Modern Trade vs General Trade: Which is better in FMCG?
Trade is a basic economic term that includes the purchasing and selling of goods and services at the compensation paid to a seller by a purchaser. Trading in FMCG has been revolutionized in the past few years. This has become possible only when modern trade entered the FMCG market. In modern trade, eCommerce and FMCG sectors focus more on expanding reach, improving customer service, building strong communications, and boosting product visibility. Whereas in General trade, it uses old and traditional channels to sell the products to the consumers. General trade is owned by an individual and mainly focuses on a small scale. As it holds more than 80% of the market, it is one of the major sources of selling products for the companies. However, it is still an unorganized type of business, and with correct proceedings, big companies can gain profit by monitoring loopholes in General Trade. Two types: Modern Trade and General Trade What is a General Trade? It is the oldest form of selling products in the market in a traditional way. It mainly consists of local shops, standalone stores, and roadside stalls, that don't have any solid infrastructure and are operated by single owners. So, it is also called an unorganized market. It holds most of the market, so it is crucial to grab the opportunity to expand the business for big FMCG firms. Advantages of General Trade in FMCG General trade is traditional therefore no organized way of selling products in the market. With the right analysis and deeper penetration big FMCG brands will be able to reach more customers who live in remote villages, and tier-3 & tier-4 cities where modern trade is not operational. General trade holds more than 80% of the market share, which enables the big companies to fully control the customer’s needs and sell their products in general trade stores via a well-organized distribution channel. General trade stores like Kirana stores have a huge local customer base which enables more sales in rural areas. With the right approach, small retail stores can elevate sales profits. What is a Modern Trade? It is the new form of trade purely adopted from the urban phenomenon that became popular between the 1990s and early 2000s. Modern trade channels are the most efficient and well-organized form of trade for FMCG companies. It is operated by a group of people and stakeholders involving middlemen as sales reps and distributors for smooth operations. Advantages of Modern Trade in FMCG Modern trade has a well-organized sales structure that enables the brands to sell their product on a larger scale. There is a small chain involved by eliminating the role of sales reps making the whole process efficient and productive with the retail stores like supermart and hypermarts. SFA enables the big brands to audit and examine their productivity directly with the retail stores without visiting them. Enabling more profits on sales and less time-consuming. Modern trade stores are spacious and accommodate more products on shelves than general trade making them more reliable to sell products in bulk. This is also a great opportunity for big brands to do visual merchandising in retail stores to attract more customers. Challenges faced in Modern Trade vs General Trade Limited infrastructure: General trade stores lack big infrastructure as compared to Modern trade stores which is a major setback for big companies to sell their products on a bulk order. Limited reach: General trade has already penetrated the smallest neighborhoods, rural areas, and small towns which is a drawback for modern trade because supermarkets and hypermarkets are mostly limited to top-tier cities and posh locations. This leads to limited reach for big companies despite having big infrastructures, resources, and popularity. Effective Sales growth in Modern Trade and General Trade All of it leads to the point where a business's profit is determined by its sales. Only when the product is well-made, effective, and long-lasting is; it feasible for the customers. A few challenges have already been covered. For countermeasures to increase sales in both modern and general trade, refer to this section: Automatic order collection: It is one of the important phases in the sales process. Regular re-stocking helps you build a huge customer base. Pepupsales SFA plays a vital role in managing and giving the statistics of orders inventory, total orders left, and restocking needed on customer’s demand. Supply chain management: Compared with modern trade, general trade establishments have less organized and sophisticated inventory management and collaborate with regional wholesalers only. Whereas, Modern trade has access to improved logistics because of its sophisticated technological and logistical skills. GPS tracking and beat management system: General trade offers better market reach than modern trade for product selling. The best way to crack the huge profits is by GPS tracking the sales reps and providing them with productive beat routes for better deals and sales numbers because general trade is available in every part of rural areas, small towns, and remote areas. Competitor analysis: Pepupsales SFA provides a solution to analyze and audit the competitors to take necessary counter-measures to sell the product in the market. General trade is a big opportunity for companies to expand their business and beat the competitors in small-town areas. Brand recognition: Get proper insights into the brand value and visual merchandising via influencers and gain more attractive sales growth on your product. Modern trade has advanced in recent few years and big brands capture the market by increasing their brand value. Overall business growth in Modern Trade and General Trade Choosing between modern trade vs general trade is very difficult. But it is also difficult to handle both modern and general trade simultaneously. For modern trade to grow, brands should collaborate with distributors, sales reps, and stakeholders. This ensures a smooth workflow, altogether resulting in better sales, efficient product placement in stores, well-stocked inventory, and competitive pricing. Whereas, in general trade, the brand should leverage technology like pepupsales SFA to streamline the whole process. Manage and utilize the data provided by the software to target specific retail stores that have huge customer base and sell the product very fast. Constant feedback from retail stores via sales reps increases customer satisfaction as well. Some of the major pointers given below should be taken to ensure a proper workflow via Pepupsles SFA: Increase product quality and competitive pricing: With the Pepupsales SFA ensures that the customers buy the product more often and suggest necessary countermeasures like enhancement of the product quality with the right price on the market. Sales Field Automation: Pepupsales SFA is a renowned SaaS company that provides solutions to companies. A user-friendly interface specially designed for the sales reps to perform better and coordinate with the retailers on a pre-assigned beat. Conclusion: There is no doubt in saying that modern trade has revolutionized the way of selling products to customers in the FMCG sector. The difference in “Modern trade vs General trade” highlights the uncommon trade practices, supply chain medium, and different strategies. Modern trade outlets have a profound impact on the development of the FMCG sector among both, it also offers new business opportunities for big brands to reach more potential customers across urban areas. We can say that the modern sector has grown the businesses as compared to general trade, but there is so much potential in the general trade sector and a vast room to grow. Take a free demo of SFA tools provided by Pepupsales to help elevate sales to the next level.
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