What D2C can Learn from FMCG

• What D2C can Learn from FMCG
• Pranjal Pravin
• Published: September 13, 2023

Contributors: What D2C can Learn from FMCG
Published: September 13, 2023

Summary

Explore how Direct-to-Consumer (D2C) brands can learn from Fast-Moving Consumer Goods (FMCG) companies, focusing on market understanding, localization, brand building, manufacturing, sourcing, and customer loyalty programs. It emphasizes leveraging FMCG strategies like branding, distribution, consumer research, product innovation, and supply chain management to enhance D2C operations. The piece highlights the importance of adapting these lessons to the unique aspects of the D2C model to achieve growth and market share.

Often, we see examples where the FMCG organisations learn to be consumer-centric from the Direct-to-consumer (D2C) businesses. But there are a lot of instances where even direct-to-consumer businesses have laid the foundation by learning immensely from FMCG businesses. There could be several examples, from skincare products to the electronics industry.

Example of D2C v/s FMCG

For example, let’s consider an Indian D2C brand that sells organic skincare products. Certain learnings that these D2C businesses can incorporate in their handbook from an established Indian FMCG company known for its successful skincare line are:

Market Understanding

The FMCG company has conducted extensive research on consumer preferences, identifying the demand for organic and natural skincare products. The D2C brand can study its market insights to understand the specific needs and preferences of Indian consumers in terms of organic skincare.

Localisation

The FMCG company has localised its products by incorporating traditional ingredients and addressing regional skincare concerns. The D2C brand can follow a similar approach by using indigenous botanical extracts and formulating products that cater to different regions or specific skin concerns prevalent in India.

Brand Building

The FMCG company has built a strong brand through strategic partnerships with influencers, endorsements by renowned celebrities, and marketing campaigns that resonate with Indian consumers. The D2C brand can learn from its branding strategies, collaborate with micro-influencers, engage with customers through social media platforms, and emphasise its values and story.

Manufacturing and Sourcing

The FMCG company has established efficient manufacturing processes, sourcing high-quality ingredients and ensuring adherence to international quality standards. The D2C brand can study its supply chain management practices, source organic ingredients locally, and implement rigorous quality control measures to offer consistent and trustworthy products.

Customer Loyalty Programs

The FMCG company has implemented a loyalty program that rewards customers with discounts, exclusive offers, and personalised recommendations based on their skincare needs. The D2C brand can develop a similar loyalty program, offering rewards for repeat purchases, personalised skincare consultations, and early access to new product launches.

These are some of the examples where a D2C brand can take foundational lessons from an established FMCG and focus on the niche to create its own brand identity and gain relevant market share.

But are these the only learnings that a D2C brand can take? The example we shared is of a skincare brand; there’s always more to what meets the eye. FMCG has various categories and verticals where it has successfully established itself in the last 100 years. 

Key Points Where D2C Can Learn From FMCGs

So, what are the key points that a direct-to-consumer (D2C) brand can take away from established Fast-Moving Consumer Goods (FMCG) companies? Let’s look at some key insights:

Branding and Positioning

FMCG companies excel in creating strong brands and establishing clear positioning in the market. D2C brands can learn from their expertise in brand building, crafting compelling brand stories, and creating emotional connections with customers.

Distribution Strategies

FMCG companies have well-established distribution networks, including partnerships with wholesalers, retailers, and e-commerce platforms. D2C brands can benefit from understanding the distribution channels FMCG companies use and adapting them to their own D2C model.

This could include exploring partnerships with third-party logistics providers, optimising direct shipping capabilities, or leveraging online marketplaces. That’s why on every highway or road connecting two cities, you could easily spot a product from either Pepsico or Coca-Cola but will hardly ever find a product from a D2C brand.

Customer Research and Insights

FMCG companies invest heavily in consumer research to understand their target audience’s preferences, needs, and shopping behaviours. D2C brands can learn from their approach to gather customer insights through surveys, focus groups, and data analysis. By leveraging this knowledge, D2C brands can tailor their products, marketing messages, and customer experiences more effectively.

Product Innovation

FMCG companies are known for constantly innovating their product lines to meet evolving consumer demands. D2C brands can adopt a similar mindset of agility and adaptability, embracing customer feedback and iterating on their products quickly to stay ahead in the market.

In fact, there have been certain instances where a product from a D2C brand has managed to outperform all the FMCG brands in the category because they paid extra attention to their consumers.

Supply Chain Management

FMCG companies have sophisticated supply chain systems to ensure timely delivery, efficient inventory management, and cost optimisation. D2C brands can study their supply chain practices, including demand forecasting, inventory control, and fulfillment processes, to streamline their operations and enhance customer satisfaction.

Pricing and Promotions

FMCG companies are skilled at pricing their products competitively and running effective promotional campaigns. D2C brands can learn from their strategies to offer value to customers while maximising revenue, including dynamic pricing models, loyalty programs, and targeted promotions.

Customer Service and Support

FMCG companies often prioritise customer service to build loyalty and enhance the overall customer experience. D2C brands can learn from their focus on providing exceptional support, including responsive customer service, hassle-free returns, and proactive communication.

Scalability and Growth

Established FMCG companies have successfully scaled their operations globally. D2C brands can learn from their growth strategies, which may involve expanding into new markets, adapting to local preferences, and leveraging partnerships to accelerate growth.

