In Singapore, there is a wide spectrum of FMCG distributors. Each distributor has their own unique strengths and weaknesses. Some are more established in certain product categories, whereas others are stronger in specific channels and niches.
Different channels has their own unique requirements of logistics infrastructure, organisation structure and skilled sales force to effectively serve the needs of the channel (eg. modern trade, convenience, general trade, pet shops, F&B, pharmaceuticals, healthcare, TCM). There is no one distributor that can be good in every channel.
Retailers and Food Service Operators, at the receiving end, can testify to the service level of each distributor. Service level KPIs such as order fulfilment rate, on-time delivery, product shelf-life are typically used to assess the distributors’ efficiency and reliability.
Singapore is currently at an evolving stage. The old traditional way of distribution (eg. van sales and door-to-door order taking) is giving way to advanced technologies and 3rd party supply chain management. For many businesses, the high costs of managing their own logistics department and maintaining own fleet of vans can easily wipe out substantial margins. This is especially affecting distributors in the F&B and General Trade channels. Many of these distributors are facing the expiry of their 10-year vehicle licences. It is simply too costly to renew.
For some big successful distributors, their current operating process is still very manual with hand-written order processing forms. There is a need to upgrade to modern technology, to align to their more tech-savvy food operators.
One of the most difficult tasks for overseas and new FMCG companies is to look for local distributors for their products. It can be a very tedious to learn how the distribution chain works in Singapore; And a challenging task to sieve out who is the right distributor for a new entrant.
Finding the right distributor is crucial to how successful a new business will be in Singapore. Sourcing for a distributor will be easier with the help of a local FMCG expertise. It is important that the local expertise has established a wide network of FMCG distributors, and who also know FMCG market. Having feedback from local expertise on the distributors (their strengths, weakness and service level) will take the guesswork out of the decision-making.
The best way forward is to do a detailed market analysis to identify the right fit to market for your product. Assess each potential distributor with insightful service level reports to see which one fits your products and target channels.