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Amol Ghemud 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.
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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.
The upGrowth.in Blueprint:
What D2C Can Learn From FMCG Giants
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1. Beyond the Click
FMCG dominates through **Ubiquity**. D2C must evolve from single-channel reliance to a true **Omnichannel Hybrid** approach.
Integrate with offline retail and quick commerce.
Focus logistics on **Cost Efficiency**, not just speed, for margin stability.
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2. Building Long-Term Equity
FMCG creates demand, not just converts it. D2C needs to shift budget towards **Brand Building** to lower long-term Customer Acquisition Cost (CAC).
Adopt the 60/40 rule (Brand vs. Performance marketing).
Ensure product and brand story consistency across all channels.
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3. Portfolio Discipline
FMCG manages complexity efficiently. D2C must use data to develop products that fill **specific market gaps** rather than just expanding the catalog.
Use first-party data for rapid, targeted R&D.
Differentiate SKUs for exclusive D2C vs. retail offerings.
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.
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.
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.
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.
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.
A new D2C brand can significantly de-risk its launch by adopting the rigorous market analysis playbook perfected by FMCG giants. This approach moves beyond surface-level trends to build a foundation on proven consumer demand and regional nuance. Adopting these strategies ensures your products are not just innovative but also deeply relevant from day one.
To apply these principles for a stronger market fit, you should:
Study Existing Insights: Analyze market reports and competitor data from large FMCG players to understand broad consumer preferences for organic and natural skincare in India.
Implement Localization: Go beyond a one-size-fits-all product by incorporating traditional, indigenous botanical extracts that resonate with local customs and address specific regional skincare concerns.
Identify Niche Demands: Use the FMCG framework to pinpoint specific, underserved needs within the organic skincare space, allowing you to create a unique brand identity rather than competing directly.
By learning from the extensive groundwork laid by companies over their established 100 years, you can focus your resources on a validated niche, building a more sustainable business. Exploring their full strategy reveals more about creating a lasting brand presence.
To scale beyond a core online audience, D2C brands must adopt the sophisticated, multi-channel distribution networks that FMCG companies have perfected. An omnichannel strategy is essential because it meets customers wherever they are, building brand presence and accessibility that a digital-only model cannot match. This hybrid approach is key to capturing a larger market share.
A D2C brand can adapt these proven distribution tactics by:
Exploring Third-Party Logistics (3PL) Partnerships: Collaborate with 3PL providers that have extensive networks to manage warehousing and shipping, optimizing your direct-to-customer delivery capabilities efficiently.
Leveraging Online Marketplaces: Expand your digital footprint by listing products on established e-commerce platforms, tapping into their massive existing customer bases.
Securing Strategic Retail Placements: Follow the model of Pepsico by identifying key retail partners, from small local shops to larger chains, to make your product visible on shelves where consumers are already shopping.
Understanding how these channels work together is fundamental to building a brand that is as ubiquitous as it is desirable. The full article provides deeper insights into structuring these partnerships.
The core difference lies in the trade-off between mass reach and authentic connection. FMCG companies historically used celebrity endorsements for broad, instant credibility, while D2C brands often use micro-influencers for targeted, high-engagement marketing that builds community trust. Your choice depends entirely on your brand's goals, budget, and target audience.
When evaluating these two paths, you should consider the following factors:
Authenticity and Trust: Micro-influencers typically offer a more genuine connection with their niche followers, which can be more persuasive for specialized products like organic skincare.
Budget and ROI: Celebrity campaigns require significant investment for wide exposure, whereas a network of micro-influencers can deliver a strong return on investment through targeted conversions.
Audience Alignment: A D2C brand must decide if its goal is to reach millions with a general message or to deeply engage a smaller, more relevant community that is more likely to become loyal customers.
Many successful brands now blend these strategies, using different tiers of influencers for different campaign goals. A closer look at how FMCG giants structure their campaigns can offer valuable lessons for any brand.
The most crucial lesson is that product consistency and quality are the bedrock of brand trust, an area where FMCG companies excel due to decades of refinement. For a D2C skincare brand, emulating these practices means establishing rigorous standards that guarantee a reliable and safe customer experience every time. This foundational trust is what turns first-time buyers into lifelong advocates.
