Route-to-market execution in emerging markets is expensive. Unfortunately, the greater the reach brands aspire for, the more expensive distribution becomes. It can impact a brand’s ability to grow and thrive.
Consumer brands have to contend with several other debilitating factors that are integral to emerging markets. Distribution inefficiency is on top of the list. Markets in emerging economies are primarily general trade driven and are unorganized. There is a dearth of real-time data, and along with the adoption of tech, capturing relevant data is even harder. It’s a vicious cycle.
Brands, therefore, suffer from the lack of visibility in unorganized channels including on-trade and traditional trade channels. Also, choosing the right distribution channel is as critical as pricing the product correctly.
In emerging economies, there are several touchpoints before reaching the consumer. The quantum of errors increases at each touchpoint leading to inaccuracies in order fulfillment. Such inefficiencies in the supply chain only increase the cost for brands.
In emerging markets, brands are unable to offload costs because people are not buying. But the real barriers for gaining visibility come from the reluctance of distributors to share data.
They fear losing autonomy or aren’t digitized to capture data. Without insight into tertiary sales, brands cannot forecast better for their downstream supply chain. It also impacts production planning in upstream supply chains.
To summarise quickly, brands should aim at digitizing retailers, connecting inventory positions across the supply chain, and fulfilling orders by integrating the supply chain through distribution solutions.