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Route to Market & Supply Chain Blog

How Can We Increase Trade Coverage Through Our Distributors in Africa?

Posted by Ross Marie on Mon, Oct 14, 2019

This is a challenging question and one that we need to break down. Trade coverage, brand distribution, distribution coverage, brand or SKU (Stock Keeping Unit) availability, or whatever terminology you use, is one of the most important Route to Market (RtM), trade marketing and/or sales operations metrics out there. In this blog, I will use the term trade coverage.

Increase Trade Coverage in AfricaSo, what do we mean by trade coverage? This refers to the presence of our brands and SKUs in the total number of outlets across the country or geography in question. It is about our reach into retail Points of Sale (POS). Depending on our industry this can include every POS from the large modern trade hypermarket or supermarket in a city, to the smallest HORECA (Hotels Restaurants Cafes) open window in a tiny rural village, often referred to as Traditional Trade.

The metric can also be weighted or non-weighted. Non-weighted simply looks at the total number of POS vs those that you are present in. The weighted version considers the volume of the outlets. For example, if there are 100,000 POS in the country, and we are present and available in 80,000 of them, we can say that we have 80% numeric or non-weighted trade coverage. But weighted trade coverage becomes very important, as the 20% of outlets we are not present in could all be large city high volume outlets. In this case our weighted trade coverage would be well below 80%.

In looking at increasing our trade coverage through our distributors in Africa, what information do we need to gather or what are the key questions we need to ask?

  1. Do we know how many outlets there are across the country? Does this cover all channels, territories, zones, regions, etc.?
  2. When was the last time we conducted an EDS (Every Dealer Survey) or a trade census to determine this? If we don’t have this facility, what measurement do we use? Has the survey covered all outlets, or do we need to consider other ways of identifying our retail universe?
  3. Is the entire country serviced by distributors or are there wholesalers or Cash & Carry’s also?
  4. What information and data do we get back from our distributors? Do we have agreements with them that ask for specific information or sales data per outlet? Is this level of sophistication even possible? To what extent is this data desirable for us (it nearly always is)?
  5. Do we have a distributive map of the country showing which distributors cover which outlets? Have the distributors been assigned territories or zones?
  6. Are there different levels of distributor, tier 1 or 2 or 3? Do the distributors use sub distributors? Do we have visibility of this? Have we considered all tiers and sub distributors? Are these included on our map?
  7. Are we working with our distributors to understand their business, their issues and how we can help each other?
  8. Have we assessed the performance our distributors to determine the most effective from the least?
  9. If trade coverage is about penetrating the retail or POS environment, how do we assess the distributors that have the most passion or the best relationships in place to deliver on this? How do we determine which distributors have the passion for and understand the complex retail environment in African countries?
  10. Do we truly partner with our distributors? Do we provide them with the necessary tools to deliver on our shared goals?
  11. Do we have a field sales force that is supporting our distributors? Do the distributors have a sales force? Do they offer training and engagement on how our trade coverage can be increased? Do they understand the importance of trade coverage to us??
  12. Do we offer incentive programmes for trade coverage increases? Do we have a process in place for measuring this?
  13. In areas where we are either weak or have limited presence have we identified distributors that we can partner in those zones?
  14. If we feel there are no local options in the so-called weak trade coverage zones, have we looked at bringing in or introducing a distributor from one zone into another? Have we done this before?  Do we have any learnings or past successes that we can use in these weak trade coverage zones??
  15. Have we ever partnered with a distributor to set up in a new zone before? What was or could be involved in this? Did we support the set up financially and/or with people resources?
  16. Is setting up any form of direct distribution an option? Are the risks or costs too great? Has this been done by any supplier in the market to date? What would the potential consequences be of doing this?
  17. Have we looked at how the competition are looking at maximising their trade coverage?
  18. Where does modern trade or key accounts come in here?
  19. Is there a presence of group owned and organised outlets in my geography? If so, are there key account or other agreements in place that mandate the presence of our SKUs across the entire network? If there are, how are these currently measured? If there are no key account or other agreements, why is this?

Finding the right partners in the right areas, across Africa, to increase trade coverage, is very difficult. During 2019, Enchange has faced these challenges in multiple markets across Africa, and in each case have delivered a Route to Market strategy to win for our clients.

My goal here is to stimulate the thinking around how to increase trade coverage in African markets. I would love to get your comments and opinions in the sections below on the challenges and solutions you have found to increase trade coverage in Africa.

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Tags: Brewing & Beverages, FMCG, Route to Market, Performance Improvement, Traditional Trade, Sales, Distribution, RTM Assessment Tool, Doing Business in Africa, Information, Retail, 3PL, RTM, 3PLP, 4PL, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

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