or who is buying them.
These challenges make the traditional route-to-market weak, as customers are unable to see and interact with the brands when and where they need it. To recover lost ground and expand to new markets, African brands must embrace digital technologies to transform their go-to-market strategies.
African brands today face a compelling opportunity to innovate their traditional route-to-market channels and models as they attempt to recover from pandemic-induced losses. The simultaneous rise of digital commerce, powerful digital players, and millennials as the dominant customer segment is disrupting the sector and changing the way FMCG brands need to go to market.
Despite this opportunity, many brands are unsure of how to proceed with digital RTM transformation, or are focused on the wrong initiatives, resulting in halting action and a failure to build significant value. A McKinsey study of the management practices related to digital strategy and capabilities that correlate most strongly with growth and profitability shows that many B2B companies, which include FMCGs, trial consumer companies in terms of overall digital maturity.
This is a massive opportunity missed, as the study shows that companies which move quickly and decisively to digitally transform their go-to-market strategies generate 3.5 percent more revenue and are 15 percent more profitable than their industry peers. They have also been able to capture 10 percent or more of incremental growth and have expanded margins by 5 points or more.
To achieve digital route to market transformation, African brands must reimagine their sales and marketing processes and answer some crucial questions:
FMCGs across Africa must also rethink their distribution model, as there are many inefficiencies in the way products are distributed, often related to order-taking and payments at the fragmented front-end.
The rise of B2B e-commerce players in emerging markets has shown how technology can make distribution more efficient for brands, distributors and retailers, hence companies must focus on developing tech-enabled sales and distribution models to accelerate robust growth and expansion in emerging markets.
To successfully drive digital RTM transformation, FMCG brands need a solution that solves the problem of the traditional route-to-market. They need a solution that provides:
RedCloud is the world’s first open commerce platform that unlocks the traditional distribution chain, empowering brands to digitally transform their route to market and drive growth. With RedCloud, sales and marketing teams can collect valuable data at POS and gain much-needed insights into the consumption patterns and geographical demand of their products. The inbuilt market intelligent tool also allows marketers to better manage their campaigns, and create targeted promotions aimed at specific customer segments, leading to greater ROI on marketing spend, more sales and increased revenue.
Schedule a demo today to see how RedCloud is partnering with FMCGs around Africa and empowering them to sell smarter, buy better, and pay simpler.
As competition in the FMCG industry intensifies, understanding and maximizing the customer lifetime value (CLV) of each distributor or retailer has become an important way to boost business profit. B2B businesses are now investing billions of dollars into increasing customer lifetime value through loyalty programs, trade marketing, and other rewards that improve customer relationships. In fact, customer relationship management software is the largest and fastest growing enterprise software market and is expected to double in size to $80 billion within the next 5 years.
To actively increase customer lifetime value, FMCG marketing leaders in emerging markets must adopt an integrated approach by leveraging digital technology systems to improve loyalty among their most important channel partners and drive economic growth in the long term.
FMCG marketers have long used trade promotions, loyalty schemes and merchant rewards to increase their customer lifetime value. CPG companies worldwide invest 20% of annual revenue in trade promotions, however, available data shows that 59 percent of these investments are wasted. Conversely, the best promotions were 5 times as successful as the least efficient promotions, and a 10% improvement in the share of wallet captured from high-value customers can increase market capitalization by an average of 12 percent, showing that trade promotions are effective, many marketers are just not doing it right.
There is clearly a huge opportunity for FMCG brands to improve the ROI on their trade promotions spend, yet many marketers cannot maximize this opportunity, as there is lack of data visibility across the distribution chain. The traditional FMCG distribution chain leaves marketers in the dark, lacking insights into:
· Who is buying from them?
· What their customers are buying?
· Why there is a change in the demand for their products?
Without end-to-end visibility across the distribution chain and access to actionable data collated at POS, CMOs are stuck targeting the same set of customers with generic and largely ineffective promotions and are unable to accurately segment their audience to account for new buying habits and preferences.
The pressure continues to mount for marketing leaders as the demand for FMCG brands and products via traditional channels have slowed in recent years, especially in canned goods, food & beverage, and laundry categories. This slowdown is driven by huge shifts to non-traditional channels like e-commerce, where smaller, digitally enabled brands can provide precisely targeted promotions and loyalty schemes that increase engagement and drives sales.
To increase CLV and drive long-term growth, FMCG brands need an advanced data analytics solution that provides granular insights into customer behavior and segments customers based on multiple criteria, leading to higher returns on promotional investments. Studies show that 30 percent of FMCG leaders already consider trade-promotion optimization through advanced data analytics their number one priority. The primary question for brands is how to make it happen.
First, marketers must build an ecosystem of supporting data with a data analytics solution that captures real-time actionable data at POS across the distribution chain to provide a granular view of buying habits and history. This would be a major win for both FMCGs and retailers, as brands that adopt granular data analytics tools to optimize promotions achieve sales growth and top-line growth that outpaces the inflation of trade investments while retailers experience increase in operating margins by up to 60 percent through efficient promotions.
Analyzing the data on CPG promotions shows that volume-based promotions do not entice retailers who buy infrequently in a particular category to purchase more, rather, they subsidize retailers who are already loyal to the brand. However, promotions focused on smaller package sizes in regions of low brand market share attracted retailers who were not loyal to any manufacturer and enticed infrequent retailers to buy more from the brand. Insights like this are invaluable for FMCG marketers in emerging markets and are key to increasing market share while driving long term growth.
RedCloud, the world’s first open commerce platform provides FMCG brands, distributors, and retailers with real-time, actionable data collated at POS and syndicated across the traditionally fragmented distribution chain, enabling marketing leaders to:
Schedule a demo today to see how RedCloud is partnering with FMCGs across Africa and Latin America to drive growth and increase sales by up to 25 percent.
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Early in the COVID-19 crisis, many large FMCG brands disappeared from stores due to panic buying and pantry loading, leading to many shoppers opting to buy private-label goods, and have continued to do so. Private label products have experienced rapid growth in the last few years, especially in emerging markets like South Africa, which reported a startling double-digit growth of 27.2 percent between March 2019 and March 2020. On the other hand, major FMCG brands experienced slow revenue growth of 1.0 percent in the CPG industry, with their market share falling by 0.6 points to 46.6 percent, while private labels and the smallest manufacturers increased their market share to 15.6 percent and 9.7 percent, respectively.
To compete favorably, larger FMCG companies need a new playbook to prevail over smaller, nimbler opponents.
In the last few decades, large FMCGs strengthened their brands, expanded their portfolios, and created strong shareholder value in an era of big media, big retailers, and big brands. However, as recent as five years ago, smaller manufacturers began to take market share from large brands, a trend that has continued in both developed and emerging markets.
Here is a look into the factors driving the success of smaller brands and private labels:
The pandemic revealed that consumers are quite willing to change their buying behavior, with customer surveys showing that 40% of customers have tried new products or brands since the start of the COVID-19 crisis. Much of this behavior was spurred by the affordability of private label brands, as customers continued to hunt for cheaper products due to the prolonged economic uncertainty.
The second-most cited reason by consumers for switching to private label brands was the unavailability of major brands as manufacturers struggled to meet rapid spikes in demand for their products.
Smaller FMCG brands can often act quicker and more creatively than their larger counterparts as they are focused and more efficient and do not bear the coordination and governance costs of large organizations. This agility and simplicity allow them to outmaneuver larger, siloed FMCG companies, ensure their products are readily available, competitively priced, and more attractive to retailers and consumers.
Private labels have benefitted in the last few years and over the course of the pandemic, as they could manage their distribution chain and address stock shortages better than larger FMCG brands. While smaller manufacturers were previously limited to distributing their products through big retailers who carried both major brands and private labels, they can now distribute their products through multiple channels. The rise of modern trade and e-commerce now allows smaller brands to reach customers just as effectively as larger brands can, as shelf space is unlimited at online stores, and brands regardless of size, have the same visibility.
These new, digital-enabled channels also provide small brands with access to data and insights that even large FMCG brands do not have. Smaller private label manufacturers can see who is buying their products via online retail channels, send campaigns and promotions tailored to specific customer segments, and track the success of said campaigns in real-time, an ability that many marketing leaders in large FMCGs currently lack.
The above-mentioned factors combine to make private labels more attractive to retailers, which has proven to be a problem for large FMCG brands as they continuously lose market share and brand value to these smaller brands. However, large brands can take back control by digitally transforming their supply chain to become more agile and resilient.
Conventional wisdom says that large FMCG brands have few options to combat the growth of small brands and that organic growth is over, but we disagree. While consumers’ tastes may have changed, their underlying needs and desires have not. FMCG brands must now:
This is what RedCloud, the world’s first open commerce platform provides. With RedCloud, FMCG brands can now unlock the full power of their distribution network by connecting brands, distributors, and retailers on a single platform. FMCGs can also collate valuable, actionable data at POS from every merchant in their network, providing unprecedented visibility across the distribution chain. RedCloud also analyses the data to provide easy-to-understand insights that sales and marketing leaders of large FMCG brands can leverage to understand their customers better, create targeted, retailer-specific promotions that drive sales, increase revenue, and win market share from private labels and smaller brands.
Schedule a demo today to discover how RedCloud is partnering with FMCGs across emerging markets, empowering them to sell smarter, buy better, and pay simpler.
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While some leading organizations have succeeded and are driving over 40% of revenue with mobile, getting users to adopt and use their apps remains a challenge for many marketing leaders. Studies show that 25 percent of all app users abandon an app after just one use, leading to a significant loss of potential revenue. CMOs need careful planning and a new strategy to drive app adoption and increase retention rates to win on mobile.
Many FMCGs spend countless man-hours and financial resources developing apps to engage their customers and drive sales, but adoption rates remain abysmally low, with studies showing that 52 percent of all B2B apps lose half their peak users after just three months, and only 32 percent of users return to an app more than ten times after download.
Adoption rates of FMCG apps remain low because:
Today’s B2B buyers expect the same level of digital experiences they encounter as consumers – experiences that FMCG apps cannot match due to the non-user-centered design and a lack of data visibility. Given that most smartphone users will spend 85 percent of their time on only five apps, most FMCG apps suffer low adoption rates and are eventually deleted.
Increasing user adoption and retention is vital for FMCG brands as a Harvard Business School report shows that a 5 percent increase in retention can increase profits by 25 to 95 percent. To maximize the incredible opportunities mobile apps offer, FMCGs must first design their apps around the needs of the end-users. Rather than building the app to solve their brand’s challenges, product managers must put retailers, distributors, and end consumers at the center of their design, ensuring that the value proposition provides a compelling reason for users to engage with the app.
