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YRC (Your Retail Coach) sheds light on some of the undermined challenges in the online dairy business.

08-07-2021 09:42 AM CET | Business, Economy, Finances, Banking & Insurance

Press release from: YourRetailCoach

Challenges in the online dairy business

Challenges in the online dairy business

The market for raw and semi-processed dairy products like milk, curd, cottage cheese, ice cream, etc. is a delicate one. The products come with a very short shelf life. Unorganized hyperlocal distribution and delivery networks rule this market. Given its prowess, eCommerce could prove to be a disruption for the traditional dairy retail industry. But what has worked well for the traditional dairy businesses presents a reflection of the challenges that lie ahead for the upcoming and existing online retail dairy businesses ( https://www.yourretailcoach.in/industries/dairy-milk-industry-business-consulting/ ). YRC sheds light on some of these challenges.

Customer acquisition

The majority of customers are not yet ready for the eCommerce way to buy their routine dairy needs. There is a long-held association with local sellers in the unorganized market. Dairy products like milk, cottage cheese, and curd are home-delivered or are found in the local departmental or grocery stores. Customers are accustomed to offline purchasing and they do not seem to have any compelling reason to shift to online channels. They might already be procuring their dairy inventory from the best farm or distributor in the town or city. Customers will still prefer to buy from the same offline sellers when they go online instead of choosing a new brand.

Inventory Control

Inventory control can be one of the toughest in the online dairy business where businesses are dependent on local dairy farms for their supplies. There is an element of uncertainty in meeting the production targets in natural dairy production and processing. Because of the short production-sale cycle for raw or semi-processed dairy products, there is very little scope for long-duration storage. In such circumstances, ensuring inventory at the desired levels is a tough ask for businesses. But these challenges disappear with processed dairy products that come with longer shelf life and big brands are dominant in these product categories.

Quality Control

Some of the largest consuming dairy products like milk, curd, sweets or ice cream are intended for quick consumption or early refrigeration. If not, these products no longer remain suitable for consumption or further processing. The right storage facilities must be present in the supply chain including in logistics. This means an additional investment burden for businesses as local dairy farmers and farms may not possess the storage needs as required by the eCommerce business model ( https://www.yourretailcoach.in/business-model-development/ ). Also, traditional QC measures may not be sufficient to convince the digital customer of quality assurance. And the short life cycle of raw dairy products renders the time window for quality checks limited.

Managing suppliers

Most suppliers of dairy inputs are active in the unorganized market. Those who enjoy a good reputation in the market already have a loyal customer base in their respective localities. These suppliers may not have any strong business case to associate with retail brands for distribution. Even if they tie up, making them adhere to SOPs for various business processes ( https://www.yourretailcoach.in/business-process-management-bpm-consulting/ ) is another big challenge. If a local customer and seller informally decide to, a retail service provider will be left with no role to play. All these factors make the task of managing suppliers intricately difficult.

Distribution and delivery

The distribution and delivery approach in the dairy business is hyperlocal whether the sales channel is online or offline. Online dairy businesses cannot avoid that. From placing orders to their delivery, businesses have to bear in mind the short production-sale-consumption cycle of dairy products. If the promised value has to be delivered to customers, the order fulfilment process must be quick, safe, and accurate. What cannot be accomplished must be ruled out from the business model. The order fulfilment process must be fastidiously planned and executed with a high degree of accuracy with every single batch of order. From procurement to delivery, there must be strict adherence to quality control and quality assurance.

Competing with big brands

Sooner or later, the big brands will make an entry into the hyperlocal online dairy business in markets ( https://www.yourretailcoach.in/dairy-industry-in-india-challenges-mitigation-strategies-by-your-retail-coach-yrc/ ) where they have not already. It will not take much for the big companies with deep pockets, rich experience, qualified workforce, and visionary think-tanks to come up with fierce market entry strategies and capture the target markets within a short period. They will also have the advantage of brand reputation which will help them further in customer acquisition.

Challenges are not hard to envision with a certain degree of experience and insight. But eCommerce is a new variable in the online dairy industry ( https://www.yourretailcoach.in/industries/dairy-milk-industry-business-consulting/ ). The challenges that begin to appear after a few months into business may not be easily foreseeable, especially for new ventures in the industry. YRC encourages businesses and entrepreneurs to do comprehensive market research and try to seek insights and make projections in all areas of business at least for the next five years.
Get advise for Retail Business Consulting : https://www.yourretailcoach.in/contact/

YourRetailCoach
Pune, India–411016
Phone: +91-9860-426-700
Email: consult@mindamend.net

YRC is a Management Consulting Company, especially for the B-C Sector.
Our expertise lies into designing of Standard Operating Procedures (SOPs), Franchise Development, Strategy & Operations services, Process Audits & Training.
We help companies to organise their operations and expand through best management practices.

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