In the dynamic landscape of Fast-Moving Consumer Goods (FMCG), companies face unique challenges when trying to implement unified commerce, primarily due to the lack of direct control over retail front-end operations. Sanjay Singal, the Chief Operating Officer for Dairy & Beverages at ITC Ltd., shared valuable insights on ITC's journey and strategies in embracing unified commerce during IReC X D2C Summit 2024.

Unified Commerce vs. Omnichannel: A Critical Distinction

Unified commerce goes beyond the omnichannel approach by integrating all systems, databases, and processes to provide a seamless consumer experience across both digital and physical platforms. For traditional FMCG players like ITC, this integration is particularly challenging due to the fragmented nature of retail outlets, which often lack automation and operate on cash transactions. Singal emphasizes that while omnichannel ensures a consistent customer experience across different touchpoints, unified commerce aims to unify the entire backend to maintain a single, coherent view of the consumer.

ITC's Initiatives in Digital Transformation

Despite these challenges, ITC has made significant strides in digital transformation, particularly post-COVID. The pandemic underscored the importance of digital channels, leading ITC to launch the ITC e-Store. This platform aims to offer the entire range of ITC products, including new launches that typically face distribution challenges. Additionally, ITC ventured into the food tech space with three Direct-to-Consumer (DTC) brands in Bengaluru and Chennai: Aashirvaad Soul Creations, Sunfeast Baked Creations, and ITC MasterChef.

“These initiatives allowed us to understand and excel in the D2C space, leveraging real-time feedback and ratings to continually improve our offerings. The success of these ventures has provided ITC with valuable lessons on managing consumer experiences directly, despite the inherent challenges of the FMCG sector,” said Singal.

Leveraging Consumer Insights and Data

One of the primary benefits of unified commerce for FMCG companies is the ability to gather real-time consumer insights. Traditionally, FMCG brands relied heavily on mass distribution and broad advertising campaigns. However, with the rise of modern trade, e-commerce, and quick commerce, companies like ITC can now gain detailed insights into consumer behavior. Singal cites examples of how consumer data helps ITC understand purchasing patterns, such as why a consumer buys a pack of six coconut water bottles online but only a single bottle in a retail shop.

ITC has also focused on building a robust consumer data hub, which now holds data on approximately 4 to 5 crore consumers. This database allows ITC to retarget campaigns effectively and run lookalike campaigns, significantly improving conversion rates and reducing costs.

Challenges in Unified Commerce

Despite these advancements, significant challenges remain. Data integration is a major hurdle, as legacy systems and disparate databases complicate the creation of a unified consumer view. Additionally, the reliance on third-party data is becoming increasingly difficult, pushing FMCG companies to prioritize first-party data collection. Singal highlights the importance of value exchange in this context, where consumers are more willing to share data if they receive something valuable in return, such as nutritional advice.

Another critical challenge is ensuring a consistent consumer experience across various channels. Channel conflicts often arise due to differing costs and pricing strategies across modern trade, quick commerce, and traditional retail. Finding a balance that provides a uniform consumer experience while managing operational costs is a delicate task.

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Practical Applications and Future Directions

To illustrate the practical application of unified commerce, Singal shares the example of ITC's Aashirvaad brand. ITC has segmented the Atta category to cater to evolving consumer health needs. Through digital marketing, the company engages consumers at multiple touchpoints, from initial discovery via advertisements to personalized offerings like Namma Chakki, which allows consumers to order customized, freshly ground Atta blends.

Moving forward, ITC aims to enhance its consumer data hub to create a more interactive system that not only gathers data but also actively engages with consumers to provide real-time feedback. This shift towards a more dynamic and integrated approach will help ITC better understand and respond to consumer preferences, ensuring a more personalized and consistent experience.

In conclusion, while unified commerce presents significant challenges for FMCG companies, ITC's innovative strategies and focus on digital transformation provide a roadmap for leveraging this approach to enhance consumer experiences and drive growth. By integrating systems, gathering real-time insights, and maintaining a consistent brand experience across all touchpoints, FMCG players can successfully navigate the complexities of unified commerce.