By studying these aspects, D2C brands can draw valuable insights from FMCG companies’ success stories and apply them to their own business models to drive growth, build strong brands, and establish lasting customer relationships.

How does the Indian market differ?

What makes an Indian market different from that of the Western ones? Its customers. More so, it is price-sensitive but values-seeking customers. Indian customers love to enjoy value in every penny they spend, and a miss of value can cause a loss in potential customers. So, here are 5 key differences and lessons Indian D2C firms can learn from established Indian FMCGs could be

Market Understanding

Indian FMCG companies have deep insights into the Indian consumer market, including regional preferences, cultural nuances, and diverse customer segments. Indian D2C brands can benefit from studying their understanding of the local market, conducting thorough market research, and customising their offerings to cater to specific consumer needs and preferences.

Pricing Strategies

FMCG companies in India have extensive experience in pricing their products competitively to appeal to price-sensitive consumers. Indian D2C firms can learn from their strategies to strike the right balance between affordability and profitability. They can also explore innovative pricing models, such as sachet pricing or bundling, to cater to the Indian market’s unique demands.

Localisation

Indian FMCG companies often emphasise localisation by adapting their products, packaging, and marketing to different regions and languages within India. Indian D2C brands can adopt a similar approach, tailoring their offerings and communication to specific regions or local communities to establish a stronger connection with customers.

Brand Building

Established Indian FMCGs have successfully built strong brands over the years, leveraging a combination of traditional marketing channels, celebrity endorsements, and grassroots-level campaigns. Indian D2C brands can learn from their branding strategies and explore avenues such as influencer marketing, social media engagement, and community building to create brand awareness and loyalty.

Regulatory Compliance

Established FMCG companies in India have experience navigating the complex regulatory landscape, including compliance with labelling, certifications, and packaging regulations. Indian D2C brands can learn from their approach to ensure adherence to relevant regulations and build trust with customers.

By studying these aspects, Indian D2C brands can gain valuable insights from established Indian FMCGs, adapt their successful practices, and combine them with the inherent advantages of the D2C model to thrive in the Indian market.

FAQs

1. How can direct-to-consumer (D2C) brands incorporate FMCG (Fast-Moving Consumer Goods) strategies to enhance their distribution channels?

• D2C brands can enhance their distribution channels by studying FMCG companies’ well-established networks and partnerships. They can explore collaborations with wholesalers, retailers, and e-commerce platforms, adapting FMCG distribution strategies to their D2C model. Additionally, leveraging third-party logistics providers and optimizing direct shipping capabilities can further enhance their distribution channels.

2. What customer engagement techniques used by FMCG companies could D2C brands adopt to strengthen brand loyalty?

• D2C brands can adopt FMCG companies’ customer engagement techniques such as loyalty programs, personalized recommendations, and responsive customer service. By offering rewards for repeat purchases, providing personalised experiences based on customer preferences, and prioritizing exceptional support, D2C brands can strengthen brand loyalty and enhance the overall customer experience.

3. How can D2C brands leverage FMCG’s pricing strategies to remain competitive in the market?

• D2C brands can leverage FMCG’s pricing strategies by carefully balancing affordability and profitability. They can study FMCG companies’ pricing models and adopt innovative strategies such as dynamic pricing, bundling, and sachet pricing to appeal to price-sensitive consumers while maximising revenue. By offering value-driven pricing and strategic promotions, D2C brands can remain competitive in the market.

4. What lessons can D2C brands learn from FMCG companies regarding product innovation and adaptation to changing consumer trends?

• D2C brands can learn from FMCG companies’ agility and adaptability in product innovation. By embracing customer feedback, gathering insights through research, and iterating on their product offerings quickly, D2C brands can stay ahead of changing consumer trends. Additionally, studying FMCG companies’ approaches to product development and market testing can help D2C brands innovate effectively and meet evolving consumer demands.

5. How can D2C brands emulate FMCG’s effective use of packaging and branding to attract and retain customers?

• D2C brands can emulate FMCG’s effective use of packaging and branding by prioritising visual appeal, brand storytelling, and product presentation. By investing in high-quality packaging design, crafting compelling brand narratives, and creating memorable brand experiences, D2C brands can attract and retain customers. Additionally, leveraging social media platforms, influencer partnerships, and community-building initiatives can further enhance brand visibility and loyalty.

Read More:

Beyond the Product: Understanding the Emotional Drivers of Indian Consumers in D2C Branding

The Digital Shopper’s Journey: Navigating the E-Commerce Landscape for D2C Products

Understanding The Average Customer Acquisition Cost by Industry

How to Optimize Marketing Spend Through Activation Rate Calculations

Measuring Monthly Recurring Revenue: Expert Tips and Advice

About the Consultant

Pranjal Pravin

Brand Consultant

As a Growth Marketing and Key Accounts Manager at Flipkart, Pranjal leads the mattress vertical of the Furniture business in the consumer goods sector. With more than 4 years of experience in brand marketing, E-commerce, and Growth Management, her career journey spans across various industries such as FMCG, Fashion, and E-commerce domains. She has also helped a lot of small businesses and startups in their marketing strategy, with one of them getting funded on Shark Tank India. She has shown consistency in guiding businesses across various industries. She has also worked in both Indian and International environments and holds expertise in consumer behavior across various target groups and countries.