Marketers need a solution that tracks user action, aggregates the data, and displays it in an easy-to-understand format, enabling them to use the data that sits behind user activity to create user and action-specific campaigns and promotions to drive engagement. Unfortunately, the few mobile data capturing solutions available are costly and ineffective, as they do not provide a deep dive into actual user action and leave a wide gap in the data provided. The lack of a complete overview of users’ actions leaves marketers in the dark, unable to take data-driven action to increase engagement.
At RedCloud, we have succeeded at increasing and maintaining an engagement rate far above the industry average. We accomplished this by designing our merchant app with merchants in mind and incentivizing high adoption rates by enabling merchants to sell digital products and earn a commission on each transaction. Our integrated market intelligence tool is also built specifically for marketers and tracks individual user activity in real-time, providing a detailed overview of how users engage with the app. The tool also analyzes the data captured to provide intelligent, data-driven insights that you can leverage to create campaigns and promotions that drive merchant activity and increase retention.
RedCloud’s open commerce platform is the perfect solution for FMCGs looking to directly engage their merchants. Our upcoming marketplace is optimized to deliver app adoption and engagement rates above the industry average, enabling merchants to buy better from distributors, and engage directly with top FMCG brands.. Replace your FMCG app with RedCloud’s open commerce platform today to better engage your merchants and distributors, increase sales, and drive sustainable growth.
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In emerging markets today, over 2 billion people and 200 million businesses lack access to savings and credit, as they are excluded from the formal financial system. Transactions are exclusively in cash, and there is no access to credit beyond informal lenders and personal networks. There is a massive gap between the credit micro, small, and medium enterprises (MSME) need and the credit facilities available to them, with studies estimating this credit gap at approximately $5 trillion, or 1.3 times the current lending level.
Despite this enormous gap, MSMEs remain crucial to emerging economies, as two out of every three full-time jobs in developing economies are provided by SMEs. The informal sector also provides employment to over half of the labor force and is at least 35 percent of GDP. Therefore, closing the credit gap and empowering MSMEs with access to credit is crucial to increasing GDP and driving economic growth.
Digital finance can close the credit gap and provide access to financial services for over 1.6 billion people in emerging economies, and provide over $2.7 trillion in new credit for MSMEs by 2025. The potential economic impact of digitizing financial services is enormous, though it varies significantly based on a country’s starting position. Lower-income countries can add 10 to 12 percent to their GDP by 2025, while middle-income countries can add up to 5 percent to their GDP by adopting digital financial services.
In developing economies, Individuals and businesses of all sizes overwhelmingly use cash, which makes up more than 90 percent of payment transactions by volume. This over-reliance on cash makes it difficult for financial service providers to gather the information needed to access the creditworthiness of potential borrowers, which further narrows the number of MSMEs that can access finance and credit.
Excessive cash payments also hurt both large and small companies in emerging markets, as the costs of handling cash become significant at scale. FMCGs and large distributors reportedly spend between 2 to 9 percent of their total revenue on managing and processing cash, while retailers and merchants lose 4.7 to 15.3 percent per transaction.
Digitizing payments is a transformational solution that can be implemented rapidly to reduce the credit gap as mobile phones and digital technologies continue to spread in emerging markets. Statistics show that 90 percent of adults in developing countries already have a mobile phone, and for small business owners in these economies, the mobile phone in the palm of their hands can redefine finance and be used to pay suppliers and distributors, accept customer payments, among many other use cases. Most importantly, adopting digital payments provides MSMEs with a data trail that can be assessed to provide credit history and collateralized to access advanced supply chain financing, loans, and other financial products.
However, despite the huge opportunity that digital payments seem to provide, getting individuals and small businesses to adopt it has not been easy. Digital financial service (DFS) providers have discovered that cash works well enough for most businesses in the informal sector; hence, adopting digital payments is not an attractive solution for MSMEs. To complete the digital transformation of payments in emerging markets, DFS providers must build platforms and products that put merchants first while addressing the financial, operational, and logistical pain points they experience daily.
RedCloud is helping close the MSME credit gap by building the world’s first open commerce platform. We remove the friction and the risk that is created by handling cash, speeding up the distribution process, and enabling merchants to trade directly with local and global brands.
RedCloud has also solved the problem of low merchant adoption rates by simplifying the logistics of digitalizing cash and providing incentives to drive user adoption and retention. We have partnered with hundreds of thousands of local cash deposit outlets and ATMs to enable merchants ‘upload’ their cash to the platform. With their cash digitalized, merchants can now connect and trade directly with national and global brands on the platform. We also provide instant access to digital products like phone credit, TV and Netflix subscriptions that can be sold in-store to their customers while earning a commission on each transaction.
As merchants use the open commerce platform to build up a trading profile, this data trail can be used to easily determine how their businesses are performing and allows financial services providers to offer affordable credit facilities - a safe and sustainable way to solve the $5 trillion credit gap.
Our CEO, Justin Floyd, says, “If we can bring merchants into the digital ecosystem and eradicate cash from the supply chain, there is potential to create a true ‘sell anywhere’ economy, where global and local brands can connect with any local merchant in any market. This can only happen if the commerce technology we build is open and accessible to all.”
RedCloud ‘s vision is to reinvent commerce and empower over a billion new merchants in the world’s fastest growing economies to serve the 5 billion new middle-class customers that will be created by 2025. Contact us today to discover how RedCloud is helping merchants in emerging economies grow their businesses by up to 40% by enabling them to buy better, sell smarter, and pay simpler.
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Digital commerce has transformed the retail industry, with worldwide sales amounting to $4.28 trillion in 2020. The rise of e-commerce is disrupting traditional supply chains with the promise of enabling brands and sellers to reach more customers than ever. However, e-commerce marketplaces like Amazon, JD.com, and Alibaba, which provide the greatest reach, are highly centralized and limit the growth of the brands who sell on their platform via heavy restrictions, algorithm changes, and price wars.
Digital commerce has transformed the retail industry, with worldwide sales amounting to $4.28 trillion in 2020. The rise of e-commerce is disrupting traditional supply chains with the promise of enabling brands and sellers to reach more customers than ever. However, e-commerce marketplaces like Amazon, JD.com, and Alibaba, which provide the greatest reach, are highly centralized and limit the growth of the brands who sell on their platform via heavy restrictions, algorithm changes, and price wars.
The current e-commerce business model allows centralized platforms to exert undue control and act as gatekeepers with little or no oversight. Most e-commerce marketplaces require brands who sell on the platform to continually pay exorbitant fees, sometimes up to 30 percent on each sale to reach their ‘own’ customers – customers that do not belong to the brands but the marketplace.
Centralized platforms also limit the visibility of brands and sellers, preventing them from knowing who is buying their products and running targeted campaigns to drive sales to their store pages. Instead, sellers are stuck paying extra fees for marketing and advertising services they have no control over and cannot measure the ROI. Brands and retailers are often forced to purchase warehousing and shipping services from the e-commerce platforms they sell on, as brands who buy these services are more likely to be chosen by the algorithm as the default seller of a product (known as winning the buy box), which is essential to generating sales.
These restrictions and extra costs eat into sellers’ already razor-thin margins, preventing them from growing their businesses or expanding into new markets. In the end, the platforms win, and brands lose. As more consumers switch to buying online, there is a need for a new business model in e-commerce, a decentralized model where brands and sellers ‘own’ their customers and can directly engage with them without competition or restriction from digital commerce platforms.
From challenge comes opportunity, and the rise of open commerce is changing the face of retail and commerce today, allowing new dynamics between brands, merchants, and consumers. The open commerce revolution is poised to disrupt commerce by decentralizing control and cutting out the middlemen, or “middle-platforms” who exploit their monopoly power over brands and sellers.
The open commerce business model provides unique advantages in commerce and the retail industry, such as:
Essentially, decentralized peer-to-peer connections on an open commerce platform gives power back to brands and sellers while also providing unprecedented visibility along the distribution chain. Unlike centralized commerce, where sellers are prevented from seeing who buys a product, open commerce platforms provide brands with access to valuable data at POS, enabling marketing and sales teams to monitor the micro-consumption patterns in the market and create marketing campaigns and trade promotions that drive sales and increases revenue.
Decentralized Finance, or DeFi, is a decentralized technology that is changing finance and commerce. DeFi can make transactions safer and faster, two factors that are invaluable to the success of digital commerce. By adopting this technology, businesses in emerging markets can share and securely store digital assets both automatically and manually while seamlessly handling customer activity such as payment processing, invoicing, record keeping, product purchases, and customer care – all of which are essential to increasing sales capillarity and driving customer satisfaction.
DeFi reduces the need for e-commerce stores to act as middlemen for every transaction and eliminates the need to go through the traditional banking system, a significant advantage in emerging markets where many merchants are unbanked yet have access to mobile phones and the internet.
By adopting a decentralized business model powered by open commerce platforms, the opportunities for brands and merchants to access a wider global consumer base is significantly enhanced and presents an opportunity for forward-thinking FMCG brands to tap into new and emerging markets.
RedCloud is the world’s first open commerce platform, a decentralized solution that puts power in the hands of brands and merchants. For brands, RedCloud drives the digitalization of the supply chain by enabling any FMCG brand to onboard its sellers onto a platform that provides end-to-end visibility across the distribution chain without the control and restrictions of traditional e-commerce platforms. On the other hand, merchants who sign up to use RedCloud enter a digital ecosystem and gain direct access to global brands. This provides them with more products to sell locally at better prices and, given that many merchants are unbanked, the opportunity to build a digital trading profile for the first time.
Schedule a demo today to see how RedCloud is creating a decentralized ‘sell anywhere’ economy to help FMCG brands and sellers sell smarter, buy better, and pay simpler.
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A close look at each of the five V’s of data shows how RedCloud enables FMCG brands to benefit from each of them.
Volume forms the base of the data pyramid, as without sufficient data, any analysis will be meaningless. Generally, the more data you have, the better the analysis, provided that the data is meaningful, relevant, up-to-date, and actionable. In many emerging markets, there is a clear disconnect between the FMCG manufacturers and their end retailers. Most manufacturers sell through a chain of distributors, and in most cases, this is the limit of their knowledge of the supply chain.
The RedCloud platform reconnects the full supply chain providing meaningful data from the end merchants and the distributors. The FMCG’s actionable data expands from simply knowing what a couple of thousand distributors do to encompassing the complete spectrum of their tens of thousands of merchants, enabling a better understanding of the complete supply chain ecosystem.
