Traditionally, retailers have played an integral role in the distribution of consumer items. Whenever an individual needs a beverage or any other household or personal care item, they head to the nearest retail store, which offers a vast collection of desired products.
However, advancements in and access to technology have changed the dynamics of how consumers interact with brands. This modified approach to shopping has led to the emergence of direct-to-consumer distribution. This approach allows FMCG companies to leverage direct distribution by eliminating the retailer’s role as the middleman.
Direct-to-consumer distribution allows businesses to control their products’ creation, selling, and distribution directly to the customer. The approach brings several competitive advantages for FMCG companies, and that’s what we look at in this post.
Here are a few benefits of direct-to-consumer distribution for FMCG companies.
Offers Increased Interaction With the Customer
Direct-to-consumer distribution allows businesses and brands to interact with customers at a personal level. It provides an opportunity for businesses to understand their customers’ perspectives better. Using this information, companies can share their product’s key features and specifications with the customers so that customers have a better understanding of the product’s utility.
Enables Businesses to Have Greater Control Over the Brand’s Message
In a traditional distribution model, the retailer has the primary control over the brand’s message. This leaves little or no room for the manufacturer to influence the brand’s utility and message. With direct distribution, businesses can solve this problem and have greater control over all aspects of the product, including its message.
Provides Reliable Data About Consumer Behavior and Preferences
A direct distribution to the customer allows businesses to gather reliable data about customer preferences and shopping behaviors. Businesses can then use this information to improve their product and supply chain.
As FMCG companies incorporate their customer’s preferences into their product, supply chain, and customer service, it can help businesses establish a loyal customer base.
Allows Expanded Business Reach
Since no retailers are involved, direct distribution to customers allows businesses to enjoy a wider reach. By relying on digital channels, businesses can reach a global audience if they target the right market segment.
Expands Business Bottom Line Profitability
By eliminating the retailer, FMCG companies can save the profit margins they must share with the middleman. Since the manufacturer sells the product at the same price as the middleman, the company’s profitability increases.
Moreover, it allows FMCG companies to pass on the benefit to the customers by offering discounts without compromising the company’s bottom line.
The recent changes in technology, consumer behavior, and shopping patterns have led to elimination of retailers from the distribution channel. Today, many FMCG companies are taking advantage of direct distribution to establish a loyal customer base and improve business profitability.