Consumer Packaged Goods Practice

The eB2B opportunity for

consumer-packaged-goods
manufacturers
The emergence of eB2B marketplaces has revolutionized the route to market
for fragmented or traditional trade. Here’s how consumer-packaged-goods
companies can take advantage.

by Erik Brailovsky, Javier Castillo, Fernando Hiraoka, and Miguel Suadi

© andresr/Getty Images

April 2023
 The route to market (RTM) has rapidly evolved for There are also multiple strategic postures CPG
fragmented retailers such as small independent manufacturers can take. Should they lead by
grocers, restaurants, and bars. Technology and owning an eB2B RTM? Partner with other CPGs or
e-commerce have reshaped consumer-facing wholesalers and distributors to co-own a platform?
business models and engagement through channels Or simply participate without ownership, coworking
such as online ordering.1 And, in B2B, opportunity with eB2B platforms and selling directly to them? And
has emerged in the form of “eB2B” players2— because these strategic approaches are not mutually
marketplaces offering independent businesses exclusive, what combination of options is optimal?
integrated solutions including a multicategory
portfolio and a set of value-added services (VAS) We’ve identified five components for determining
that simplify the way they acquire products for the best eB2B strategy, starting with understanding
resale in their stores. the options and fit with current RTMs and then
identifying what the platform brings to independent
This also presents an opportunity for consumer- businesses, their approach to negotiation, and the
packaged-goods (CPG) manufacturers, which can capabilities they have and need to develop. Because
sell to marketplaces and reach fragmented retailers the eB2B market is still relatively immature in many
in the eB2B space. There are three principal markets, there’s a window of opportunity: the faster
archetypes shared by eB2B platforms: decisions can be made, the better the terms may be.

— CPG manufacturers building digital platforms

to sell their own products and those of others A rapidly expanding eB2B market
before expanding into VAS EB2B platforms emerged in China around 2016,
but their growth was accelerated by the COVID-19
— digital start-ups leveraging their speed and pandemic, which limited in-person sales activity
capabilities to anchor their value proposition while demand for goods remained strong. Latin
on VAS, using CPG products as a hook to enter America and Asia are the most advanced eB2B
this space markets, and the Middle East is ahead of Europe
and North America. For example, in Latin America,
— wholesalers, distributors, and retailers BEES by Anheuser-Busch InBev has accessed
embracing digital to move their business model about three million stores and is now expanding
beyond brick-and-mortar locations to the United States and Europe. In China, Alibaba

1
“Next on the menu for food delivery,” McKinsey, March 29, 2022.
2
“Digital disruption: The rise of eB2B in fragmented retail,” McKinsey, January 14, 2022.

Because the eB2B market is still

relatively immature in many markets,
the faster decisions can be made, the
better the terms may be.

2 The eB2B opportunity for consumer-packaged-goods manufacturers

LST and JD XTL penetrated more than 30 percent For fragmented retailers, eB2B platforms allow
of mom-and-pop stores. And in Europe, METRO them to develop a stronger value proposition,
Markets directly supplies fragmented outlets integrating elements such as loyalty plans,
through a digital platform (Exhibit 1). promotions, in-store execution, financial services
(such as loans and insurance), and multicategory
These eB2B ecosystems are attractive to one-stop shopping. Many of these opportunities
independent businesses such as fragmented address long-standing pain points and issues of
retailers, end consumers, and CPG manufacturers competitive disadvantage for fragmented-retail
because they present options that are broader and outlet owners.
more comprehensive than what have traditionally
been available.

Web <2023>
<Riding the Wave of eB2B Platforms>
Exhibit
Exhibit <1>1 of <2>

Global eB2B activity accelerated during the pandemic, with Latin America and
Asia being the most advanced markets.

