(Yicai Global) June 2 -- More and more companies trading fast-moving consumer goods (FMCG), products that sell quickly at relatively low cost, regard reverse order as a breakthrough opportunity as the industry growth slows down. Recently, some well-known FMCG brands including Wufangzhai, Mondelēz and Budweiser have launched reverse customized products on Tmall.com.
Industry insiders think that China's FMCG industry is trying to project a new impression of customization within the context of consumption upgrade and growing consumer demand for personalization. In reverse order in retail market, what is first becomes last and what is last becomes first, moving the production process for certain products from the end to the beginning, giving customers a bigger say in their choice of the product they want to buy, namely customizing.
Attempts at Reverse Order
During China's traditional Dragon Boat Festival earlier this week, Wufangzhai that has a long market history launched do-it-yourself (DIY) Zongzi, traditional festival specialty, stuffing activity by partnering with Tmall.com. Users can make their own choices from more than 10,000 ingredients to make Zongzi stuffing according to their taste.
The reverse order of Zongzi was Wufangzhai's attempt to craft a new selling point in the era of new retail and consumption upgrade, Ma Jianzhong, the company's e-commerce director told Yicai Global. As personalized demand becomes increasingly prominent, long-established brands should shake off their arrogance as industry leaders with large-scale production capacity to cater to the demand of the new-generation consumers, Ma said.
Another company that has adopted reverse order is Oreo, a brand under Mondelez, one of the world's largest snacks companies. In late May, Oreo introduced to the market a limited-edition music gift box. More than 30,000 sold out within 12 hours. Oreo also offered them under customized packaging, allowing buyers to choose their favorite patterns, colors and greetings. On Xianyu, an app for selling idle items, Oreo's music gift box found buyers at hundreds or even nearly 1,000 yuan each.
Supply Chain Reconfiguration
To date, around 40 brands from seven industries have tried reverse order on Alibaba's Tmall.com, said Qin Xiao, senior executive of Tmall's FMCG division.
In the past, social interaction could only take place in the end, and it was difficult to integrate social experience with the sale of products because it required involvement of both the supply chain and transaction connection, Qin said.
In the traditional business model, the whole process from product design and packaging to the delivery to the consumers takes two or three months, which involved pre-determination of the volume of production, as well as the procurement of raw materials, packaging materials and consumptive materials.
Therefore, reverse order faces the same problem, whether it is for hand-made Zongzi or machine-made Oreo biscuits.
Reverse order of Zongzi is difficult. It is a challenge to enterprises' ability of collecting and applying the big data about the consumer demand. In addition, software and hardware of production workshop and supply chain of the entire process from purchase to manufacture need to be reconstructed. More importantly, the company needs to influence the user perception at all levels, Ma said.
In his view, the reverse order is a reverse value chain reconstruction from manufacturer-market-consumer process to consumer-market-manufacturer one.
Zhu Danpeng, a food researcher at China Brand Research Institute, told Yicai Global that the management of fast moving consumer goods enterprises "under one fixed-principle" has now become a history. Reverse order is the result of accurate layering and breakdown of consumer groups.
Many FMCG enterprises have to transform. Actually, FMCG enterprises including Budweiser, Mondelez and Wu Fang Zhai are facing challenges brought about by changes in consumption trends. For instance, Budweiser faces weak beer market in China, while Mondelez faces the challenge prompted by Chinese consumers turning to healthier leisure foods due to their increasing concern on health.
It is worth noting that reverse order paves the way for new opportunities for FMCG enterprises.
Dong Xin said from the perspective of profits, pricing of customized products is more flexible for online business, and the actual profits from reverse order products by enterprises are noteworthy. E-commerce platforms can provide experiences combining contents and products for consumers in a better, faster and effective manner to improve sales volume.
Through customization, manufacturers can communicate with consumers through the right language, mechanisms and products to drive sales growth, Qin Xiao emphasized.