Velocity is perhaps more important than the volume of data. Having the right data available at the right time is key. The RedCloud platform provides near real-time data, allowing managers to visualise data in dashboards showing stock levels at their distributors, orders being taken, and which SKUs are currently performing the best. Understanding demand across the supply chain allows can help prevent overstocking and better forecasting of when orders will be received from the distributors.
Data can come from many sources and in different forms. Data can be extracted from app usage, geolocation, feedback from marketing campaigns and other sources. The data collected by the RedCloud platform enables the FMCG producers to understand their markets and answer a wide range of questions.
Veracity in this context relates to quality. The data that is collected must be accurate and must be meaningful. It is too easy to capture vast amounts of data that is either inaccurate or unusable by the organisation. The data collected by the RedCloud platform is accurate, meaningful and can be leveraged to derive key data-driven business decisions.
Value sits at the top of the data pyramid. With the ability to capture large amounts of data, it is vital to transform the data from its raw form into meaningful business actions that bring value to the organisation. This is where the RedCloud platform excels, unlocking the full value of the distribution chain.
The disconnect between the manufacturer and the end retailer can lead to overstocking, slow responses to market changes, and negatively impact revenue. RedCloud addresses these issues by reconnecting the FMCG producers with their end retailers and providing reliable, accurate, meaningful, timely data to empower business decisions.
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In many FMCG companies, marketing and sales departments operate in their own silos, each having their separate organization, processes, and objectives, and is further complicated by a web of organizational complexity where sales units are structured around customer segments, products, or geolocations.
FMCG sales and marketing leaders must transform their sales and marketing processes, especially on how they engage retailers, use technology, and structure their teams. Whilst it can be difficult to change long-standing ways of working, the cost of resisting change grows higher. Brands that fail to co-operate closely and build an automated sales and marketing engine will misallocate resources, alienate their customers, and lose them to smaller, more agile brands who are deep-rooted in their communities and can directly engage with retailers. Large FMCG brands that get this transformation right, however, display impressive results, including a 15 to 30 percent improvement in marketing efficiency and a 20 to 50 percent higher ROI on marketing spend.
To digitally transform how their organizations work and build an automated sales and marketing engine, FMCGs must:
The needs of merchants and retailers today are changing, and understanding this changing behavior, as well as the evolving role FMCG marketing and sales teams must play in the new digital economy is vital to designing a go-to-market approach that can capture market share and drive growth.
To successfully drive digital transformation, FMCGs need a solution that integrates data across the distribution chain while providing actionable insights that sales and marketing teams can leverage to drive sales. RedCloud has built the world’s first open commerce platform to unlock the full value of the distribution chain and enable cross-functional collaboration across FMCG sales and marketing teams.
For the first time, sales and marketing have equal access to syndicated data at POS that deliver insights into where the demand for products is and who is buying their products. With RedCloud, FMCGs gain a sales and marketing engine that integrates data across both departments. This results in increased sales-force efficiency by up to 15 percent, as less time is spent physically visiting merchants, and the time saved can be re-invested in revenue-generating activities. Marketing efficiency is also improved as FMCG marketers spend less time trying to understand the data available and more time leveraging the data to create targeted campaigns that drive sales and increase revenue.
Schedule a demo today to see how RedCloud is helping FMCGs increase revenue by up to 25 percent with an automated sales and marketing engine.
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Cash still remains the largest cause of friction in distribution chains across emerging markets, as less than one-third of the $13 trillion in payments between suppliers and retailers are made electronically. This over-reliance on cash affects FMCG brands significantly and can lead to lost sales opportunities as many retailers return or cancel orders at the point of delivery due to the lack of cash at hand. Eliminating cash from the supply chain can potentially resolve this and lead to more sales opportunities but remains an enormous challenge.
Many of the cash digitization initiatives by FMCGs and large distributors have failed as they do not provide any significant value for most merchants, who find cash payments convenient. To solve the cash problem and recover lost sales opportunities, FMCGs need a solution that digitizes cash payments while also providing a powerful incentive for merchants and retailers to adopt the solution.
Customers in developing economies rarely pay local merchants electronically, so most retailers prefer paying their suppliers in cash, which requires a high level of interaction between retailers and delivery staff and often results in multiple delivery attempts for a single order. Fully or partially returned orders are lost sales opportunities for FMCG brands and lead to increased costs as well as higher inventory costs due to unproductive inventory in the delivery pipeline.
Cash payments also prevent FMCGs from gaining visibility at POS as it is virtually impossible to know who is buying their products in real-time, and sales teams must depend on data from field officers that are often inaccurate.
Many FMCGs have attempted to eliminate cash from their supply chains by creating their own apps but have failed due to low merchant adoption rates. Merchants do not want to adopt an app that only allows them to pay a single supplier, given that the largest supplier represents only 30 percent of the cost of goods sold by a typical small retailer. A stronger business case for retailers to adopt electronic payments is a solution that is easy to use and widely accepted by several suppliers.
Low levels of financial inclusion and high levels of mobile penetration in emerging markets provide an enormous opportunity for digital payments solutions that do not require merchants to have a bank account, such as mobile money and cash-in-cash-out operations.
RedCloud is solving the cash digitization problem in emerging markets with the world’s first open commerce platform. We have partnered with some of the biggest cash-in-cash-out operators in Africa and LATAM to enable merchants to digitize their cash easily. We also enable merchants to connect directly with global FMCG brands and pay directly on the platform without a bank account. This provides merchants with a compelling incentive to adopt the platform and is evident in our industry-leading app adoption and retention rates.
With RedCloud, FMCGs can significantly increase sales velocity by connecting directly with their merchants in any market to receive orders and get paid instantly. This eliminates orders cancelled by retailers due to lack of funds and saves up to 16 percent of lost revenue. High SG&A costs are also reduced as last-mile delivery becomes more efficient and demand-driven. In addition, merchants can build up a digital trading profile on the platform, which allows FMCGs to provide credit to their top-selling merchants and meet excess demand.
RedCloud is reinventing commerce and empowering players in the FMCG industry at every level to sell smarter, buy better, and pay simpler. Schedule a demo today to see how we are helping FMCGs in emerging markets recover lost sales opportunities and save up to 16% of revenue lost on returned and cancelled orders.
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For decades, the traditional FMCG sales model in emerging markets has depended on manual sales activities, such as field officers physically visiting retailers and merchants. This leads to high sales costs of between 30 to 40 percent, as brands and distributors need thousands of sales reps to cover their territories and visit each merchant individually. However, the disruption caused by the global pandemic has severely impacted this model and revealed its inefficiency. The need to increase market reach and drive sales growth has caused FMCG sales leaders in developing markets to begin adopting digital solutions.
As a result, sales force automation (SFA) tools have been adopted as research indicates that up to a third of all sales tasks can be automated, and that automating sales tasks can lead to efficiency improvements of up to 15 percent and a sales uplift potential of up to 10 percent.
However, recent studies show that over 60 percent of companies who have made investments into digitally transforming their sales by adopting SFA tools have not achieved returns above the cost of capital. Many brands are stuck initiating pilot after pilot of SFA tools yet are unable to gain any significant visibility into their market, reduce sales costs or increase the efficiency of their sales force.
This leads to a critical question every FMCG sales leader must answer: Are SFA tools the best way to digitally transform FMCG sales?
Many of the SFA tools available simply allow sales teams to record their findings from merchant or distributor visits onto a mobile device. While this is an improvement over the manual pen-and-paper note-taking process that sales reps have used for years, they cannot solve many of the challenges that face FMCG brands in emerging markets today, which include:Many of the SFA tools available simply allow sales teams to record their findings from merchant or distributor visits onto a mobile device. While this is an improvement over the manual pen-and-paper note-taking process that sales reps have used for years, they cannot solve many of the challenges that face FMCG brands in emerging markets today, which include:
Large amounts of valuable data are generated daily across the supply chain, but brands cannot leverage it, and SFA tools do nothing to unlock that data. To increase sales velocity and capillarity, FMCG sales leaders need more than sales force automation – they need a solution that transforms the traditional sales process, reduces sales costs, and increases the efficiency of your sales force.
RedCloud is the world’s first open commerce platform that completely transforms the traditional FMCG sales operating model by converting your sales team from an order-taking model to a true territory management data-driven sales model. The open commerce platform provides merchants with the ability to drive ordering directly through digital means, reducing need for sales teams to physically visit stores, whilst simultaneously empowering them to capture verifiable data and gain increased visibility across the distribution chain.
RedCloud empowers distributor and FMCG sales teams to understand the flow of goods and consumer demand and allows them to act through digital and physical means to stimulate that demand within their territory. For the first time, FMCG brands and distributors can connect directly with every single merchant along the distribution chain at the same time and capture valuable POS data in real-time.
With our solution, your sales force become more efficient, evolving from simple “order-takers” to data-intelligent territory managers who can leverage syndicated, real-time data analytics to drive sales growth across their geo-locations. The in-built marketing intelligence tool also provides sales leaders with timely insights into the expected shifts in demand for specific products across multiple geolocations and delivers actionable data that can be leveraged to devise data-driven strategies to take advantage of the micro-consumption patterns in the market.
Schedule a demo today to see how RedCloud is helping FMCG brands and distributors transform their sales process, reduce sales costs by up to 80 percent and increase revenue by up to 25 percent.
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Brands and distributors in developing economies need to build deeper relationships with their retailers and merchants to effectively deal with an evolving market context and rapidly changing consumer behaviour as they can detect new market trends quicker and develop more agile business models by directly connecting with their customers. Developing these competencies are crucial, with research showing that even if small changes in consumer behaviours become permanent, the effects of these changes will reshape value chains and redistribute over $3 trillion worth of value to the brands that best anticipate the change.
Cloud technologies will play a key role in helping FMCG brands, and distributors drive growth, as the adoption of cloud-based digital and analytical technologies to provide data-driven decision making at scale, which will be the superpower that will provide leading brands and distributors with a competitive advantage. Analyzing top use cases and application areas of cloud technologies in the FMCG industry can potentially drive at least $490 billion in value creation by 2023. In addition, adopting cloud-based technologies can provide a 6 to 10 percent boost in sales, an 18 to 30 percent reduction in marketing expenses and up to 18 percent improvement in ROI through proper customer segmentation.
However, brands and distributors must understand and commit to driving full cloud adoption to reap the benefits. Business leaders must treat cloud technology as a muscle to build, strengthen, and maintain to unlock potential value and drive growth.
