The consumer goods industry is one of the largest in the world, with a market size of over $10 trillion, and is projected to hit $15 trillion by 2025. This industry, which accounts for two-thirds of the volume of trade in the world economy, plays a vital role in the local American economy, where it is often the primary source of income for local businesses and a major provider of essential products that consumers in local neighborhoods need. A walk down any local neighborhood street in Kentucky or New Jersey would prove just how important this market is to the daily survival of millions of small businesses and the communities they are located in.
However, despite this industry’s importance and outsized impact on the local economy, the current trading systems and distribution model places distributors, brands, and retailers at a marked disadvantage. Broken supply and distribution chain challenges, outdated, manual trading processes, and over-reliance on cash payments have led to consistently higher prices and limited access to essential goods. These challenges have far-reaching negative effects on the health and well-being of local populations and hinder economic development.
Solving these challenges will require a new approach to how consumer goods are traded. A long-term solution that provides an open, level playing field for retailers and small business owners is necessary to create a better world for the businesses in these communities. This is why we need Open Commerce. By creating an open, transparent digital trading system powered by open commerce, we can finally solve the inequalities that keep small retailers and local businesses at a disadvantage and provide them with the tools they need to grow their businesses and better serve their communities.
Centralized trading is killing the world.
Globally, the consumer goods industry is under immense stress as prices of consumer goods continue to rise, and the supply of essential consumer goods remains limited. These challenges are exacerbated by the current state of the supply chain – complex, slow, and opaque. While it is commonly assumed that the disruptions causing rising prices are on the supply side of the chain, such as the lack of availability of raw materials, the IMF reports that 80% of price increases are caused by increased shipping and distribution costs.
The traditional distribution process that moves essential consumer products from the manufacturer’s warehouse to the retailer’s shelves and into the consumers’ arms is centralized and is largely dependent on many intermediaries, many of whom operate entirely manual processes and are chronically inefficient. This inefficiency makes it possible for bad actors to create artificial barriers across the supply chain, thereby increasing the prices of essential goods.
These barriers have far-reaching effects on entire communities. For example, when retailers cannot access the products they need at prices they can afford, they are forced to buy less stock or increase the prices of the products, which means that consumers who need those products cannot access them or may have to spend more to purchase them. For consumers in low-income communities, this can be a severe hit to their finances and may leave them unable to afford essential services like healthcare or insurance. In addition, the fragmented distribution process often means that retailers have to close their shops and travel great distances to get the products they need. They also have to carry significant amounts of cash, as most distributors only allow cash payments, leaving them at higher risks of getting attacked and robbed.
Modern-day technology has the potential to help level the playing field for SMEs and help them grow their business. However, most available solutions are either too expensive or utilize the same centralized model that propagates the barriers to doing business. For example, digital commerce, that is, buying and selling consumer goods online, is one of the easiest technologies to deploy and could help reduce the price of consumer goods. However, less than 3% of all consumer goods are sold online, and most of those sales take place on third-party eCommerce platforms like Amazon, which are responsible for over 95% of online consumer goods sales.
These large e-commerce platforms have hijacked control of the supply chain by building their own distribution networks and locking out millions of distributors and retailers from accessing the goods they need. More importantly, the vital trading data needed to help build a more efficient trading system is often locked up and kept away from both brands and distributors, leaving them playing blind.
Payments are another critical barrier to unlocking real growth for small local businesses in the US, where many small businesses do not have access to the credit facilities needed to grow their businesses. Despite the decades of advances made in payment technology, there are very few solutions that enable merchant payments, and the few that do, are quite costly, with transaction fees and other charges eating deep into the retailer’s profit margins.
The situation of online trading in the consumer goods industry across the United States can be summed up as prohibitive and difficult and ultimately enriches a few intermediaries that leverage their outsized power to influence the market, making life difficult for the average retailer.
Open Commerce is the best way to build a better world.
Open Commerce is the only way to build a truly equitable future for the over 1 billion merchants and small businesses across the world responsible for moving essential communities across communities. It is a revolutionary technology built to level the playing field and provide any merchant in any location with the tools they need to grow and scale their businesses.
It should not be difficult for the small merchant in rural Arkansas to access products from any brand, nor should they have to wait for days or weeks and pay cash to buy the products their communities need.
This is what Open Commerce solves. By putting simple, digital tools in the hands of every retailer, we provide them with the tools they need to grow their businesses. Now, with our revolutionary Red101 Open Commerce app, retailers can simply order for stock on their phones at any time of the day and have the products delivered to their stores or any location of their choice. We’ve also solved the cash payment problem by building the world’s largest local payment network, RedPay, with over 2 million cash-in points across 100 countries, allowing retailers to walk to any nearby agent, digitize their cash, and begin buying their products. More importantly, by opening up digital payments to these retailers, they can build a trading history that allows them to access the credit they need to grow their businesses.
To find out more about Open Commerce and see how it can help brands, distributors, and retailers grow their businesses, please schedule a demo here.