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05 Nov 2021

Challenges of Delivering FMCGs in the GCC

The Dynamics of Delivering Fast-moving Consumer Goods in the GCC

Fast-moving consumer goods (FMCGs) are moving faster than ever, especially in the Gulf States. The Covid-19 pandemic has wrought dramatic changes to traditional shopping habits.

In pre-pandemic times, consumers in the region would typically stop by their local supermarket or shopping mall to stock up on grocery items such as dairy, meat, fruit and vegetables, bread, and beverages on their way home from work or from picking up the kids.

These days, however, teams on motorbikes are speeding through the streets delivering FMCG items to consumers’ doorsteps as quickly as possible. The pandemic gave consumers a taste for online shopping, even for grocery items—and now there’s no turning back.

What Defines FMCG Items?

Consumer packaged goods either have a short shelf life due to perishability or are subject to very high consumer demand. They are the items that supermarkets stock at the rear section of their stores so that customers have to walk through tantalizing non-CPG items to reach them.

They include the following product categories:

  • Dairy products
  • Meat & fish
  • Fruit & vegetables
  • Toilet paper
  • Baked goods
  • Soft drinks
  • Cosmetics
  • Snacks
  • Cleaning products
  • Over-the-counter medicines

These goods have a high turnover and are sold in large quantities because they are consumed quickly and priced low. Although profit margins on these items are modest, they account for more than half of all consumer spending.

Pandemic Has Shifted the Shopping Paradigm

Faced with lockdowns, quarantines, mask mandates, and hygiene protocols, consumers began exploring online shopping options. At the same time, FMCG merchants had no option but to embrace online and omnichannel sales.

As a result, the trend towards online shopping for FMGC products is growing exponentially. While it may not yet qualify as the new normal in the Gulf States, online retail in the region is expected to account for 16.3 percent of all retail in 2025—up from just four percent in 2017.

And taking into account that the global consumer goods market is growing so rapidly, smart retailers are investing heavily in last-mile delivery logistics to cater to the increasing need for FMCG speed.

The lure of FMGCs ###

Consumers in every geography are wedded to FMCGs, which is why they move so fast. The GCC is no different and businesses that tap into this market successfully are among the most profitable in the Gulf Region.

If you’d like to know which of those business are enjoying the most success, here’s a list of the Top 10 FMGC companies in the GCC:

  • Nestlé Middle East
  • Mondelez International

  • Al Sultan Sweets

  • Addmind Hospitality Group

  • Mezzan Holding Co.

  • Kibsons International

  • Unilever UAE

  • Almarai Company

  • Samsung Electronics Company Limited

DAL Group

Online Grocery Delivery Challenges

Selling groceries and other FMCG items online is way more complicated than packing them onto supermarket shelves, opening the doors to customers, and keeping track of sales through point-of-sale software.

These are some of the challenges faced by merchants in the Gulf region wishing to add a last-mile delivery option to their already-complex retail operations:

  1. Address verification and mapping

    Home addresses are often written poorly, making them difficult to locate. Some streets are open only to larger vehicles during certain hours, while others are often closed off suddenly, with no warning. The delivery process is frequently disrupted.

  1. Order Management

    It is almost impossible to keep track of high-density, on-demand omnichannel orders using traditional pen and paper methods. Point-of-sale software is also not always up to the job. Merchants are finding that the best way to keep track of orders placed on a plethora of channels is to automate menu management in one place.

  1. Temperature control

    Due to the extreme heat that bakes the Gulf region, last-mile delivery of perishable items must be temperature controlled. That adds an extra layer of complication when it comes to the packaging of delivery items. Meat and fresh produce is kept cool in insulated box liners.

  1. Tracking inventory

With in-store shoppers emptying the shelves and online consumers testing the abilities of warehouse workers to speedily package their orders, stock-level monitoring is one of the biggest worries of omnichannel businesses.

Unless a meticulous record is kept of inventory turnover, merchants risk offering items for sale that are out of stock. Cancelled orders reflect badly on a business and are sure to turn customers off.

With thousands of items continuously on the move, it is impossible to update stock levels manually—an investment in real-time data capture software is essential.

