What is FMCG?—A Definition
Updated · Jun 03, 2022
Many ecommerce businesses often focus on selling slow-moving products, such as books or electronics.
While there is nothing wrong with this business model, it can be beneficial for online entrepreneurs to learn about the world of FMCG.
The world of FMCG is unique and offers many opportunities to capitalize on local markets especially, but what does FMCG stand for?
What Is FMCG?
FMCG stands for “fast-moving consumer goods”, and refers to products that are frequently bought, cheap, and that often have a shorter shelf life than other goods.
These are “everyday” purchases, such as food items, medicine, hygiene products, and low-end luxury goods like cigarettes.
They are “fast-moving” because they leave selves quickly, and they are usually “consumable”, meaning they get used up before more has to be purchased.
Due to their nature, FMCG requires a different approach to marketing and distribution than “slow-moving consumer goods” (SMCG)
CPG vs FMCG
The terms FMCG and CPG (which stands for “consumer packaged goods”) are often used interchangeably.
Such use isn’t completely incorrect. FMCG is a subset of CPG, and so all fast-moving goods are consumer packaged goods, but not all CPG are fast-moving.
The meaning of “F” in the FMCG is key: the speed at which the products leave the shelf is the main difference.
As such, regular CPGs usually have a much longer shelf life, or may never go bad at all.
We’ll provide some examples to give a clearer picture of what FMCG are, and how they may differ from CPG.
Some common examples include food items, such as cereal, pasta, soda, spices, and canned goods; hygiene items, such as soap, shampoo, and toothpaste; and household items, such as cleaning supplies, paper towels, and trash bags.
Trending items can also temporarily be classed as FMCG until they lose demand.
In general, FMCG products are those that are purchased frequently and have a relatively low price point.
On the other hand, CPGs can include things like stationary, makeup, and even clothing items like socks.
Another point to consider when distinguishing between CPG and FMCG is volume. A store will sell bread and milk all day, but may only sell a few pens.
The FMCG Industry
This industry is one of the world's largest and most competitive industries, due to the fact that the products are in high demand, and available at low prices.
Some of the industry's biggest leaders are Procter & Gamble, Nestle, Unilever, Coca-Cola, and PepsiCo. Most were founded in the late 19th and early 20th centuries, and this highlights something important about the industry—the leaders have had a hold for decades, and have the stability that comes with a long-existing infrastructure and build-up of capital.
This also means that most businesses selling FMCG are reselling these giants’ products. Naturally, it can be difficult for newcomers to break in.
Not impossible, though. Small-time FMCG companies see the most success in local markets. There has been an increase in demand for locally sourced goods, and FMCG is the easiest type of good to make locally.
Baked goods, craft beer, pickled produce, and so on are all things that can be made on a small scale and sold quickly locally.
By embracing a “click-and-mortar” setup, traditional sellers can transition into ecommerce, and improve their hold on a local market. Staying local also helps small producers overcome one of the big challenges to selling FMCG…
Because FMCG is so often perishable, the distribution of them requires specific supply chain considerations. This means that efficient and timely distribution is essential in order to minimize wastage and maximize profits.
For food items, in particular, special packaging, and a “cold chain” storage system are required. This means goods must be kept refrigerated from the FMCG manufacturing line, in the trucks and ships that transport them, and all the way to the reseller or final customer.
When such a system fails, it can be disastrous. The “F” in the FMCG meaning also indicates how quickly things can go wrong.
Items can spoil, and smaller businesses with a limited output could suffer crippling losses. During the covid lockdowns, this was one of the biggest challenges to FMCG, while SMCG sellers were able to endure a bit longer.
As such, smaller sellers looking to sell FMCG need to take care with their order fulfillment, in order to be prepared for any unforeseen circumstances.
Marketing is an interesting aspect of FMCG, because as with the rest of the industry, it favors big brands that are well established, while newer sellers are left playing catch up.
Small FMCG businesses are best served by focusing their marketing on their local area
A boon for small sellers in this regard is the ability to sell and advertise on the Facebook marketplace, as it can be restricted to a local area.
WhatsApp ecommerce is another valuable tool, as it can digitalize small everyday transactions for local businesses like takeouts, bakers, florists, etc.
Now you know what FMCG is, and some of the particulars around it.
While it’s an industry dominated by big brands, there’s room for local sellers to leverage ecommerce to get a boost in local markets.
Just keep in mind that it’s a high turnover business, with the bulk of profit margins in the volume of products sold, rather than in each individual one.
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Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.