HERE’S EXACTLY WHY MOST FMCG BRANDS FAIL IN E-COMMERCE

In the past week, I had the opportunity to talk to a number of clients and business associates (always great to catch up with people in the industry; so much new insights to learn from) in the fast-moving consumer goods (FMCG) industry, and the conversations invariably turned towards the impact of e-commerce and how evolving consumer buying behaviour in the digital age changes the way FMCG brands market their products.
One prevailing sentiment that I got out of the conversations is that while everyone recognises that e-commerce is an undeniable aspect of modern business that all companies need to address and tackle these days, FMCG brands in particular face more challenges in making it work.


One of the main difficulties is of course managing the delicate relationships with existing distribution channels, and avoiding cannibalisation in the meanwhile (Actually, not true; over 50% of all online purchases made in China are additional revenue for retailers and brands, in line with global trends).
Another challenge is justifying the investment for e-commerce setup and operations, especially for mono-brands considering establishing their own online storefronts, when online sales percentage against total global sales still hover in the single-digit range across all FMCG categories.
So over the last few days I’ve given this topic some thoughts and come to realise that more often than not, e-commerce in traditional FMCG brands is largely separated from the decision-making processes that drive offline sales. In some cases, e-commerce is also separated from the digital branding and marketing processes.
The lack of integration among these functions prevents FMCG brands from tapping into and unleashing the potential of holistic, omni-channel marketing and sales.

FMCG brands have been slow to realise that consumer consideration in the shopper path-to-purchase has irrevocably changed in the digital age; the first touchpoint of all consumer interactions with a brand is now a digital one.
It is puzzling to see that many FMCG brands’ digital marketing and e-commerce presence serve simply as signposts to bring the consumer back to the retail outlets, when a concerted effort to connect with the consumers directly and immediately on the e-commerce platform could have resulted in a much impactful customer acquisition and sales conversion.

A large reason why the disconnect exist in many FMCG brands could be due to the fact that traditionally, marketing and sales are separate functions that report to separate hierarchical lines with different business objectives.
But in the age of the internet, marketing and selling occurs at the same moment, first described by Google as the “Zero Moment of Truth” back in 2011.
While a world where a majority of shampoos is bought online is still some days away, the influence of e-commerce on consumer buying decisions can already be felt, with as much as 25% of all retail sales influenced by e-commerce interactions consumers made leading up to the point of purchase.
Established FMCG brands should also recognise that on the internet, away from the protection of traditional retail visibility accorded to them through scale and relationships with distribution channels, every brand has an equal chance to make a connection with consumers, whether it is a decades-long leader or a just-launched newbie.
This means that to win the hearts (and purses) of the consumers, FMCG brands have to put in more effort to tell a compelling brand story on the digital media, and use e-commerce as a primary destination to start the consumers on the brand journey, rather than just viewing it as simply another distribution channel.
In short, FMCG brands need to rethink how e-commerce should fit into the larger brand narrative that is being told to the consumers. Specifically, FMCG brands should formulate a clear strategy of integrating e-commerce into their overall brand communications, using it as the initial springboard from which all further consumer interactions down the path-to-purchase are influenced, eventually leading towards the overall objectives of customer acquisition and sale conversion, online or otherwise.
Is your FMCG brand facing similar challenges? Talk to us today and find out how we can help you formulate a winning e-commerce strategy and implement it effectively. Email us at: info@stridec.com.