FMCG (Fast-Moving Consumer Goods) or CPG (Consumer Packaged Goods) are products that are sold quickly and at a relatively low cost. The individual, profit margin on a FMCG product can be comparably small, but they are generally sold in large quantities.
Examples of FMCG products include:
- Non-durable household goods (such as packaged foods)
- Over-the-counter drugs
- Other consumables (meats, fruits, vegetables, dairy products, baked goods, pre-packaged foods, soft drinks, candies)
The FMCG segment is highly dynamic and innovative. To be successful, a company has to be acquainted with the consumer, brands, as well as logistics. In order to maximize efficiency, it is required for logistics and distribution systems to provide secondary and tertiary packaging.
Compared to other types of products, the shelf life of an FMCG product is quite short. The reason for this is due to both high consumer demand and fast deterioration of products. What’s even more interesting is that most FMCG products are not ordered online. They are rather bought in stores, and sales are heavily influenced by discounts as well as holiday or seasonal periods.
From a customer’s perspective, the main characteristics of FMCG include the following:
- frequent purchases
- low prices
- short shelf life
- rapid consumption
- low engagement (little or no effort to choose the item)
- price comparison over online purchases by the customer
However, from a marketer’s perspective, the main characteristics of FMCG include:
- high volumes
- high inventory turnover
- low contribution margins
- extensive distribution networks
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