The COVID-19 pandemic has led to major disruption, notably in logistics and supply chain, thus affecting many companies. Many countries were quick to respond to the pandemic, putting into place various “emergency” lockdowns, even closing national borders. Many of the policies are often changing, further contributing to the impact of the disruption. However, some opportunities have arisen as a result as more companies revamp their supply chain to cater to selling Direct-to-Consumer (D2C). This has resulted in increasing volume of orders and more supply chain bottlenecks.
Key Takeaways:
- The changing of customer behaviour during the pandemic of COVID-19
- Opportunities for the FMCG Companies to expand the market through website and omnichannel
- Benefits from digitalising the last-mile delivery for companies
COVID-19 and The Changing of Consumer Behaviour
The disruption has caused economic instability in many countries, due to the changes in market dynamics. This has also impacted consumers in terms of lifestyle as consumers change to adapt to the ‘new normal’.
According to McKinsey¹, the pandemic changed different aspects of life, especially with regards to shopping and consumption. Some of these changes have been predicted to be long-term and are trends that are here to stay.
Consumers have gotten more comfortable purchasing essential goods & everyday consumables ... giving birth to a second growth spike in eCommerce.
With government policies limiting physical movement over the past 2 years, many consumers have resorted to making more and more purchases online. Before the pandemic, consumers would reserve online purchases for nice-to-have or non-essential items like clothes, shoes, jewellery and many others. During the pandemic, consumers have gotten more comfortable purchasing essential goods & everyday consumables like food, groceries, homecare and personal care products online. This is added demand on top of the existing online orders, giving birth to a second growth spike in eCommerce.
With changing consumer behaviour, consumer expectations also evolve accordingly. Companies are now left to react and adapt to growing consumer expectations. However, this can also be seen as new opportunities for companies to grow into or take advantage of.
Opportunities for the FMCG Industry
In the last year, FMCG companies are reported to be dominating the last-mile delivery space. They are predicted to remain the dominant player for many years to come. As more consumers make purchases online, there is a higher demand for last-mile delivery.
Many companies are looking into the omnichannel distribution of their goods and are paying close attention to Direct-to-Consumer (D2C) distribution.
With the pandemic affecting traditional retail distribution, companies, especially those in the FMCG space, have taken the opportunity to review, realign & expand their distribution strategy. Many companies are looking into the omnichannel distribution of their goods and are paying close attention to Direct-to-Consumer (D2C) distribution.
Even though many brands businesses have relied on marketplace platforms (eg. Zalora, Lazada, Tokopedia) to distribute their goods, many businesses are seriously building or revamping their websites to sell directly to their consumers online. Prior to the pandemic, the trend of buying online was already rising. The pandemic was merely fuel to an already growing fire, driving more consumers to buy online. Many FMCG companies took advantage of this, establishing their own online platforms to sell directly to the consumer.
Furthermore, with the growth of online purchases coupled with the limited physical movement policies put into place, companies have seen more consumers from rural areas participating in the online buying frenzy. Previously, many of these consumers would have made frequent trips to nearby larger cities to purchase what they needed. With that no longer being a viable option, many consumers from more rural locales have looked online to make more of their essential purchases.
Many companies have experimented with hyperlocal distribution over the last few years with varying levels of success. However, a supporting ecosystem of customers, technology platforms and last-mile delivery players have been gradually building up, making it a good time to cater to the hyperlocal market.
With this, hyperlocal distribution has become more feasible with higher chances of success. Companies are able to sell and deliver to consumers all over the place, no longer limited to just urban cities.
As FMCG companies embark on doing the last-mile delivery themselves for the D2C strategy, the last-mile delivery now becomes part of the brand image & experience. Consumers do value brands who can deliver a seamless and pleasant delivery experience and not just the goods themselves. As a result, companies are looking more seriously into last-mile technologies.
Digitalising the Last-mile
In order to deliver the best experience in the last-mile, companies should look into technologies like Transport Management Software (TMS) that can help digitalise the last-mile. To match the delivery experience provided by various marketplaces that have already set the bar in such experiences, companies can immediately match those expectations by adopting the right software.
In 2016, research showed that 53% of overall delivery costs are attributed to the last-mile². This means that last-mile aspect of the supply chain is the most expensive portion of the overall delivery. This still holds true today. Companies should consider investing in digital last-mile technology, to not only maximise resources and optimise cost but also to help build or maintain a good brand experience.
One such last-mile technology like the TMS can help a company with the last-mile of the supply chain. Some features in a TMS that can help in this includes but is not limited to:
- Route Optimisation
Route optimisation can help match orders with available resources, helping companies achieve routing efficiency. Sometimes, this may result in reduced transport costs whereas other times, it may help a company to discover additional capacity that can be used elsewhere.
- Real-time Tracking for all Stakeholders
With the growing online sales & D2C distribution, consumers expect to know where their orders are at all times. Consumers want to be able to track their orders at a click of a button without having to call Customer Service. A TMS can provide real-time tracking capabilities for both the company & the consumers so that everyone can track their orders’ delivery progress at any time.
- Data Visibility
The data visibility will support companies the ability to know each stage of the delivery process. Hence, companies can have insight into every delivery process. More than that, companies can also evaluate while planning for the long-run strategies to maximise their last-mile space.
Nowadays, companies are more transparent with their consumers about the delivery process and the milestones involved. A TMS helps companies gain full data visibility by knowing each stage of the delivery process & the milestone achieved. With the delivery data digitalised, this data can be used in future for analytics to gain insights to improve operations.
Companies should consider investing in a TMS, especially if they are embarking on a strong D2C strategy.
Maintaining a competitive edge or market dominance is not an easy feat. Companies should consider investing in a TMS, especially if they are embarking on a strong D2C strategy. This would help to ensure that the last-mile delivery will contribute positively to the overall brand experience.
To know more about TMS solutions like VersaFleet, book a demo with the VersaTeam today: https://versafleet.co/
References:
- Alldredge, K. et.al. (2021, March). COVID-19’s Impact on Demand and Costs in the CPG Industry. McKinsey. https://www.mckinsey.com/
- Klein, Lana. Covid-19: Impact on CPG. Fractal.ai https://fractal.ai/
- ¹Kohli, S. et. al. (2020, June). How Covid is Changing Consumer Behaviour. McKinsey. https://www.mckinsey.com/
- ²(2018, September). The Final Hurdle – Innovation in Last-Mile Logistics. Coresight Research. https://coresight.com/
- (2020, October). FMCG and Retail (e-commerce) REBOOT Report. Deloitte https://www2.deloitte.com/
