FMCG advantages
What are the benefits of FMCG .
1.It is a recession proof industry.
One of the major benefit of FMCG sector is that recession can’t hamper too much. While no sector is completely recession proof but recession has a little impact on FMCG sector. During economic slow down in 2008 , Automobile, Telecom, IT and other service sector witnessed a big slow down but FMCG sector performed with stability
Nobody will stop buying grocery item or cosmetics or cold drinks because of recession. So during recession, investor need not to be worried . These products are of small value and does not require planning to buy. Consumer will always keep purchasing , even during economic slowdown. Hence the investor gets his business constantly.
This feature gives guarantee of stability to the investor, job seeker and the whole economy .
2.It is daily use product.
As the term FMCG implies it is very quick selling because it is the daily need of human. People from different class ,background or group everybody need everyday. It is hard to imagine your day without FMCG products. These products meet our day to day requirement. It does not include only grocery items alone, but also includes packaged food stuff, dairy items, confectionery products, cosmetics, personal care items. As a result , demand for FMCG remains constant.
3.High rotation of capital .
Rotation means cash in and cash out from the business. That means inflow and out flow of working capital. Working capitals are as follows.
A. Cash in hand & Bank B. Raw material value C. Value of finished goods D. Value of debtor E. Loan and advance
After how many days a cash will come out from the business is called rotation. For investor like retailer, wholesaler, distributor or the manufacturing organization, rotation of capital is very important . FMCG sector gives high rotation. In general there are 14 rotation of investment in a year. For Rs 100000 investment, one can get a business of Rs1400000 in a year. Unlike other sector money blockage is low . High rotation of investment gives a healthy ROI for the investor. As a whole the channel partner’s remains motivated.
4.Huge manpower engagement.
Because It is vast industry, it gives employment opportunity to a large number of people. May be as retailer ,wholesaler, distributor or the manufacturing organization, it gives huge employment scope. Also for the job seeker FMCG sector gives more jobs than any other sector in the country. Also FMCG sector gives employment opportunity to transport & packaging sector . It is the 4th largest sector in the economy in terms of revenue and employment. Also unlimited numbers of retailer gives employment opportunity to so many people.
https://economictimes.indiatimes.com/industry/cons-products/fmcg/fmcg-again-most-preferred-for-employment/articleshow/64267139.cms
5.Channel partner can earn a good profit .
 |
| FMCG-PARTNER-INCOME-IMAGE |
Because of high transaction & volume channel partner can earn a good amount of profit . As everybody uses FMCG product , it’s demand is high and all the channel partner can earn a good amount of profit. . In India average fmcg trade partner earn 24percent to 30percent ROI in a year. Which is a healthy ROI for trade partner.
Also read
https://economictimes.indiatimes.com/jobs/slump-hit-auto-firms-are-halving-their-fresher-intake/articleshow/70709019.cms
6.Minimum investment required for channel partner.
Even in a small town/village one can start his career as channel partner with a small amount of investment and can earn a handsome profit out of it. Even some body can start a distribution business with a low amount of Rs50000 only. Channel partner gets finished product from manufacturer and they need to focus on distribution only. No plant and machineries or factory area needed for these channel partner. Their job is to purchase and sell only. So no big investment required for channel partners.
7.Low operating cost for channel partner.
Channel partner like distributor and super stockist can run their business with low operating cost . As the finished products are supplied by the manufacturer, channel partner has nothing to do with the product and they can focus only on sell. Hence their operating cost is lower. Channel partners need to keep small godown and shop or office . They does not require any technical person or any technology to operate their business.
8.Huge market size .
Market size is huge, due to large number of buyer and seller in rural and urban market. Also because , ever body uses this category of product , demand is very high. It is the 4th largest sector in India. Market size is 4 Lakhs crore per year. Also due to growing of rural area , demand for quality product is increasing day by day. Again in India majority of population lives in rural area and growing of rural area gives higher demand.
In India there are 640867 villages and 7935 town according to census 2011. In 640867 village there are 4 million outlet and 2 million outlets are in 7935 towns. That means it is a huge market size for any manufacturing company.
9.Basic technology are easily available.
 |
| AGARBATI-MACHINE-IMAGE |
FMCG manufacturing organization can start with minimum basic technology which are easily available. Like candle and incense stick machines are very low investment oriented , also easily available in the market. Even some snacks category products can be manufactured with a small amount of investment.
Though packaging technology is changing day by day, still it is not difficult to find. Again one can take advantage of third party manufacturing process. So , any new player can enter easily in this sector.
In India we can see despite of strong presence of big MNC , unorganized sector plays a very important role. Easily available technology, cheap labour cost , availability of key raw material etc.
10.Third party manufacturing.
 |
| FMCG-THIRD-PARTY MANUFACTURER-IMAGE |
In last 15 to 20 years third party manufacturing is common . All most all the big corporate ares using thirty manufacturing process. To save transportation and labour cost, the mother company provides manufacturing process and some time basic raw material to third party manufacturer and accordingly third party manufacturer provides finished product. So, no need to change your manufacturing technology very frequently. Also third party manufacture works for multiple company and you will get expertise from them.
Also third party manufacturer hires low cost man power locally . So the mother company does not take any headache for manpower hiring and their expenditure. Like employees PF, Gratuity, medical insurance and any other benefits.
By using third party manufacturer , one can save transportation cost as well as manpower cost . Overall cost of production can be minimized in this process.
11.Cross brand publicity.
FMCG facilitates cross brand publicity for complementary product. A particular brand does publicity for another complementary brand . So as a result sale for both the product increases . Your targeted consumer loves your product but they loves so many other product also. Suppose a consumer buys tea or coffee and it is obvious that he will buy milk and sugar. This helps cross brand publicity. So it increases sale volume for each other. Even some time we see printed advertisement of biscuit on milk’s packet. So sale for biscuit rises as sale for milk rise. Also it cuts down promotion expenditure.
Pls read the article
 |
| FMCG Sales E-Book |
Pls read this book.
https://amzn.to/2zlbupV
Comments
Post a Comment