To build this trust, a D2C brand should focus on:
Localized and High-Quality Sourcing: Just as FMCG companies localize, you should source high-quality, indigenous botanical extracts. This not only supports local economies but also creates a product story that resonates with Indian consumers.
Rigorous Quality Control: Implement multi-stage quality control measures throughout your manufacturing process, ensuring every batch meets international standards for safety and efficacy.
Transparent Supply Chain Management: Study the supply chain practices of established companies to build an efficient and transparent system that guarantees the integrity of your organic ingredients from source to final product.
Mastering these operational elements is just as important as your marketing. The full content explores how these behind-the-scenes efforts translate directly into market leadership.
D2C startups can emulate the disciplined brand-building techniques of FMCG giants to create powerful, lasting emotional connections with consumers. The key is to adopt their focus on crafting a compelling and consistent brand story that goes beyond just product features. This strategic approach to branding is what turns a simple product into a household name.
To build a brand with such enduring appeal, you should:
Craft a Compelling Brand Story: Define your brand's core values and unique narrative. FMCG leaders are masters at connecting with consumers on an emotional level, and your story should do the same.
Establish Clear Market Positioning: Determine exactly where your brand fits in the market and who your ideal customer is. This clarity informs all marketing campaigns and product development decisions.
Maintain Consistent Messaging: Ensure your brand's voice, visuals, and values are uniform across all platforms, from social media to packaging, building recognition and trust over time.
These foundational strategies, refined over decades, provide a roadmap for creating a brand that not only sells but also inspires loyalty. Diving deeper into these techniques reveals how to apply them to a modern D2C model.
FMCG companies master localization by conducting deep research into regional needs and incorporating cultural elements directly into their products and marketing. A D2C beauty brand can adopt this hyper-targeted approach to avoid a generic identity and connect more deeply with consumers across India. This strategy demonstrates a genuine understanding of the customer's world.
To effectively localize your D2C beauty products, you can:
Incorporate Traditional Ingredients: Research and use indigenous botanical extracts or formulations that are popular and trusted in specific regions, such as turmeric in one area or neem in another.
Address Regional Skincare Concerns: Develop product variations that cater to different climates and prevalent skin issues, like creating a more hydrating formula for dry regions and a lighter one for humid areas.
Tailor Marketing Campaigns: Collaborate with regional micro-influencers and create marketing messages that resonate with local languages, festivals, and cultural values to build a stronger community connection.
By following this playbook, your brand can achieve a level of relevance that national campaigns often miss. The complete analysis offers more examples of successful localization in action.
A D2C organic brand can build a powerful loyalty program by mirroring the FMCG focus on personalized value and exclusive rewards. The goal is to make customers feel recognized and appreciated, transforming transactional relationships into long-term loyalty. This structured approach ensures every reward reinforces your brand's value proposition.
Here is a stepwise plan to implement such a program:
Define Tiered Rewards: Create a system where customers earn points for purchases, reviews, and referrals. Offer rewards like discounts, free samples, and exclusive access to new products.
Personalize Recommendations and Offers: Use customer data to provide tailored skincare or product consultations and send personalized offers based on their purchase history and stated needs.
Create an Insider Community: Give loyal members early access to new launches, special content, and a direct line to your product development team, making them feel like true brand partners.
Integrate and Promote: Ensure the program is seamlessly integrated into your website and promote it actively across all marketing channels to drive enrollment and engagement.
This structured program moves beyond simple discounts to build a defensible competitive advantage. Further details in the article explain how to measure the success of these initiatives.
The future of retail is a hybrid model where the distinction between online and offline channels dissolves, a shift FMCG companies are already navigating. For D2C brands, this means that a purely digital presence will become a competitive disadvantage. To thrive, you must start building a flexible, omnichannel foundation today to meet future consumer expectations.
To prepare for this evolution, D2C brands should:
Invest in a Unified Customer Experience: Ensure your brand's presence, pricing, and promotions are consistent whether a customer is shopping on your website, a marketplace, or in a physical store.
Build Strategic Retail Partnerships: Begin exploring collaborations with wholesalers and retailers that align with your brand, treating physical shelves as a powerful channel for discovery and sales.
