Today, the FMCG industry is perhaps undergoing the most profound shift since the advent of modern retail. The rise of digital-first brands are not merely disrupting traditional business models, they are fundamentally re-imagining the relationship between consumers and products in ways that challenge conventional assumptions about brand building, distribution, and consumer engagement.

The rise of digital-first brands can be attributed to the growth of e-commerce. But thinking that it is the key reason is a perspective that oversimplifies nuanced market evolution over the last two decades or so. D2C brands represent a philosophical shift in product development, marketing, and scale. Unlike traditional players, digital-first brands operate on a “test-and-learn” paradigm that prioritises consumer insights over economies of scale.

Modern-day consumers discover products through social media, research on comparison sites, seek validation through influencer reviews, and make purchases through multiple channels — all within a compressed timeframe.

Competitive advantage

Digital-first brands, leveraging real-time data analytics and agile manufacturing partnerships, can move from concept to market in as little as 8-12 weeks, giving them a competitive advantage in responding to consumer trends.

On the sales front, digital-first companies prioritise building consumer profiles through an interconnected web of touchpoints and interactions by analysing direct purchase behaviours — tracking not just what consumers buy but how they navigate the purchase journey.

Social media engagement patterns reveal brand sentiment and product preferences in real-time, while customer service interactions provide invaluable insights into pain points and satisfaction drivers.

Direct engagement with consumers also allows these brands to build active communities that transform customers into brand advocates. Their integrated value chain, eventually, provides control over the entire consumer experience, ensuring consistency and quality at every touchpoint.

The focus on data infrastructure and analytics-led agility is the true differentiator for digital-first brands. Their rich data ecosystems enable micro-segmentation and predictive analytics capabilities that traditional firms struggle to match. And this is where the true challenge for legacy FMCG players lies: not in mere digital adoption, but in organisational transformation.

Achieving such transformation is easier said than done. Cultural inertia, born from decades of success with traditional models, creates natural resistance to change while their legacy infrastructure, with supply chains optimised for bulk production and distribution, makes it difficult to pivot to more agile models. In undertaking such a transition, legacy players must also contend with data fragmentation across multiple channels which hampers their ability to create unified customer views and deliver personalised experiences.

Digital-first brands face their own set of imperatives as they scale up. Their focus must shift to sustainable unit economics, moving beyond a growth-at-all-costs mindset to build profitable operations that can weather market fluctuations. As they mature, they also need to develop a strategic offline presence that complements their digital foundations without compromising their agility. Investment in proprietary technology is crucial to having a competitive advantage.

Retailers must develop truly integrated online-offline experiences. Strategic partnerships with digital-first brands can bring innovation and energy to their offerings.

The future of FMCG belongs not to digital companies, but to those that can effectively combine the efficiency of traditional operations with the agility and consumer-centricity of digital-first brands.

The writer is MD and CEO, Marico Ltd