Many FMCG brands are stuck in the first phase of data migration as business leaders restrict the cloud to just an IT cost management solution, as it can generate up to 40 percent reduction in infrastructure costs. However, they are missing out on many significant benefits. When brands and distributors fully embrace cloud, they can:
Unleashing the full power of cloud for growth and increased revenue only comes when brands and distributors go for full adoption. By moving from the “migrate” phase to the “accelerate and innovate” phase, the potential business impact increases from tens of millions to hundreds of millions.
FMCG brands and distributors have been unable to unlock the full potential of cloud technology due to several issues, some of which include:
To maximize the potential of cloud-based technologies, FMCG businesses need a solution that is low risk and easy to adopt. This is the RedCloud advantage.
RedCloud is the world’s first open commerce platform that unlocks the full value of the traditional distribution chain, connecting brands, distributors, retailers, and merchants on a single cloud-enabled platform. With RedCloud, brands and distributors have increased visibility across the supply chain and can connect directly with even the smallest merchants in any geolocation. The platform also collates valuable data at POS, providing insights into variable demand and changes in customer behaviour.
The cloud-powered integrated marketing intelligence tool enables sales and marketing leaders to analyze the effectiveness of their promotion and marketing spend in real-time, as well as create targeted customer and geolocation specific campaigns that take advantage of the micro-consumption patterns in the market. FMCG marketing teams can also leverage the insights to identify new opportunities to upsell and cross-sell their products, increasing revenue by up to 60 percent.
Unlike other cloud solutions, RedCloud is an intuitive and easy to use solution with a short learning curve. Sales and marketing teams can set up and use the platform with minimal training as the data and insights generated are displayed on easy to understand, customizable dashboards, which gives your teams a competitive edge.
Contact us today to see how deploying RedCloud can provide a competitive edge for your brand, increase revenue by up to 25 percent and drive growth.
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Web 1.0 , the first iteration of the internet, was a strange place. It was characterized by a few creators, was read-only and had no room for user interaction. Websites only served static content and had minimal functionality.
The launch of Facebook alongside other social networks and interactive platforms marked the dawn of Web 2.0. In this iteration, websites offered dynamic content that allowed deeper user engagement and enabled more people to become creators. This was the age of e-commerce, cloud, and social media. However, with these advances came a new set of problems. Centralized control and poor platform security led to imbalanced creator economies and disgruntled communities.
The launch of Facebook alongside other social networks and interactive platforms marked the dawn of Web 2.0. In this iteration, websites offered dynamic content that allowed deeper user engagement and enabled more people to become creators. This was the age of e-commerce, cloud, and social media. However, with these advances came a new set of problems. Centralized control and poor platform security led to imbalanced creator economies and disgruntled communities.
Fun fact: A large part of why Internet Explorer failed was because it was a Web 1.0 application trying to compete in a Web 2.0 world, while Chrome was built for Web 2.0.
Big Data was another major feature of Web 2.0 as brands began a race to collect as much customer and transaction data as possible. However, in many cases, the data collected was unintelligible and didn't provide any useful or actionable insights that significantly improved business decisions. Also, with vast amounts of often personalized data at their disposal, data and information security became a major issue for brands, as it became clear, perhaps for the first time, just how powerful data can be when analyzed properly, as well as how much damage can be done if said data gets into the wrong hands.
These factors all contributed to the search for a system that was both open and secure, where data could be transparently collected, transferred, and leveraged by any person, group, or brand, without compromising the safety of personal information. This was the birth of Web 3.0
Web 3.0 is the next significant paradigm shift in the evolution of the internet and represents a fundamental disruption of the standard centralized model of web 2.0 and its "platform-takes-all" economics. Open, trustless, and permissionless networks are the future of Web 3.0. Innovations like the blockchain, DeFi, and NFTs are changing the way we communicate and share value on the internet, paving the way for a truly open economy where you can connect, engage, and trade with anyone without unnecessary centralized control.
Steve Jobs announced the iPhone in 2007 to a lot of applause and attention, but there was another technology that I believe was even more important than the phone itself - The App Store . The presence of a trusted platform that ensured safe distribution allowed more developers to create mobile apps and led to a $ 218 billion market by 2020.
However, in true Web 2.0 fashion, app stores have slowly evolved into walled gardens where centralized entities exert undue control while charging a significant percentage on the revenue that should accrue to app developers. This problem is not unique to app stores, it is evident in e-commerce and even traditional finance (Ever wondered why banking fees are so high and you have almost no choice but to pay them?).
Web 3.0 is set to change the landscape by decentralizing control and power from a single entity and sharing it with users and creators, who should be the real stakeholders. Why should a small business have to pay a huge chunk of their revenue to Amazon while still competing with the platform itself to sell to customers? Or why should Facebook dictate how your personal data is collected, used, and sold? With Web 3.0 technologies, the economy becomes truly " open ", and the power is back in your hands.
One of the easily recognizable applications of decentralization is blockchain and cryptocurrency. With a mobile phone and internet access, anyone, even in the most remote areas, can transfer and receive funds in minutes without a central entity processing the transaction. It's completely open, anonymous, permissionless, and trustworthy .
NFTs are another Web 3.0 technology built on the blockchain that allows artists to earn directly from their art. Traditionally, when an artist sells a piece of art, they lose all rights to that piece and cannot earn directly from that piece ever again. With NFTs, however, an artist can earn a percentage of the piece's price every time it's sold. NFTs enable this with blockchain-powered smart contracts that provide a transparent, fool-proof mechanism for profit-sharing and collective decision-making, which will eventually address the inequity of art patronage, shifting the power dynamic within the industry.
So, how does a Web 3.0-powered future look? And what industries will it affect?
I predict that it will affect every industry, but I'm most excited about what the change means for global commerce and supply chains. For decades, the traditional global supply chain, particularly in the FMCG industry, has depended on an inefficient mishmash of manual paperwork, cash transactions, and disconnected local merchants. E-commerce is only marginally better, as centralized restrictions like Amazon impose unnecessary that kill small businesses . With Web 3.0, however, we can finally create a true "sell anywhere" economy, where global brands can reach any merchant in any market and sell directly to them.
This is why we're building RedCloud, the world's first open commerce platform that connects brands, distributors, and retailers in the world's fastest-growing economies together. Unlike the traditional distribution chain, RedCloud provides a solution where brands and distributors can access valuable POS data across the supply chain, gaining valuable visibility that can be leveraged to eliminate any supply chain inefficiencies. Merchants can connect with global brands, offer their customers better products at more competitive prices, and build a digital trading profile that can be collateralized to provide access to credit facilities.
The time to build an open future that connects us is now, and Web 3.0 is key to that future.
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According to the World Bank, over half of all payments in the retail industry are made in cash, with most of these transactions occurring among more than two billion individuals and 200 million small businesses in emerging economies. These businesses and individuals lack access to formal capital and credit and must rely on informal lenders and personal networks to raise funds to meet their daily personal and business needs.
The over-dependency on cash payments in the retail industry has had devastating effects on merchants, retailers, and FMCGs, as a World Bank study shows that the average retailer loses between 4 and 15 percent of total revenue to the costs of cash handling, while brands lose between 7 to 20 percent of annual company turnover.
While digital payments can remedy these challenges, eliminating cash payments and driving the adoption of digital payments across emerging markets is easier said than done, as many Digital Financial Services (DFS) providers have found.
In rural Uganda, an FMCG company had to drop bags of cash by plane every 15 days to pay workers. Upon arrival, over 8000 workers had to queue for more than half a day to receive their wages, and the company had to deploy nearly 100 staff to manage this process, including 64 field security guards and armed police. In Nigeria, Coca-Cola truck drivers who deliver drinks to corner shops are victims of armed robbery as often as once a month. FMCG brands also report that collecting and transporting cash from small “mom-and-pop” shops is not only incredibly risky and prone to fraud but is notoriously inefficient, as field officers must spend extra time to collect and manage cash - time that could be better spent selling to new customers.
Evidently, cash transactions pose significant problems for FMCG companies and brands across emerging markets, but it also affects retailers and merchants. Every year, retailers lose nearly $100 billion to shrinkage and leakages, with over 34 percent of this shrink attributed to cash theft. Dealing exclusively in cash means small retailers and merchants are restricted from accessing the vital financial services they need to grow their businesses. Even those with access to traditional banking cannot fully maximize the available credit and savings facilities. Making bank deposits, for example, is a challenge because many merchants operate during the same hours as banks and cannot afford to ignore customers and close their stores. This leaves the merchants stuck with cash and the dominance of cash payments continues.
Digital payments have the potential to solve the numerous problems caused by cash payments across emerging markets and can potentially reach over 1.6 billion new retail customers across emerging markets and provide $2.1 trillion in new credit for merchants, retailers, and small businesses. In addition, full adoption of digital payments can increase the GDPs of all emerging economies by 6 percent, or $3.7 trillion, an equivalent of creating a new economy bigger than all the economies of Africa.
FMCG brands can substantially increase their revenue by leveraging digital payments to drive distributor and retailer growth with advanced supply chain financing and access to credit. These value-added services also enable stronger business relationships across the supply chain and drive increased loyalty from merchants and distributors. Digital payments also open the door for increased visibility across the distribution chain, providing valuable insights at POS that FMCGs can leverage to develop growth strategies and increase sales.
Despite the clear benefits of digitalizing payments, many FMCGs still struggle to drive its adoption across their distribution chain. Most digital payment solutions were built to solve the cash problems of larger FMCG brands but do not give smaller merchants a compelling enough reason to adopt the solutions. However, these merchants are often paid in cash by the end consumers, placing the burden of converting cash to digital money on smaller merchants and distributors, who do not have a reason to do so.
Solving the cash problem and reaping the dividends of digital payments will require FMCG brands to:
RedCloud has built the world’s first open commerce platform with an integrated digital payment system the world’s largest local payment network consisting of 2 million+ payment points that leverage the widespread adoption of mobile phones across emerging markets as over 80 percent of adults in developing economies have a mobile phone, while less than 65 percent have bank accounts.
We solve the cash problem by creating a solution with value propositions for both the largest FMCG brands and the smallest corner shop. We created Red101, a digital platform that enables merchants to offer digital products like mobile airtime and cable TV subscriptions to their customers and get a commission on every transaction.
The RedCloud open commerce platform enables FMCG brands to connect with every distributor, retailer, and merchant across their distribution chain and accept digital payments. The platform also captures valuable data at every POS along the distribution chain and analyzes the data to provide brands with insights into market demand and consumption patterns that sales and marketing teams can leverage to create growth campaigns, drive sales, and increase revenue.
Book a demo today to see how you can start unlocking the full value of your distribution chain, sell to more merchants, and start accepting digital payments seamlessly.