Develop Flexible Logistics: Optimize your supply chain for both direct shipping and bulk distribution to retail partners, creating an agile system that can adapt to changing market demands.
Brands that proactively build this integrated ecosystem will be best positioned for long-term growth. The full analysis explores emerging trends in retail partnerships that D2C brands can act on now.
The most common mistake is focusing exclusively on the product and its features while neglecting to build a strong, emotionally resonant brand identity. FMCG leaders understand that people buy into stories and values, not just utility. A resilient brand is built on a clear identity that creates a deep connection with its audience.
To avoid this pitfall and build a stronger brand, you must:
Define Your Brand's “Why”: Before you sell a single product, articulate your company's core purpose and values. This “why” becomes the heart of your brand story and emotional appeal.
Establish a Clear Positioning: Do not try to be everything to everyone. Identify your niche audience and craft a unique brand position that speaks directly to their needs and aspirations.
Create an Emotional Connection: Use storytelling in your marketing, from your website's “About Us” page to your social media content, to build a narrative that customers can connect with on a personal level.
Brands like Coca-Cola sell feelings of happiness and connection, not just a beverage. Adopting this mindset is crucial for long-term success, and the article offers more guidance on crafting your narrative.
D2C brands can solve their scaling challenges by adopting the hybrid distribution models that allow FMCG giants like Pepsico to be available on every highway and in every small town. The solution is not to replicate their massive infrastructure but to learn from their multi-pronged approach. This involves moving beyond a single-channel, direct-shipping model.
To overcome this distribution hurdle, you should:
Develop Regional Distribution Hubs: Instead of shipping everything from a central warehouse, partner with third-party logistics (3PL) providers to create smaller, regional hubs that reduce shipping times and costs.
Form Partnerships with Local Wholesalers: Identify and collaborate with regional wholesalers and distributors who already have established networks with small retailers in tier-2 and tier-3 cities.
Leverage Online-to-Offline (O2O) Models: Explore partnerships that allow customers to order online and pick up from a local partner store, blending digital convenience with physical accessibility.
This diversified approach is the key to achieving widespread availability. The full piece breaks down how to identify and vet the right logistics and retail partners for your brand.
An electronics D2C brand can greatly enhance product consistency and trust by adapting the disciplined supply chain practices perfected by FMCG companies. The key is to shift from a purely reactive process to a proactive system of controls and strategic sourcing. This ensures every product that reaches the customer meets an unwavering quality standard.
Here is a practical process for implementation:
Map and Analyze Your Current Supply Chain: Create a detailed visualization of your entire supply chain, from component sourcing to final assembly, to identify potential weaknesses or inefficiencies.
Identify Local Sourcing Opportunities: Research and vet local suppliers for high-quality components to reduce dependency on international shipping and improve turnaround times.
Implement Multi-Point Quality Control: Establish rigorous quality checks not just at the final stage but also when raw materials are received and during key assembly phases.
Study Logistics Efficiency Models: Analyze the distribution networks of companies like Coca-Cola to learn how they maintain product integrity and availability across vast regions.
This methodical approach builds a robust operational backbone for your brand. More insights on establishing these quality control measures are available in the complete article.
Many D2C brands struggle with loyalty because they maintain a purely transactional relationship with customers instead of building a community. The solution lies in adopting the FMCG playbook for loyalty, which focuses on creating ongoing value and personal connection beyond the initial purchase. This transforms one-time buyers into repeat customers and brand advocates.
The problem is a lack of a structured retention strategy. To solve it, you can implement an FMCG-style loyalty program by:
Offering Personalized Recommendations: Use purchase data to suggest products that fit a customer's specific needs, showing that you understand them as an individual.
Providing Rewards for Repeat Purchases: Implement a points-based system that unlocks discounts, free products, or other perks, giving customers a tangible reason to return.
Granting Early Access and Exclusive Offers: Make loyal customers feel like insiders by giving them first access to new product launches and special promotions not available to the general public.
This approach builds a powerful moat around your brand that competitors cannot easily replicate. Discover more about structuring these programs for maximum impact by reading the full content.
Amol has helped catalyse business growth with his strategic & data-driven methodologies. With a decade of experience in the field of marketing, he has donned multiple hats, from channel optimization, data analytics and creative brand positioning to growth engineering and sales.
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