To ensure maximum efficiencies, FMCG brand owners must look at all cost drivers. Marketing, sales, logistics and finance are important costs elements in the brand P&L. To many brand owners, it can be beneficial to outsource these big parts of the value chain. Either in a full or partial outsourcing setup.
Savings provided by Conaxess Trade are key to ensure the ongoing profitability – Conaxess Trade will in almost any case be more efficient compared to every standalone setup of a brand. Savings can be up to 40-50% compared to a standalone setup of a brand with a significantly improved performance for the brand and the customers.
“Biggest saving occurs in a full-service outsourcing, where we take over all local operations of a brand. Savings come from the better coverage of Conaxess Trade to every standalone setup (critical mass) and the removal of duplicated functions, e.g. customer service, accounting, finance, warehouse management, demand planning, etc. Depending on the specific needs, the outsourcing operations at Conaxess Trade are customized to suit the specific the brand owner’s situation.”
– Uwe Thellmann, Group CEO, Conaxess Trade.
One of the important reasons for considering outsourcing as an FMCG company is the need for skilled expertise with local knowledge. Outsourcing gives brad owners access to personnel resources which are not available internally, and in some cases, it is not possible for brand owners to hire/keep full-time employees to do the certain task in-house.
“FMCG companies would need dedicated external teams to understand the local requirements, design adapted marketing communication, address the needs of local retail and other channels’ customers. In addition, they would need to have different retail sales forces and logistics/financial offerings, to service the local market.”
– Uwe Thellmann, Group CEO, Conaxess Trade.
A strategic outsourcing partnership provides brand owners with best-in-class services which increases their competitive advantages. This can outpace competitors who haven’t yet realized the benefits of outsourcing.
In an outsourcing partnership with Conaxess Trade, brand owners get a dedicated, passionate, local sparring partner with wide knowledge about the FMCG business, market structure, consumer habits and trends. The most important responsibility for us is to take good care of your brand: to make it grow and develop. We have more than 60 years of experience and strong local presence in the six countries which we operate in (Denmark, Sweden, Norway, Finland, Austria and Switzerland).
As early results of the pandemic, the buying habits by private and professionals have and will change – we have not seen all the impacts of the pandemic yet. This urge many FMCG brands owners to accelerate internal transformations and organizational restructuring to free up resources such as cash, capital and facilities.
When tasks related to FMCG brand owners’ route to market are allocated to an outsourcing partner, they release internal resources which can be put into effective use for other purposes. It allows them to spend time and efforts on their core competencies and mission. Additionally, the organization free up capital for further investments in e.g. technology or in developing new and better products or services.
Private labels and retailers’ brands are new and strong competitors in nearly all FMCG categories, which strengthen the need for constant progress and visionary brands. In an outsourcing partnership, the FMCG brand owner is still responsible for the product development, initiatives, innovations and creative marketing. This is key in the long-term survival strategy of a brand, especially as the global Covid-19 crisis has affected what consumers buy, how they buy it and when they buy it.
“More than ever, product development cycles, creativity and innovation are very critical if a brand want to stay relevant, top of mind, build loyalty and continue its growth path. I believe that this part of the FMCG value chain is changing very fast and it needs to be a high priority to FMCG brand owners. At Conaxess Trade, we provide the brand owner with data, insight and local knowledge which can help you in this process.”
– Uwe Thellmann, Group CEO, Conaxess Trade.
In the FMCG business, companies need to move fast – as the abbreviation indicates – to keep up with the competitors and to meet the consumers’ shifting preferences and needs. A flexible outsourcing setup can accelerate the execution of e.g. product launches, new market entries, campaigns, etc.
Additionally, in an outsourcing partnership, fixed costs are made flexible and brand owners can upscale and downscale the setup – including Field Sales, Brand Management, Key Account Management and Back Office – depending on both internal and external circumstances.
“The route to market setup of a FMCG brand owner always needs to be adaptable to unexpected changes. In uncertain times, especially during and after a pandemic, the need for efficiency, speed and flexibility increases. These factors are among the main drivers for outsourcing today. We expect to see more FMCG brands choosing outsourcing solutions in the field of marketing, sales and logistics in the coming months and years, since it makes the companies more resilient to dramatic changes in the external environment.”
– Uwe Thellmann, Group CEO, Conaxess Trade.
One size doesn’t fit all. Conaxess Trade is specialized in customized business models and tailor make each outsourcing partnership to the specific brand.
In general, the FMCG business is constantly under pressure to further improve efficiencies, costs, ways of working, etc. The value chain in FMCG has become very transparent during the last decade. The professional development of private labels by retail customers, makes the value creation transparent. Additionally, the very tough competitive environment on the brand owner and production side within Europe and the tough competition between retail customers, make pricing structures transparent.
Ongoing tenders for best offers, tough trade negotiations, aggressive retail sales prices do not allow big margin build-up on any level of the value chain.
The negative economic effects of the Covid-19 crisis and a lower spend by consumers put a huge pressure on the retail industry – and effectively, a huge pressure on FMCG brand owners.
“We will probably see an increased tendency towards private labels, since it offers consumers a cheaper version. To activate sales, retailers can reduce prices and thereby increase the cost pressure on brand owners. This puts brands in a tough position and outsourcing the value chain fully or partial can in many cases be the best solutions to reduce costs and maintain a strong position in the market.”
– Uwe Thellmann, Group CEO, Conaxess Trade.
Customer satisfaction is key to any business, especially in a competitive environment such as FMCG. As we have seen with the pandemic, brands’ supply chains can be heavily affected very quickly due to unpredictable issues. This calls for an evaluation of brand owners’ supply chain and route to market setup.
When outsourcing warehousing and logistics, brand owners have stocks on ground in the specific country instead of having their own warehouse far away. In that way, the goods are closer to the customers which is a great advantage and minimizes some of the risks.
“This has proven to be essential to many brands in our portfolio, especially in the beginning of the pandemic. Having an outsourcing partner, like Conaxess Trade, FMCG brand owners can increase the customer satisfaction since our buffer ensures, that we have enough products to deliver for several weeks. Additionally, we bundle different products and thereby deliver full-loaded trucks to the customers from our warehouse – this is what the customers prefer due to the effectiveness and a lower number of trucks.
Another advantage of outsourcing is the synergy effect across brands and products. We are proud of our strong portfolio which includes some of the world’s most ambitious brands. We only work with third party brands – we do not have our own brands which we need to prioritize higher than your brand. Our portfolio increases our negotiation power towards trade, and it gives us a powerful voice and impact. The brands in our portfolio have for several years – some for decades – benefitted from outsourcing to us.”
– Uwe Thellmann, Group CEO, Conaxess Trade.
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