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Globally, emerging markets account for 55 percent of the total consumer spending of FMCG products. Within the next five years, over 5 billion new middle class consumers will be created in these markets, and their spending is expected to exceed $6 trillion. To serve this rapidly growing consumer base, distributors and wholesalers across developing markets must leverage digital technologies to build a resilient and responsive distribution chain.
The pandemic has revealed the lack of resilience in the traditional FMCG supply chain, as many distributors have struggled to handle the rapid change in demand for the products that they carry. Distributors and wholesalers now see the need to make data-driven decisions to serve retailers better and maximize their margins. For example, under the traditional distribution model, distributors have mainly acted as order takers, delivering goods from the manufacturers to merchants at the cheapest cost per mile. However, to minimize future supply shocks, many distributors now plan to incorporate digital solutions that provide real-time data and insights across the supply chain to enable strategic, data-driven decision-making.
Distribution across emerging markets is mainly informal, with up to 80 percent of all consumers shopping from stalls that are set up at the roadside or in local markets. Thus, distribution across this highly fragmented market remains hugely complex, leaving many distributors unable to properly penetrate the market and get the right products to the right shops at the right time.
Van sales are the major distribution channel across LATAM And Africa, a highly inefficient model where distributors load their products into a van and drive along a pre-determined route to visit retailers and merchants to discover if there is a demand for the product. If there is a demand for their products, the sales rep either sells to the merchant on credit or receives a cash payment. The van visits multiple retailers, returning to the distributor with raw cash and any unsold products at the end of the day.
This model is outdated and no longer ‘fit-for-purpose,’ as it lacks visibility and leaves distributors unable to detect and respond to changing demand. Wholesalers are often forced to sell their products on credit or at lower prices to reduce inventory costs, a practice that eats into already-thin margins. In addition, this model encourages the almost-exclusive use of cash, which is risky and costly as the funds can be stolen or mismanaged.
A digital solution that provides real-time, end-to-end visibility across the distribution chain in emerging markets is the key to offering a new degree of resiliency and responsiveness. This solution must also withstand the daily shocks of rapidly changing demand across the market and will solve one of the biggest challenges wholesale distributors face. Therefore, digitalizing the supply chain will enable distributors to go beyond reacting to market disruption, to anticipating them and adjusting the supply chain immediately while still providing the most efficient and cost-effective service delivery.
With increased mobile phone penetration across emerging markets, wholesale distributors are taking the first step by placing calls to retailers before delivering to them, but this is not nearly enough. Without real-time visibility and a solution that enables retailers to pull demand, wholesale distributors cannot make the right decisions that increase sales and drive growth.
RedCloud has solved this problem by building the world’s first open commerce platform – a platform that directly connects FMCG brands, distributors, and retailers. With RedCloud, distributors can buy products directly from any FMCG brand and pay digitally, while simultaneously selling to retailers on the same platform and accepting digital payments.
Our platform also provides end-to-end visibility across the distribution chain. With the click of a button, you can track demand across various product categories, retailer types, or geolocations and generate granular insights to identify new or existing retailers willing to buy from you. These insights help distributors make strategic data-driven decisions that increase sales and drives growth.
We have eliminated the friction along the traditional FMCG supply chain and given you the tool that you need to make strategic decisions and build resilience into your distribution chain. Schedule a demo today to see how RedCloud empowers distributors in emerging markets to create more resilient distribution chains.
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Globally, FMCG supply chains have been disrupted and the critical shortcomings in the current system have been exposed. Studies show that 40 percent of all multinational companies have had their supply chains recently disrupted. Many manufacturers have seen production halted due to a shortage of materials, while others have been unable to cope with the rapid fluctuations in demand. This had led to the familiar images of empty shelves, as customers could not access necessities like toilet paper, pasta, and flour.
Now, adaptability and supply chain resilience are the keywords of the FMCG industry, as over 90 percent of FMCG brands plan to change their supply chain networks and more than 40 percent expect to increase their investment in supply chain management with the primary aim of improving speed, resilience, and agility.
The traditional FMCG distribution chain is a series of largely discrete, siloed steps and is further complicated due to the fragmented nature of the retail industry in emerging markets. Traditional trade still accounts for 70 percent of all consumer goods sales across emerging markets. Therefore, driving growth with this distribution model will require FMCG brands to reach large volumes and many different types of retail outlets, while understanding the different role each outlet plays to the customer, as well as how to influence demand at the retailer.
What products a retailer stocks, how much they stock, the price they are willing to buy, the distributor that delivers the products, and how often the stocks are replenished are all vital information that FMCG brands need to create the right sales and marketing strategies to drive growth. However, there is a severe lack of visibility across the traditional supply chain as brands are left in the dark, unable to gain insight into who is buying their products, and properly collaborate with channel partners.
If supply chains do not evolve, the consequences will be dire for both brands and consumers in developing economies. Empty shelves in developed economies might be a minor inconvenience that is quickly solved, but it is a far more serious problem for the lower-income consumers in emerging markets whose survival depends on the availability of essential products like milk, pasta, baby food and diapers, and the small businesses who also depend on daily sales to make ends meet.
FMCG leaders are beginning to see the need to transform their supply chains and make them more resilient, as a survey of 500 FMCG executives showed that end-to-end visibility was ranked as the top factor responsible for creating a successful supply chain. To achieve end-to-end visibility, FMCG brands need a digital solution that gathers real-time insights on market demand and displays the data collated into easy-to-understand dashboards, so that sales, marketing, and supply chain leaders can leverage the collated data to generate sales and drive growth.
To build resiliency and agility into the FMCG distribution chain with digital technologies, the solution chosen must capture data seamlessly across the entire distribution chain, from the manufacturers warehouse to the shelf of the smallest merchant. It must also provide real-time visibility at POS, so that brands can anticipate and react to changes to demand in the shortest time possible.
The most agile and resilient supply chain will be an interconnected ecosystem of brands, distributors, and retailers, where data silos are dissolved, and each channel partner will have full visibility into the needs and challenges of other players. Stock shortages, rapid increase in customer demand and other important information will be visible throughout the system in real time, allowing brands to react and plan accordingly. This is the RedCloud solution.
RedCloud has built the world’s first open commerce platform, a platform that provides FMCG brands in emerging markets with visibility across their distribution chain. For the first time, a brand can see in real-time, every single merchant that buys their products, the prices of the product, how often they restock, and other valuable information. For example, a soft drinks brand might observe a merchant that places orders frequently and offer them a branded refrigerator. This could potentially increase the merchant’s average order value and enable them to generate more sales.
We have also built the world’s largest payment network, with over 2 million cash-in points across 100 countries, so brands can seamlessly accept digital payments from merchants who may not have access to bank accounts.
Book a demo with us today to see how RedCloud is helping FMCG brands across emerging markets build more resilient supply chains.
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Adoption of data analytics is a must for FMCG brands who want to drive consistent, outsized growth. Research shows that FMCG brands who effectively use data analytics capabilities to service their sales and marketing processes are 150 percent more likely to outgrow their competitors. Many FMCG leaders, especially those in emerging markets, recognize the need to leverage data to grow their businesses, as 64 percent of leaders expect to increase their spending on predictive analytics.
However, many brands do not effectively use data to drive the needed growth. Studies show that only 40 percent of consumer-goods companies have achieved returns above the cost of their investments into data analytics. To increase sales, achieve outsized growth, and outperform the competition, companies must learn to use data analytics to engage prospects better and increase the lifetime value of the average customer.
The value at stake for FMCG brands that do not effectively utilize data analytics is enormous. Industry trends show that a brand’s ability to scale up its data analytics capabilities strongly correlates with its financial performance. The companies with the highest level of analytics maturity are creating significant value and have a growth rate of approximately 60 percent more than their competitors.
We have worked extensively with FMCG brands in emerging markets and have identified some of the most common pitfalls that prevent companies from capturing value at scale from data analytics:
Many FMCG brands have been unable to leverage data-driven growth at scale, but the recipe for success is clear. To successfully drive growth with data analytics, FMCG brands must:
RedCloud has built the world’s first open commerce platform, a complete data analytics solution that unlocks growth for FMCG brands in emerging markets. Our solution provides brands with real-time visibility into the distribution chain and provides actionable insights that can be leveraged to make data-driven decisions that drive growth.
With RedCloud, sales and marketing teams can see in real-time who their customers are, what products they are buying, and how often they buy. With these granular insights, you can design targeted trade promotions and growth marketing campaigns that increase order velocity and ultimately lead to more sales.
We have also built the world’s largest payment platform with over 1 million pay-in points in 200 countries. Now, brands can easily accept digital payments from their customers and avoid huge cash handling costs. By trading on a digital platform and building a trading profile, brands can identify fast-growing merchants and provide them with advanced supply-chain financing to help them grow their business, even if the merchant does not have a bank account.
Schedule a demo with us today to discover how RedCloud can help you outperform the competition and drive sustainable growth.
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Emerging markets present the largest growth opportunity for FMCG brands, accounting for over 70 percent of total revenue growth and 55 percent of the global spend on consumer-packaged goods (CPG). Consumer spending across these markets is expected to grow rapidly over the next few years to reach $6 trillion, as 5 billion new middle-class consumers are created. Given that emerging consumers spend 50 to 75 percent of their disposable income on consumer products, capturing this segment is vital to the growth ambitions of FMCG brands.
Despite this tremendous growth opportunity, many FMCG brands struggle to drive sustainable growth in developing markets, as studies show that larger CPG companies will grow 5 times slower than their smaller competitors. To increase revenue and drive consistent growth, FMCG brands must transform their traditional sales model to meet the ever-increasing demand for their products.
Emerging markets present a unique set of challenges to FMCG growth, as physical stores and markets generate up to 80 percent of all sales. Furthermore, growth in these markets does not result from winning shelf-space at large supermarket chains, but from ensuring precise distribution at hundreds of thousands of small ‘mon-and-pop’ shops and neighborhood grocery stores.
Under the traditional sales model, FMCG sales reps must visit these small shops individually to check inventory, collect orders and receive cash payments – a highly inefficient process that leads to significant loss of revenue. Unfortunately, sales reps cannot realistically cover every single shop, leaving brands with no visibility at POS and an inability to directly track sales or stock levels across their distribution network. This makes it hard to determine sales targets, optimize the supply chain to meet rapidly changing demand or plan effective trade promotions.
The lack of visibility across the distribution chain also leaves FMCG marketers in the dark, without granular data on their customers, and as such, are unable to estimate real-time demand or identify growth opportunities. Consequently, CPG companies in emerging markets, especially in Africa and LATAM, are unable to drive consistent growth and increase market share.
