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FMCG is one of the most critical industries in the modern world. The size of the global FMCG market, estimated to be worth 11,490.9 billion USD in 2021, is expected to grow to 18,939.4 billion USD by 2031, according to a report by Alliedmarketresearch. This industry is responsible for supplying essential commodities to the end user. Trade is an integral part of this industry, as it deals with how the goods reach the consumers.
What do you mean by general trade and modern trade in FMCG?
General or traditional trade can be defined as the trade conducted by local stores or shops that cater to the needs of local consumers. These typically include retailers, wholesalers, distributors, and corner stores. They work to satisfy the typical requirements of the end consumer and deal with small amounts of products.
Modern trade denotes a more structured and sophisticated system of chain retailers like mini-markets, supermarkets, and hypermarkets. They are found only in cities and are typically corporate-owned.
What is the difference between general trade and modern trade in FMCG?
Modern and general trade are slightly different from each other. The general trade and modern trade in FMCG differences based on different metrics are as follows:
Demand and order placement
The demand for general trade is seasonal or erratic, whereas, for modern trade, it is consistent. Similarly, the order placement for general trade depends on the stock levels, and in modern trade planned strategically to satisfy promotional expectations.
Deliveries and order fulfillment
Delivery timings are not given much focus for general or traditional trade, whereas, for modern trade, on-time delivery of goods is of utmost importance. In the case of general trade, order fulfillment can be done at any time, whereas, for modern trade, it must be precise to set time slots previously.
Product range and economy
The product range for general trade is limited, whereas extravagant for modern trade. Retailers can absorb costs and offer promotional discounts to encourage sales in modern trade, whereas products are sold on MRP in traditional trade.
Customer interaction
Since there is direct contact between retailer and customer in traditional trade, the interactions are on a personal level. In modern trade, customers select what they want before checking out. As a result, the buyer has more options and can compare several products before choosing one, and the interaction with the retailer may also be minimal.
Difference between General Trade and Modern Trade in FMCG
Both general trade and modern trade in FMCG have their advantages. General trade, due to its accessibility and proximity to residential zones, can be more advantageous for clients.
Modern trade, however, typically provides a more excellent choice of goods and better customer support. Because fewer middlemen are involved and a higher turnover in modern trade, FMCG companies find it more effective. Modern trade, however, can be challenging for new businesses to enter because it necessitates substantial investments and an advanced distribution network.
How general trade and modern trade in FMCG affect the logistics operations
Fortune Business Insights estimates that the international FMCG logistics market will increase from 105.85 billion USD in 2021 to 131.54 billion USD in 2028. The FMCG sector needs general trade to ensure that goods are delivered quickly and effectively to customers. Organizations dealing with general trade often transport goods straight to retail establishments like convenience stores and supermarkets. But since competition is high, businesses should invest more in logistics planning to ensure that the correct products are given to the consumers at the correct price.
The effect of modern trade can be seen mainly in the eCommerce industry. This trade allows the sale of goods across different geographical regions. The global FMCG market is also expected to expand at a 6-7% yearly rate by 2025, according to a study by McKinsey. So, businesses should invest in developing flexible logistics solutions for different regions.
Conclusion
Mojro is a future-ready platform that enables FMCG businesses to handle business variability, Plan and optimize end-to-end logistics and cut costs for smoother operation and profitability. The multi-leg planning and route optimization solutions by Mojro allow businesses to deliver commodities effectively with minimal costs and in the least possible time.
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