March 14, 2018 | 08 min read
Make no mistake, we’re big fans of Salesforce for its pioneering role in SaaS. It did a brilliant job of selling the idea of “No Software” and made cloud technology cool and mainstream. However, going through their guidebook that describes Salesforce for CPG I felt that they are not designed keeping emerging markets in mind — that they don’t quite get the ground realities of unique and complex markets like India’s. Let me explain why.
Their “Build globally and localize rapidly” philosophy is flawed as it tends to grossly underestimate just how different CPG sales in emerging markets are from Western markets. In a country like India, for example, more than 90% of the retail market comprises tiny retail outlets that are less than 100 square feet in area. You naturally need a lot of such outlets to serve a vast and populous country like India, which is why the country has about 15 million retailers (compared to the roughly 1 million outlets in the US). CPG companies engage hundreds to thousands of salesmen and distributors to sell to such a fragmented market.
Such a sales force needs software that streamlines their day-to-day functioning and makes it way more efficient: software that tells them exactly where to go, what to do, which products to sell, how much to sell, etc. Their workflows need to imbibe the sheer range of their everyday tasks which can include everything from order taking, retail execution, channel management, merchandising, asset audits, surveys etc. So when Salesforce talks about localizing rapidly what they essentially mean is that a local partner would need to build significantly on top of its platform to be able to deliver this sheer range of functionality. This is time-consuming and expensive, and frankly in today’s SaaS ethos of out-of-the-box solutions, this is simply not the best way.
We also found Salesforce riding the “omnichannel” hype – Omnichannel is about providing a unified shopping experience, and a unified backend system (inventory, order & billing management), irrespective of whether the consumer uses a mobile application, website or a physical store. This is largely irrelevant for more than 90% of the FMCG market which does most of its selling offline and to kiranas. Arguably, therefore, Salesforce’s focus on omnichannel is premature for India and sounds like just a way to leverage the hype around it.
Non-essential features also impact Salesforce’s pricing, making it infeasible for many brands in developing markets. For example, their most popular edition (according to their website), Lightning Enterprise, costs $150, or nearly Rs. 10,000, which is half or one-third of the average FMCG frontline salesperson’s monthly take-home pay.
Perhaps more than anything else, though, Salesforce’s lack of attention to a key player in the Indian FMCG retail ecosystem – the distributor – is what I see as the biggest problem. In the report, they talk about their common data model philosophy wherein various different functionalities interact with a common data source delivering a seamless, tightly integrated experience.
However, to truly provide such a fully integrated experience to its CPG customers, Salesforce will need a full-fledged distributor management system (DMS), which it currently doesn’t offer. In the absence of this, an FMCG company would need to shop around for a DMS vendor and then work out integration with Salesforce again, losing time and money to roll out these integrations and maintain multiple systems.
To conclude, Salesforce’s brand holds strong in the sales automation space at the enterprise level because of its excellent international reputation. But is it the right choice for Indian CPG? I would love to know more from you.