  1. Adapting to changing lifestyles

    With the vast array of ecommerce businesses that have emerged since the start of the pandemic, consumers have become much more demanding—and far less loyal to brands.

Those in the business of FMCG retail will get left behind if they don’t follow—or, preferably, anticipate—local and international consumer trends.

Currently, the focus in the GCC is on establishing a healthy lifestyle, leading to a demand for fresh, healthy, locally produced food. Tomorrow may well see a significant shift towards vegetarian and vegan lifestyles, following the international tendency. Those stuck in a time warp may ultimately be left with warehouses full of obsolete or excess stock.

The Shipa Approach to FMCG Delivery ##

At Shipa Delivery, we handle high volumes of FMCG deliveries, chiefly comprising grocery items. We have found the following ways to deal with the delivery challenges listed in the section above:

To keep perishable items cool, we pack them in thermal bags and ice packs.

Using advanced software, we are able to translate addresses into geo-location (pin) codes that allow our drivers to find the delivery site via Google Maps. When faced with the problem of incomplete addresses, our customer support team will try to resolve the issue through contact with the customer via WhatsApp, SMS, or a telephone call.

We offer complete transparency during the delivery process. Most merchants’ systems are integrated with ours. As soon as they receive an order, it is passed directly to our system. The merchants can monitor any action we may take regarding these orders, such as calling customers, successful delivery attempts, and failed delivery attempts (with reasons) on a business dashboard in real-time. They can extract reports from the dashboard and capture raw data for analysis.

End customers can track their orders online at shipa.com. In addition, they receive a tracking link by SMS, WhatsApp, or on the Shipa Delivery app which allows them to keep an eye on their package at all times.

Why a Slick FMCG Supply Chain is so Crucial ##

The logistics supply chain is the key to success when it comes to FMCG shipping solutions. Customers want their orders delivered speedily and on time. Perishable goods such as meat, fish, and fruit should be fresh and vegetables crisp when customers receive them.

Logistics managers need to keep tight control of the complex schedules and be constantly plotting the most efficient delivery routes in accordance with the changing traffic situation on the ground.

Most importantly, an electronic/digital system must be installed to accurately track the movement of products between the merchant and the recipient. FMGC companies that cannot maintain a well-oiled and streamlined supply chain tend not to last long amid an industry in which speed is of the essence.

The FMCG Business is Booming ##

Plenty of companies are getting FMCG fulfilment right and, for them, business is flourishing.

As an indication of how lucrative the FMCG business is, in 2017, the global market was valued at $10,020.0 billion (USD). By 2025, it is expected to swell to a whopping $15,361.8 billion.

In other words, the fast-moving goods business has the potential to generate fast-moving profits. The following companies are among those that know this all too well, as indicated by their immense levels of revenue:

  • Nestlé—USD91.1 billion in revenues (2018 figures)
  • Procter & Gamble—USD64.5 billion
  • PepsiCo—USD63.5 billion
  • Unilever—USD60.5 billion
  • AB InBev—USD56.4 billion
  • JBS—USD49.6 billion
  • Tyson Foods—USD38.2 billion
  • Coca-Cola—USD35.4 billion

  • L’Oréal—USD29.3 billion

  • Philip Morris—USD28.7 billion

What is the Future of FMCG Delivery? ##

While Amazon, the world’s largest retailer, is still struggling to get its drone deliveries off the ground, a company called Wing is happily delivering FMCGs to residents of Logan, a city in Australia’s eastern Queensland state.

Wing promises delivery ‘within minutes’ of items such as coffee, milk, over-the-counter pharmaceuticals, hardware—and even sushi.

The company says it made more than 50,000 drone deliveries in Logan—which it has dubbed the ‘Drone capital of the world’—in the first eight months of 2021.

In other geographies, drone delivery companies are still negotiating clearance with aviation authorities, but there is no doubt that in time permission will be granted. The skies above will then be buzzing with small, parcel-carrying autonomous aircraft.

Perhaps that will be the ultimate in FMCG delivery performance, as it’s hard to imagine how goods could be delivered any faster than the speed of flight. Until then, though, traffic density and the quality of road transport infrastructure will dictate just how fast consumer goods can be moved.