Start of eB2B Active users,

Companies Region services, year Main channels thousands

METRO Europe 2019 Restaurants 60 weekly

active users

BEES Latin America 2020 Mom-and-pops 3,100 monthly

active users

40 monthly
Chiper Latin America 2018 Mom-and-pops
active users

60 monthly
Frubana Latin America 2018 Restaurants
active users

Jumbotail India 2015 Mom-and-pops 150 monthly

active users

Source: Emily Senkosky, “The Bogota Post’s top 15 places to work in Colombia,” Bogotá Post, April 22, 2022; Iris Dorbian, “Chiper attracts $53m Series B,”
Venture Capital Journal, November 18, 2021; “Jumbotail,” CBInsights, accessed March 22, 2023; “METRO’s e-commerce platform,” METRO.digital, accessed
March 22, 2023; Peerzada Abrar, “Food-grocery marketplace Jumbotail raises $85 mn in Series C funding round,” Business Standard, December 22, 2021;
“How BEES is using Braze and Segment to accelerate B2B digital transformation for Anheuser Busch Inbev,” Braze, December 8, 2022; “‘We are looking to
close the year with more than 100,000 restaurants’: CEO of Frubana,” Portafolio, March 14, 2022; “Frubana,” Crunchbase, accessed March 22, 2023

McKinsey & Company

The eB2B opportunity for consumer-packaged-goods manufacturers 3

 CPG manufacturers and consumers similarly have example, a company with its own RTM model could
access to features not previously available to them, leverage eB2B to reach customers that would
such as live transactional data and live business- otherwise be too costly to serve. But only a few
to-business-to-consumer (B2B2C) promotions to companies are by default positioned to develop
end consumers. Today, eB2B enables large and an eB2B platform because of the existing breadth
small CPGs alike to execute promotions to final of their client relationships, depth of distribution
consumers at an affordable cost and faster time to network, and coverage of a store’s share of wallet.
market (Exhibit 2).
For everyone else, the investment for this type
Selecting a strategic posture of platform is significant when infrastructure,
CPG manufacturers have three interrelated promotions to drive engagement and activation,
potential strategic postures they can adopt in eB2B and inventory are considered. For that reason,
RTM: only top CPG manufacturers, wholesalers, and
distributors in a given market—or digital natives
— Leading: owning an eB2B platform with significant funding—are expected to be
capable of leading this disruption.
— Partnering: joining with other CPGs or
wholesalers and distributors to co-own an And because our experience shows it usually takes
eB2B platform around five years to break even, we expect only a
handful of platforms will succeed in most markets,
— Participating: forgoing ownership of a platform along with potentially a few small, specialized
but working with and selling directly to an eB2B players (such as those focused on cold chain, the
platform (for example, a CPG manufacturer management of perishable goods that require
may tap opportunities in underpenetrated temperature-controlled environments).
geographies by creating a commercial
agreement with a global eB2B player) One final consideration: given the nature of
this business, eB2B platform builders look for
These three strategic postures are interrelated multicategory portfolios from inception. And while
because they can coexist in the same geography
or channel and even with current RTM models; for

EB2B enables large and small CPGs

alike to execute promotions to final
consumers at an affordable cost and
faster time to market.

4 The eB2B opportunity for consumer-packaged-goods manufacturers

Exhibit 2

The scope of eB2B opens a world of possibilities for fragmented retailers,

consumer-packaged-goods manufacturers, and consumers.

Uncommon Common Very common

Stakeholder Use case Description

Fragmented Market insights Access insights on local product performance, trends, relevant news, etc
outlets
Performance data Consult trends, supplier variety, product history, and compliance
with restrictions

Financial services Choose from multiple payment methods and get access to
financing options

Loyalty programs Be part of a tier-based system with tailored rewards

Merchandising Commit to in-store execution through merchandisers (eg,

services store branding)

Multi-user accounts Allow different users to select products and access, review,
or create carts

Promotions Get targeted package deals with promotion information aimed

at lowering costs

Sales assistance Access online support tools and further assistance from
platform employees

Consumer- Market insights Access insights on product and category demand, clients, and
packaged- market trends
goods
companies Cross-promotion Leverage other CPG products to do cross-promotion
(CPGs)
Performance data Visualize main products, revenue trends, and relationship with clients
and performance

Promotions Offer client-specific promotions to create loyalty and retention

B2B2C1 Loyalty programs Be part of reward system based on point collection and redemption

Promotions Access live promotions from CPGs and businesses through a platform
1
Business to business to consumer.