Data-driven sales execution is the key to unlocking growth across developing markets but will require sales leaders to holistically transform their organizations by integrating digital solutions to their sales operations. Studies show that Chief Sales Officers (CSOs) who adopt a holistic, integrated approach to sales transformation report top-quartile growth. FMCG brands with the highest growth rates have also been shown to have embedded data analytics across their sales operations.
Digital transformation allows sales leaders to redesign their route-to-market strategies to identify new and existing demand spaces. By building strong, digitally enabled links with distributors, retailers and merchants brands can create direct, personalized relationships with channel partners independent of the path a product takes to arrive on a the retailer’s shelf.
CSOs need a solution that creates a 360-degree view of every distributor, retailer and merchant while also providing granular targeting. This enables sales leaders to create and optimize their growth strategies. Digitizing the sales process also provide sales reps with retailer-specific data, insights and next-best-actions that are necessary for driving grow. The increased level of personalization and precise targeting enabled by real-time visibility has been proven to have a significant impact on sales growth – up to 20 percent.
RedCloud is the perfect solution that helps FMCG brands across emerging markets drive growth. We have built the world’s first open commerce platform – a digital solution that provides brands with visibility across the traditionally fragmented distribution chain.
For the first time, FMCG brands can directly connect to every merchant in the distribution chain and see in real-time where the demand for their products is, how often the merchant restocks the product and other vital information. The platform analyses the collated data and provides sales leaders with actionable insights that pinpoint available growth opportunities. For example, by identifying merchants that restock a product often, sales leaders can detect areas of high product demand and create trade promotions that fills that demand, increases sales and eventually drive month-on-month growth.
Schedule a demo today to see how RedCloud can help your brand drive month-on-month growth and capture market share.
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Today, wholesalers and distributors in emerging markets face intensified battles over shrinking margins, increased competitive pressures from e-commerce platforms, fluctuating market demand, and supply chain issues. FMCG manufacturers want faster and cheaper ways of getting their products to the retailer’s shelves, and retailers want to buy products at lower prices and still increase their profits. This leads to considerable margin reduction and a threat of stagnation for distributors, as brands and retailers attempt to work together.
If distributors in emerging markets do not embrace digital technologies and leverage data analytics to reduce costs, increase visibility across their distribution chain and provide specialized offerings to merchants, they will become less relevant to both brands and retailers, which spells death to their business.
For decades, FMCG distributors have relied on existing relationships to penetrate the fragmented retail markets in emerging economies, but that is no longer enough. The traditional sales model that relied on the gut instincts of sales reps to maintain business relationships is not scalable and has made it increasingly difficult for distributors to compete effectively and grow their businesses.
Every business day, large volumes of data are created by wholesale distributors as they buy from manufacturers, receive orders from their customers, and fulfil the orders. This data can help business leaders understand what is working and what can be improved, but only when it is analyzed to generate actionable insights. A survey of leading distributors shows that 75 percent of high growth wholesale distributors have developed advanced demand planning and forecasting capabilities by adopting data analytics in their processes. They are also 31 percent more likely to have real-time visibility across the organization and the broader supply chain.
Adopting data analytics also allows distributors to uncover challenges in the products they carry and the services they provide. By understanding these challenges, sales teams can provide solutions that cement customer loyalty and increase market share. For example, if a distributor notices a pattern of customer complaints about a product spoiling before the expiry date, the sales reps in the field can be instructed to educate retailers on how best to store the products to lengthen its shelf-life and reduce the resources lost. However, without a data analytics system, the sales leader might not realize the problem for months and can eventually lose customers.
Unfortunately, many distributors in emerging markets lack any basic data collection or analytics system. Without these capabilities, they cannot understand the micro-consumption patterns in the market and miss significant upselling or cross-selling opportunities that can be leveraged to drive growth.
Developing analytics capabilities allows wholesale distributors to collect and review every piece of data generated across the distribution chain to make smarter, timelier, data-driven decisions. In the pursuit of consistent growth, knowing how to leverage accurate and relevant data to create a more efficient distribution chain is an edge that every distributor needs.
For many distributors, the most significant barrier to successfully adopting digital technologies is the fear of disruption to their business. However, for those willing to embrace change, there is still a hurdle – how to begin. Without clarity on the exact steps to take, many distributors waste time and resources on data analytics programs that do not provide the needed growth.
The first step to successfully implementing an analytics system that drives growth is to identify the areas where you can make the smallest change for maximum return on investment. We have identified three main areas that distributors must optimize with data analytics to see the consistent, outsized growth. They are:
With the knowledge of the critical competencies that must be developed, distributors can now select the right data analytics tools that provide the needed capabilities in the organization.
RedCloud is the world’s first open commerce platform that unlocks the full value of the distribution chain by providing distributors with a powerful yet easy-to-use tool that collates POS data across the entire chain in real-time and analyzes the data to provide actionable insights that can be leveraged to drive growth. Our powerful market intelligence solution displays these insights on a customizable dashboard in an easy-to-understand manner, so distributors do not have to spend valuable time deciphering complex data.
We have solved the biggest problem in the traditionally fragmented retail market in emerging economies by empowering distributors to directly engage with every single retailer across their network on a single platform. With this increased visibility, distributors can easily create data-driven promotions that take advantage of the micro-consumptions patterns in the market to drive growth. We have also built the world’s largest local payment network with over 2 million pay points in 100 countries and provided distributors with an easy way to collect digital payments from merchants of any size, even if the merchant does not have a bank account. This will eliminate the high costs of cash handling and provide another vital data source that can be analyzed to identify underserved merchants and provide them with the credit facilities they need to grow their businesses.
Book a demo today to see how you can leverage RedCloud’s open commerce platform to drive growth in your business.
Half-empty shelves, longer delivery times, labor shortages, and increasing prices of consumer goods are symptoms of a global problem – supply chain issues. Bottlenecks at many steps along the way have been exacerbated by the pandemic, causing severe issues in a system that demands timeliness to function properly. Worse still, this has happened just as demand for many products increased drastically. The ongoing supply chain crisis threatens to have significant consequences for the upcoming holiday season throughout the world as many consumers can’t buy what they want when they want it, and experts predict that it might get worse before it gets better.
The supply-chain disruption started over a year ago, as COVID-19 response from governments and corporations created many interruptions along the supply chain. This, combined with rapidly changing customer demand, has caused severe disruption, resulting in manufacturers unable to meet consumer demand in time. The disruption cuts across various sectors, including manufacturing, consumer goods, and even electronics, with Apple reportedly halting the production of their latest iPhone entirely for the first time in over a decade.
While the pandemic has significantly affected the global supply chain, external hindrances to the value chain, such as political disputes, are not a new thing and will continue to exist for as long as there is global trade. So, what is responsible for the current supply chain crisis?
The problem with the flow of goods, especially in the consumer goods industry, is quite profound, as there are underlying structural concerns that cause delayed delivery and increased prices irrespective of the pandemic, energy crises, or grounded container ships. All over the world, the core problem remains the same – the process of getting products from factory to shelf is broken. There are issues at every point in the distribution chain – from too many intermediaries adding unneeded complexities to the overly complicated relationships between brands, distributors, and merchants, to the overwhelming reliance on expensive cash rather than digital payments – the traditional supply chain is broken and no longer fit for purpose.
In addition, there is little or no sales data across the industry, as FMCG brands have no idea who their customers are. Without visibility into the distribution, it becomes impossible to anticipate rapid increases in consumer demand and make data-driven decisions to meet that need. On the other hand, Merchants are disconnected from the brands whose products they sell and find it increasingly difficult to get the products they need at the prices their customers can afford.
Supply-chain disruptions are a bigger problem in emerging markets, where billions of consumers are in danger of losing access to necessary everyday items like baby food, nappies, and pasta. With a lack of sales data and no market visibility, FMCG brands cannot penetrate these essential markets and can only reach a tiny fraction of prospective merchants.
If we do not take steps to transform the world’s supply chains, prices will continue to skyrocket, and product availability will decrease, leading to a potential crisis for millions of individual households and local merchants in developing economies.
If we view global trade as a person, then the supply and distribution chains are the veins and arteries, and any disruption in the essential flow of goods will be fatal – and make no mistake, the consumer goods industry is headed for a heart attack, if we don’t act fast.
What we need is a solution that digitally transforms the distribution chain in emerging markets and unlocks the immense growth opportunity in those markets – a true ‘sell anywhere’ economy powered by frictionless, open commerce where brands can connect directly with any merchant in any market.
RedCloud is the world’s first open commerce that successfully digitizes the B2B supply chain in emerging markets, providing brands with increased visibility across the entire supply chain by collating valuable data at POS. RedCloud connects brands and merchants on a single, digital platform, so brands and distributors can see in real-time where the demand for their products is and who is buying their products. They can leverage this data to devise new strategies to reach more merchants directly.
RedCloud also empowers merchants to trade directly with global brands, access more products, and gain increased visibility into locally available FMCG products. The platform also eliminates the cost and risks associated with cash by enabling digital payments between merchants, distributors, and brands.
Rising prices and empty shelves are signs that it is time to change how consumer goods are bought, sold, and distributed. By bringing local merchants into the digital ecosystem and championing open, digital commerce, we can improve every aspect of the distribution chain to benefit brands, merchants, and consumers worldwide.
Schedule a demo today to see how we empower FMCG brands, distributors, and merchants to sell smarter, buy better, and pay simpler.
For decades, FMCG brands in emerging markets have depended on a traditional distribution model to penetrate a highly fragmented market and get their products to retailers’ shelves.
However, this model is grossly inefficient as it relies on costly cash payments and a large sales force who make hundreds of visits every week to merchant’s stores. With over 80 percent of all consumer sales in emerging markets occurring in small roadside shops and local markets, FMCG brands cannot capture any useable POS data from these stores in real-time. This leads to a severe lack of visibility across the entire distribution chain, making it almost impossible to identify new sales opportunities and drive growth.
But the story is changing. FMCG brands who are able to successfully disrupt their traditional sales process by combining data, analytics, and technology have generated above-market growth and an earnings before interest, taxes, depreciation, and amortization (EBITDA) increase of 15 to 25 percent.
FMCG brands in emerging markets must forgo age-old practices and digitalize their operations to keep up with the ever-changing demand trends and increased supply-chain volatility. By adopting new technologies and making data-driven decisions, they can better anticipate and maximize new growth opportunities.
Over the last few years, the consumer in emerging markets has experienced a lot of change. Multiple trends have emerged that threaten to wreak havoc on established business models and sales strategies, while promising enormous rewards for the brands that can best anticipate new opportunities.
