With the spike in the pandemic-led changes, the behavior patterns of the Indian consumers have largely metamorphosed. The key FMCG brands have witnessed a higher penetration into the rural and semi-urban parts of India, marking a paradigm shift in the growth story of the Indian FMCG sector. According to the Indian Brand Equity Foundation data, the Indian FMCG market is expected to grow at a CAGR of 14.9% to reach US$ 220 billion by 2025, from US$ 110 billion in 2020. In April-June 2021, the domestic FMCG market saw an increase of 36.9% YoY. Furthermore, according to a Nielsen study, the rural FMCG consumption increased 58.2% YoY in September 2021 which was 2x more than the urban consumption (27.7%).
With the sector’s growth and penetration perspective in mind, leveraging the 3PL services could be a game changer for the FMCG brands. Having said this, the FMCG brands still have a long way to go before they can comprehend and leverage the immense potential that an effective 3PL service provider can bring to them. 3PL companies can offer a range of services right from streamlining procurement, distribution, and reverse logistics, to ensuring smoother supply chain networks across both the rural and urban markets. It is interesting to see how 3PL service providers are emerging as significant entities in the bigger growth and success picture of FMCG brands not just in India but across the globe.
Let’s dive into the benefits that a 3PL service provider could bring to an FMCG brand:
The way forward:
According to a UK-based market research firm Technavio, the 3PL market in India is expected to grow at a CAGR of 8%, and is set to be valued at US $10.74 billion, from 2021-2025. While most of these 3PL service providers offer end-to-end logistics solutions, including warehousing, inventory management, shipping and last-mile delivery, there is still a huge scope for growth which is now being propelled by tech driven logistic enablers. With a clear emphasis on streamlining operations and driving efficiency, 3PL service providers are now actively working towards creating customized solutions while leveraging AI, emerging tech and a deep domain customer understanding to provide value to their FMCG clients. This surge of such tech enabled and value driven 3PL partners are set to drive the growth of the FMCG sector and revolutionize this sector like never before!
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