FMCG firms have been grappling with provide chain and logistical challenges as a result of countrywide lockdown imposed final month. In order to ease last-mile connectivity and distribution challenges, among the FMCG majors have tied up with meals supply and hyper-local supply apps. Marico, Godrej Consumer Products Limited (GCPL) and Britannia have tied up with Swiggy, Zomato and Dunzo, respectively; ITC Foods has partnered with Domino’s Pizza, whereas Tata Consumer Products has joined fingers with Flipkart.
Even although the demand for FMCG merchandise, particularly every day necessities, is excessive, the provision has suffered as manufacturing amenities are shut, and manpower and transportation are unavailable, leaving distributors in a troublesome state of affairs. As a consequence, the gross sales of those firms are down by 10-30%, in accordance with specialists. Companies with numerous every day necessities of their product portfolios are faring higher than those that don’t.
At a time when your entire nation is in lockdown, and stepping out even for necessities is fraught with dangers, hyper-local supply has emerged as an answer for FMCG firms in addition to customers. Under this association, supply apps are selecting up merchandise straight from the distribution centres and retailers, and delivering them to the buyer.
Marico’s tie-up with Swiggy and Zomato, says Sanjay Mishra, COO, India gross sales and Bangladesh enterprise, Marico, is geared toward “increasing efficiency”. “The Covid-19 crisis has resulted in supply chain disruptions and delivery operation issues for the platforms. So, while the demand is up by 60-70% in essential categories across platforms, there are several challenges in trying to meet the demand,” he provides.
Meanwhile, GCPL, aside from its tie-ups with Zomato and Dunzo, is taking a look at different partnerships to resolve distribution points. The firm has additionally partnered with B2B provide chain start-up Shop Kirana and automotive rental firm Zoomcar.
“We are employing Zoomcar’s fleet for prompt deliveries of products to our distributors and wholesalers in Mumbai and Nagpur. We will be extending this to Pune, Madhya Pradesh and Gujarat. This will be for all products under the personal care, hair care, home care, and household insecticide categories. Shop Kirana will provide direct supplies of our soaps to individual retailers,” informs Sunil Kataria, CEO, India and SAARC, GCPL.
Tata Consumer Products, alternatively, has listed its distributors on Flipkart, which can decide up and ship the merchandise to the customers. GCPL and Marico plan on persevering with these partnerships even after the lockdown ends.
Partners for good?
The hyper-local supply mannequin will not be recognized to be very cost-effective, and has pressured grocery supply firms corresponding to Grofers and BigBasket to pivot to inventory-led fashions. Is the current association of FMCG firms with supply apps sustainable?
Anurag Mathur, head – retail, and accomplice, PwC India, is of the opinion that with the minimal stress on value and promotions proper now, the mannequin might be efficient within the present state of affairs.
“Today, it is more about connecting the right inventory to the right place and moving the stock fast. Hence, these strategies might work out in the short term and even in medium term, if supplies continue to be disrupted in some parts of the country. In the long term, however, they will have to figure out a way to make this profitable,” he provides.
A couple of business watchers imagine that these measures might assist FMCG firms enhance their gross sales marginally, and in the long run, assist them get a greater grip on e-commerce as a channel. According to a Nielsen report, e-commerce’s contribution to general FMCG gross sales within the nation stands at 2% at present and is predicted to extend to five% by 2022.
Pinakiranjan Mishra, accomplice and chief, client merchandise and retail, EY, expects the gross sales of FMCG from e-commerce to go up, “as many people who were not used to ordering online are now using the channel”.
Shipra Biswas Bhattacharyya, principal, Kearney, says the present state of affairs additionally presents a chance for FMCG firms to get their merchandise tried by new clients. “Consumers are not picky these days; they are going for anything that is available. Through such partnerships, these companies can reach out to new customers,” she provides.