One of the biggest trends that will affect the FMCG industry is rapid consumer growth in emerging markets. Studies show that within the next few years, the growth of emerging markets will outpace that of the developed economies, with 1 billion new emerging market consumers created by 2025. Reports also show that these emerging-market consumers will become the dominant force in the global economy, as 60 percent of households that earn over $20,000 per year will come from emerging markets.
Another major trend that will affect the FMCG industry is the rise of the digitally conscious customer. The growing emerging market customer base is increasingly becoming digitally conscious. Already, more than half of all global internet users are in emerging markets, and a recent survey of African consumers in 15 cities across ten different countries found that 60 percent already owned internet-enabled smartphones.
The traditional distribution and sales model that FMCG brands have previously employed will not be enough to serve this ever-increasing consumer base. For example, while the experience of sales reps who physically visit merchant stores remains relevant, they cannot reach and satisfy the ever-expanding network of merchants who have rapidly changing needs and must compete in an ever-more-crowded marketplace.
Brands must therefore take the preferences of emerging-market consumers into account, disrupt, and redesign their distribution, sales, and marketing processes to better serve both new and existing customers. Brands that fail to adapt will squander crucial opportunities to build positions of strength that may be long-lasting.
While digitalization is essential, it is more important for brands to know exactly what and where to digitalize. FMCG companies must identify the most crucial areas of their businesses that can be optimized with digital technologies to drive the highest growth. We have identified three essential areas that brands must digitalize to survive in the coming years.
To successfully digitalize these processes, FMCG brands need a powerful yet easy-to-use digital solution that can be rapidly scaled across the entire distribution chain and provides clear, demonstrable benefits for brands, distributors, and merchants. RedCloud is that platform.
RedCloud has built the world’s first open commerce platform, a decentralized, open trading platform that digitalizes the entire distribution chain. With RedCloud, FMCG brands have real-time visibility at POS across the entire distribution chain. Existing business relationships are transformed into data points that enable FMCG leaders to see in stark detail where the demand for their products is, observe the change in demand for their products across multiple geolocations and directly engage every single merchant in their distribution network.
With RedCloud’s open commerce platform, sales and marketing leaders can access real-time, actionable, granular insights on every channel partner in their distribution network. These insights can then be leveraged to increase customer engagement and create data-driven promotions and campaigns to drive growth.
RedCloud also has the world’s largest local payment network with over 2 million pay-in points across 100 countries. This allows merchants across emerging markets to easily make digital payments, even without a bank account.
Schedule a demo with us today to see how RedCloud can help you digitalize your business and drive consistent, outsized growth.
At the turn of the century, retail in emerging markets experienced tremendous growth and immense change. Reports show that as the population in emerging markets grew by 21 percent between 2000 and 2015, retail sales per capita rose from $525 to $1490.1. Over the same period, emerging markets’ share of global retail sales jumped from 32 percent to 51 percent, growing at an 11.4 percent CAGR, compared to 5.7 percent for developed markets.
However, due to the fragmented distribution chain, an overwhelming reliance on cash payments, and a lack of technology adoption across the market, FMCG growth has slowed considerably, with reports showing zero retail growth between 2013 to 2015. Since then, the rate of retail growth has remained slow, and is likely to persist, unless there is a big shake in the traditional retail sales model caused by broad technology adoption. This move can generate up to $5.5 trillion in new retail sales across emerging markets.
Across developing economies, retail trade is severely fragmented and depends mainly on small Kirana (grocery) stores and mom-and-pop shops as the main distribution channel for their goods. The traditional distribution chain, which starts from manufacturers to distributors, wholesalers, and eventually retailers, is a $2.8 trillion market that has remained unchanged for over 50 years.
This fragmented system comes with inherent complexities, as brands need to employ multiple field officers who service the same routes and the same retailers, often making delivery runs with partially loaded trucks. This system is grossly inefficient, as research shows that a large percentage of retail outlets are either underserved (with limited direct coverage from sales reps and low access to promotions) or overserved (with larger retailers receiving up to 80 visits in a week from a single brand). In addition, many small retailers and merchants are cash-constrained, lack access to credit, and are limited in the product assortment they can offer.
However, despite these inefficiencies, the role small shops play in local commerce, and social networks will remain relevant due to their scale and proximity to the end consumer. This is a crucial reason why B2B e-commerce has had limited success in emerging markets. Many consumers still want to buy their products and pay in their local stores, but the current e-commerce model only allows a direct-to-consumer distribution model. Hence, brands are stuck between two impossible choices. They must either adopt e-commerce and the sophisticated technology that comes with it but risk losing access to the large number of consumers who prefer to buy from small, local shops or stick with the inefficient, fragmented distribution system that increases costs and stifles growth.
To solve this dilemma and drive consistent growth, manufacturers must digitize their processes to eliminate inefficiencies without alienating their existing channel partners and breaking their distribution chain. This solution must disrupt the incumbent, inefficient distribution model while addressing the specific needs of brands, distributors, and retailers in emerging markets, ensuring that they can extract margin from the efficiencies generated across the entire value chain. However, building such a digital ecosystem capable of industry-wide disruption will require a thorough understanding of the market structure and properly setting the scale and speed of change.
Open commerce is the only solution capable of industry-wide digital disruption while ensuring that brands can maximize the value of their existing distribution chain. Unlike traditional e-commerce, which focuses on selling to end-consumers and eliminating the traditional distribution chain, open commerce unlocks the full value of the distribution chain, providing a solution that connects brands, local distributors, retailers, and merchants on the same platform, all in real-time.
Open commerce provides the much-needed visibility that the current distribution model lacks by providing brands with real-time data at POS. With this data, sales leaders can see where the demand for their products is across the market and make data-driven decisions to meet that demand. Distributors can also place orders for their products from manufacturers and sell to retailers on the same platform while accepting digital payments, significantly reducing the time and resources spent on reconciling orders and payments.
RedCloud has built the world’s first open commerce platform that empowers brands, distributors, and merchants to sell smarter, buy better, pay simpler. With Red 101 Market, our open commerce platform, manufacturers can see every distributor and merchant in their supply chain in real-time. By accessing POS data, sales and marketing leaders can detect what products are in high demand and the areas where the demand is highest.
More importantly, FMCG brands can leverage Red101 Market to shift from traditional outlet segmentation, which is often based on scale or region, to a more advanced approach, such as grouping retailers based on micro-market characteristics, and overall growth potential. This will allow marketing leaders to create a more relevant assortment across price points and packaging types for different types of outlets, ensuring the right service level and delivery frequency across each outlet.
RedCloud has also built the world’s largest local payment network, available in over 100 countries and over 2 million pay-in points. This will allow merchants to pay for their FMCG products digitally even if they do not have a bank account. Adopting digital payments will significantly reduce the need for cash payments, which can cost up to 15 percent of total revenue, and provide merchants with a digital trading profile that can be used to access credit to grow their business.
Schedule a call with us today to learn how RedCloud’s open commerce platform can help you unlock the full value of your distribution chain and grow your business.
The FMCG industry has experienced significant disruption over the last decade, caused by the rapid adoption of digital technologies and e-commerce, as well as changing consumer preferences. This disruption, which is poised to continue has affected the ability of larger FMCG brands to generate profitable growth. Research shows that smaller, digitally-enabled brands have recorded the highest growth rate of 34 percent compared to larger, manual-first companies, which grew by only 0.4 percent within the same period. Other reports show that companies in certain sectors like apparel, that effectively leverage data analytics have doubled their EBITDA margins compared to their traditional peers.
It is, therefore, no surprise that FMCG leaders recognize the need to digitally transform their operating models to meet today's and tomorrow's needs as 60 percent of FMCG CEOs plan to digitally transform their organizations completely within the next few years. To successfully accomplish this and maximize the considerable advantages that digitalization offers, FMCG brands, especially those in emerging markets, must carefully choose the right technology solutions that guarantee success. Choosing a hard-to-use solution that lacks company-wide adoption can spell doom for any transformation plan, leading to huge losses and reduced efficiency even with the right strategy.
FMCG brands in emerging markets face numerous challenges that their technology must solve to increase market penetration and drive sales growth. Some of the crucial competencies that brands must develop are:
In addition to providing the above-listed competencies, FMCG brands need a digital solution that is:
To find and choose the right digital solution for their FMCG brands, CEOS, sales, marketing, and technology leaders must all work together to identify the best tech solution for their companies and the industry.
FMCGs often take a technology-first approach to digitalization by building major platforms without focusing on specific use cases that can provide the most value for the organization. Upon identifying digital opportunities and increased competition in their industry, many brands rush to invest in technology without building a holistic digitalization strategy. They mostly focus on the technology alone and address immediate, discrete use cases without considering mid-to-long term sustainability. It is no wonder then that over 70% of all digitalization initiatives by FMCG brands eventually fail, and only half of FMCG leaders say they have made moderate progress at meeting their digitalization and analytics objectives.
A recent global survey by McKinsey shows that the two largest challenges FMCG companies face with driving digital transformation are creating a holistic strategy to effectively develop data analytics capabilities and designing an effective technology infrastructure that effectively supports data-and-analytics activities at scale. The survey also found that 80% of all CPG companies make their IT departments responsible for data transformation, often without input from sales and marketing leaders. This results in brands adopting sophisticated, expensive technologies chosen by IT staff but unusable by sales and marketing teams.
Selecting a technology solution should be as much of a business decision as an IT decision. Brands must closely identify key business use cases and consult with sales, marketing, and operations leaders to identify value drivers across multiple teams and processes. Then, they must select from a wide array of available technology solutions while prioritizing efficiency, ease of use, and ease of integration.
An open commerce platform is the best technology solution for FMCG brands in emerging markets, as it satisfies the criteria mentioned above while providing the necessary competencies that will drive growth.
RedCloud's open commerce platform is the world's first decentralized trading platform powering a trade anywhere economy. With RedCloud, brands gain unprecedented visibility across their supply chain as our solution captures POS data in real-time from every merchant, distributor, and retailer across the market. This provides a clear picture of the market and enables brands to reach their customers faster and easier.
Our open commerce platform also allows retailers to order for stock when necessary, rather than relying on visits by sales representatives to take orders. By providing sellers and distributors with the ability to pull demand, brands can build resilient supply chains that can instantly respond to changes in demand, increasing sales by up to 30%. Our inbuilt market intelligence tool analyzes all the data collated and provides actionable insights displayed in easy-to-understand, customizable dashboards. With these insights, sales and marketing leaders can identify growth opportunities and devise data-driven campaigns to take advantage of those opportunities.
