The coronavirus pandemic and the subsequent disruption in the supply chain have set off newer trends for the FMCG sector while consequently coercing brands to look for an alternative to protect their supply chains and keep their customer loyalty intact. We look at how Alternative Data can change the game for the FMCG sector and the long-term opportunities this technology can unlock.
COVID-19 has become a precursor for newer food industry trends. The pandemic, with its subsequent lockdown, immediately resulted in most of the FMCG products to be left out of stock for weeks. The FMCG supply chain was left battered by the pandemic in its immediate aftermath especially for the Asia Pacific region due to the COVID lockdown.
These are harrowing times for brands and marketers who have spent years and millions to build customer loyalty. With the situation so unprecedented, they have almost been at the end of losing the equity and consumer loyalty that has taken them decades to build. We look at an alternative that can enable FMCG brands to overcome this storm.
The Data Bandwagon
Data is redefining the nature of our relationships with e-commerce and advertising platforms causing a revolution in the way consumers communicate with brands.
It is so pivotal to business success that in the absence of an ongoing, data-mediated relationship with a customer base, we may be looking at an environment where data-poor brands may suffer in a bid to compete effectively.
Product-based customer relationship offer miniscule data for the manufacturer. The retailer of the product will usually owns the relationship and ultimately, the customer data.
Alternative Data: The possible course of action
Alternative data is the data used by businesses or investors to evaluate a company or investment that is not within their traditional data sources.
It offers a more accurate, faster, or more granular insights and metrics into company performance than traditional data sources. A large number of companies have taken recourse to Alternative Data to collect, clean, analyse, and interpret data and provide it as a product that could inform investment decisions.
Let’s take a retail business as an example. If the person wishes to expand into a new territory, then traditionally, it would seem like a decision based on the performance of other stores in that area as well as on the person’s stores based in other major metropolitan centers.
However with alternative data, one can use cameras that take pictures of the shopping mall’s parking lot for several months, and then correlate parking lot traffic with sales, or even collect data from a source that measures foot traffic in front of your proposed location.
Incorporating Alternative Data into the FMCG Supply Chains
Consumer data is becoming one of the key drivers for brands to launch new services.
Although FMCG brands and retailers have since long relied primarily on traditional data sources to make their decisions, usage of Alternative data can offer a host of advantages to this sector.
By streamlining the supply chains, Alternative Data can redefine an FMCG brand’s existing understanding of inventory needs across cities and localities.
By employing real-world intelligence, it can emerge as a game-changer for understanding the consumer trends and allowing an FMCG brand to adequately respond to the demand and meet it.
Apart from this, online app usage data could procure a broad understanding of how people are buying groceries online.
In normal times, FMCG brands could very well ensure that they do not just meet the essential needs of the neighbourhoods but also deliver beyond. But with a supply chain that is battling hindrances in the times of COVID, alternative data can enable FMCG brands to hyper-target their supply chain in order to ensure that the essential needs of a larger section of consumers in these neighbourhoods are met.
This will not only help them retain their existing loyal customers but also outperform brands that do not have access to alternative data.
A Word to the Wise
For companies who are ensure of how to take the road forward, it would help if organisations start developing the capability and the architecture to integrate multiple data sources together. Apart from finalising on how to manage the data chain, it will also be fruitful to hire the right people in this context, so that they can analyse the data and draw meaningful insights from it.
Although supplementing your supply chain with alternative data initiatives might not always work, if it does, it will bring about invaluable insights that can bring about a constructive change in the way the supply chains operate.
A digital-first strategy is what companies will be driven towards. Being digital-first will not only makes their products available to consumers through platforms like Swiggy or Zomato but also create a parallel system to their traditional distribution system. It can redefine the way the supply chains function.