McKinsey & Company

The eB2B opportunity for consumer-packaged-goods manufacturers 5

 negotiations to reach commercial agreements with it is critical to align expectations, clarify roles,
a seller typically take time, eB2B platforms tend complement reach, and avoid promotional
to buy other manufacturers’ products through distortions to amplify the impact of eB2B and
wholesalers or distributors (even sacrificing minimize cannibalization. The potential evolution
margins) to ensure they have a compelling portfolio of this new RTM should be analyzed to design a
to offer their clients. long-term plan under different scenarios, such
as the concentration of the market around one
This means that whether manufacturers want it player, the potential bankruptcy of a current
or not, their products will most likely be available distributor, or the merger of an eB2B company
through eB2B platforms. The best response is and a distributor.
to be proactive in defining a strategy to become
a direct seller to eB2B players, which gives CPG 3. Manufacturer value proposition. Manufacturers
manufacturers a say on the product offering, should also identify what they have to offer
strategy, and promotional activities, while potentially eB2B platforms to understand how much value
getting access to additional benefits such as data, they can add and in what dimensions. This value
in-app product placement, and in-store execution. proposition should be assessed mainly around
the manufacturer’s assets (for example, market
share, strength of brands, B2C digital marketing
Key considerations for successful channels, in-store materials, and consumer
participation with eB2B marketplaces knowledge); operational attractiveness (such
CPG manufacturers should prioritize five as high value per kilogram or cubic meter);
considerations when developing a winning eB2B and capabilities (such as processes for
seller strategy: understanding consumers, A/B testing, and
in-store execution). It is recommended that
1. Understand the options. Scan the market CPGs map these elements and benchmark
to understand the differences in the value them against the industry to understand their
propositions of existing eB2B platforms, competitive advantage and market power to
identifying those with the features and prepare them for negotiation.
engagement that best complement your
objectives. There will be different profiles 4. Negotiation approach. CPG manufacturers
that produce potential trade-offs for CPG should develop a “give and get” approach that
manufacturers, such as eB2B platforms with incorporates their leverage and objectives with
wider distribution versus those with greater the value proposition of eB2B platforms. This
share of wallet in a specific segment, platforms approach can consider dimensions including
with great engagement features (such as commercial, marketing, execution, operations,
loyalty plans) but lacking logistics or financial data, talent, and finance. The negotiations can
capabilities, or successful platforms that could then be informed by the CPG manufacturer’s
develop a private-label portfolio in the same objective (get) and clear offering (give) toward
CPG manufacturer’s category. the eB2B platform (such as exclusive SKUs or
support in digital marketing channels) based on
2. Fit with the current RTM. Considering the the platform’s value proposition and the existing
available eB2B platforms and their capabilities, and expected eB2B services.
manufacturers will need to redefine their
overall RTM strategy, including the potential 5. Capabilities for working with the channel. The
implications of existing distribution channels. growth of eB2B platforms is expected to grant
While the eB2B space is expected to keep both platform owners and sellers access to
growing, existing distribution channels will new data sets. CPG manufacturers will need
still dominate in the medium term. That is why to develop an “eB2B channel management”

6 The eB2B opportunity for consumer-packaged-goods manufacturers

 capability to get the most out of platforms today
Find more content like this on the
and in the future, with a focus on talent, data,
McKinsey Insights App
and logistics. For example, CPG manufacturers While the eB2B market remains relatively immature
will need people who can manage large amounts in most geographies, we predict that exponential
of data, convert data into insights and actions growth will redefine the landscape in the years
at trade and consumer levels, and orchestrate ahead. That is why CPG manufacturers should act
channels while operating with more agility and quickly. There is a window of opportunity for them
financial acumen. to define their strategies, start engaging with eB2B
platforms, and adapt their RTM and organizations
In developing their strategies, CPG manufacturers on potentially better terms than if they wait until the
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will want to consider potential risks such as eB2B environment is more mature.
private-label portfolios, volume concentration,
higher fees compared with wholesalers, and
disruptions to current distribution partners.

Erik Brailovsky is an associate partner in McKinsey’s Mexico City office, where Javier Castillo is a consultant and
Fernando Hiraoka and Miguel Suadi are partners.

The authors wish to thank Agustín Gutiérrez, Luis Salcedo, Simon Wintels, and Matteo Zanin for their contributions to this article.

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The eB2B opportunity for consumer-packaged-goods manufacturers 7