We have also built the world's largest payment network with over 2 million pay-in points in over 100 countries. This digital payment network allows even the smallest merchant in remote areas to make digital payments for their FMCG products, while also generating a digital trading profile that can be used to provide access to much-needed credit and other financial services.
We have specifically built our open commerce platform to integrate seamlessly with any technology stack that your brand uses. This eliminates the need for huge installation or retraining costs, as the platform is intuitive and easy to use. Most field agents and marketing executives can use the platform and generate tangible results within record time.
Schedule a demo with us to see how our open commerce platform easily integrates with your current tech stack and can help grow your business.
Changing consumer behavior and the increasing importance of data analytics have disrupted the linear value chain in the FMCG industry. FMCG brands in emerging markets, who have traditionally depended on manual processes, now recognize the need to adopt digital solutions that offer superior, personalized services at lower costs.
However, cost pressures have continued to rise, with the average CPG company spending up to 21% of revenue on SG&A costs, the highest of any industry. These high SG&A costs are linked to the inefficiency of the traditional sales model still employed by brands, where hundreds of field sales representatives must visit distributors and merchants to take orders. In a bid to improve cost management and increase efficiency, FMCG leaders have turned to digitalization, as 76% of FMCG leaders plan to leverage digital solutions to reduce costs by up to 15% over the next 12 months.
Enterprise Resource Planning (ERP) systems have long been the preferred solution by FMCG brands and large distributors to unlock digital capabilities, but no significant progress has been made, especially across emerging markets. Many brands that have adopted ERP systems still depend on manual sales processes and lack visibility across the supply chain, with 46% of FMCG leaders saying they feel unprepared to meet their cost-reduction targets. FMCG brands need a newer, cost-effective, and more efficient digital solution to reduce costs successfully.
Enterprise Resource Planning (ERP) was a term first coined by research firm Gartner in 1990 to refer to a system of integrated software applications that standardizes and integrates business processes across various departments in an organization. For many FMCG brands and large distributors, ERP systems are the backbone of their IT systems, allowing multiple business units to integrate their processes and streamline the management and transfer of data within the company.
Despite its widespread adoption, traditional ERP systems may not be the best digital solution for FMCG brands, as analysis from Gartner shows that 55% to 75% of all ERP projects fail to achieve their objectives. This failure can be linked to three significant challenges that ERP systems pose to FMCGs, especially brands in emerging markets:
High costs: Adopting and maintaining ERP systems can be costly, especially for large FCMG brands. In addition, data conversion and migration costs when moving to a different ERP platform can be astronomical. Research from McKinsey shows that mandatory migration to the SAP/S/4HANA platform, the new industry standard, can cost up to half a billion dollars for large organizations. FMCG brands, many of whom currently wrestle with the need to cut costs, struggle to justify this large expense.Highly complex and technical: Many traditional ERP systems are complex and require highly skilled technical staff to run and maintain. The systems also have a steep learning curve, and employees often need extensive and expensive training to utilize the software properly. Mostly limited to internal processes: Traditional ERP systems are mostly limited to improving the efficiency of internal processes, with the most common use cases aimed at streamlining processes across finance, procurement, distribution, and other departments in the same organization. However, the existing ERP systems do not digitalize external processes with other ecosystem partners, such as distributors, retailers, or sellers. For example, FMCG brands that adopt traditional ERP systems still require sales reps to visit merchants physically, take orders manually and reconcile cash payments. The dependence on manual external processes causes SG&A costs to remain high, leaving brands with vulnerable supply chains.
Open commerce is a digital commerce platform built on the principles of decentralized control – the same principles behind cryptocurrencies, DeFi, and other web3 technologies. Open commerce is designed to create a digital “free trade environment,” where brands, merchants, and distributors can meet and transact digitally without undue interference from centralized entities.
By integrating ERP systems with an open commerce platform, FMCG brands and distributors can increase the efficiency of internal and external processes. For example, open commerce provides brands with a direct link to every merchant across the distribution chain and collates the data generated at POS. With this data, sales and marketing leaders can see where the demand for their products is without waiting for manual reports from field sales officers. This increased efficiency can reduce SG&A costs by up to 25% - a reduction that exceeds the most optimistic cost-reduction estimates for traditional ERP systems
In addition, an open commerce platform provides all the advantages of traditional e-commerce, such as real-time transaction data, direct customer engagement, and digital payments without the ridiculously high fees and artificial barriers enforced by e-commerce platforms. Open commerce platforms enable FMCG brands to overcome the challenges posed by traditional ERP systems, as it is a fraction of the cost, easy to install and maintain, and is simple to use.
RedCloud has built the world’s first open commerce platform, Red101 Market, to unlock the full value of the traditional distribution chain and drive growth. With Red101 Market, FMCG brands can directly sell to distributors and merchants and collect digital payments on a single platform.
Our open commerce platform collates real-time sales data at POS from every merchant in the market, providing brands with in-depth insights into market demand and consumption patterns. The in-built market intelligence tool analyzes this data to generate actionable insights that sales and marketing leaders can leverage to identify growth opportunities and make data-driven decisions to maximize the opportunities.
We are also eliminating cash payments across the FMCG industry by empowering brands to receive digital payments for their merchants. To do this, we built the world’s largest local payment network with over 2 million pay-in points across 100 countries. This vast payment network ensures that merchants can digitize their cash quickly and make digital payments, even without a bank account. By enabling digital payments, we also provide brands with an up-to-date digital trading record of all merchants so they can identify the top-selling merchants and offer credit facilities that they need to grow their business.
The open commerce platform easily integrates with any existing ERP system and is easy to use. Sales and marketing teams can begin generating insights and increasing sales within a short while after deployment.
Schedule a demo with us today to see how you can integrate open commerce with your existing tech solution, reduce costs by up to 25% and drive growth.
Web 1.0 , the first iteration of the internet, was a strange place. It was characterized by a few creators, was read-only and had no room for user interaction. Websites only served static content and had minimal functionality.
The launch of Facebook alongside other social networks and interactive platforms marked the dawn of Web 2.0. In this iteration, websites offered dynamic content that allowed deeper user engagement and enabled more people to become creators. This was the age of e-commerce, cloud, and social media. However, with these advances came a new set of problems. Centralized control and poor platform security led to imbalanced creator economies and disgruntled communities.
The launch of Facebook alongside other social networks and interactive platforms marked the dawn of Web 2.0. In this iteration, websites offered dynamic content that allowed deeper user engagement and enabled more people to become creators. This was the age of e-commerce, cloud, and social media. However, with these advances came a new set of problems. Centralized control and poor platform security led to imbalanced creator economies and disgruntled communities.
Fun fact: A large part of why Internet Explorer failed was because it was a Web 1.0 application trying to compete in a Web 2.0 world, while Chrome was built for Web 2.0.
Big Data was another major feature of Web 2.0 as brands began a race to collect as much customer and transaction data as possible. However, in many cases, the data collected was unintelligible and didn't provide any useful or actionable insights that significantly improved business decisions. Also, with vast amounts of often personalized data at their disposal, data and information security became a major issue for brands, as it became clear, perhaps for the first time, just how powerful data can be when analyzed properly, as well as how much damage can be done if said data gets into the wrong hands.
These factors all contributed to the search for a system that was both open and secure, where data could be transparently collected, transferred, and leveraged by any person, group, or brand, without compromising the safety of personal information. This was the birth of Web 3.0
Web 3.0 is the next significant paradigm shift in the evolution of the internet and represents a fundamental disruption of the standard centralized model of web 2.0 and its "platform-takes-all" economics. Open, trustless, and permissionless networks are the future of Web 3.0. Innovations like the blockchain, DeFi, and NFTs are changing the way we communicate and share value on the internet, paving the way for a truly open economy where you can connect, engage, and trade with anyone without unnecessary centralized control.
Steve Jobs announced the iPhone in 2007 to a lot of applause and attention, but there was another technology that I believe was even more important than the phone itself - The App Store . The presence of a trusted platform that ensured safe distribution allowed more developers to create mobile apps and led to a $ 218 billion market by 2020.
However, in true Web 2.0 fashion, app stores have slowly evolved into walled gardens where centralized entities exert undue control while charging a significant percentage on the revenue that should accrue to app developers. This problem is not unique to app stores, it is evident in e-commerce and even traditional finance (Ever wondered why banking fees are so high and you have almost no choice but to pay them?).
Web 3.0 is set to change the landscape by decentralizing control and power from a single entity and sharing it with users and creators, who should be the real stakeholders. Why should a small business have to pay a huge chunk of their revenue to Amazon while still competing with the platform itself to sell to customers? Or why should Facebook dictate how your personal data is collected, used, and sold? With Web 3.0 technologies, the economy becomes truly " open ", and the power is back in your hands.
One of the easily recognizable applications of decentralization is blockchain and cryptocurrency. With a mobile phone and internet access, anyone, even in the most remote areas, can transfer and receive funds in minutes without a central entity processing the transaction. It's completely open, anonymous, permissionless, and trustworthy .
NFTs are another Web 3.0 technology built on the blockchain that allows artists to earn directly from their art. Traditionally, when an artist sells a piece of art, they lose all rights to that piece and cannot earn directly from that piece ever again. With NFTs, however, an artist can earn a percentage of the piece's price every time it's sold. NFTs enable this with blockchain-powered smart contracts that provide a transparent, fool-proof mechanism for profit-sharing and collective decision-making, which will eventually address the inequity of art patronage, shifting the power dynamic within the industry.
So, how does a Web 3.0-powered future look? And what industries will it affect?
I predict that it will affect every industry, but I'm most excited about what the change means for global commerce and supply chains. For decades, the traditional global supply chain, particularly in the FMCG industry, has depended on an inefficient mishmash of manual paperwork, cash transactions, and disconnected local merchants. E-commerce is only marginally better, as centralized restrictions like Amazon impose unnecessary that kill small businesses . With Web 3.0, however, we can finally create a true "sell anywhere" economy, where global brands can reach any merchant in any market and sell directly to them.
This is why we're building RedCloud, the world's first open commerce platform that connects brands, distributors, and retailers in the world's fastest-growing economies together. Unlike the traditional distribution chain, RedCloud provides a solution where brands and distributors can access valuable POS data across the supply chain, gaining valuable visibility that can be leveraged to eliminate any supply chain inefficiencies. Merchants can connect with global brands, offer their customers better products at more competitive prices, and build a digital trading profile that can be collateralized to provide access to credit facilities.
The time to build an open future that connects us is now, and Web 3.0 is key to that future.
