Fast-moving consumer goods (FMCG) giant Unilever Bangladesh opts for distributing products of other brands to retailers, in a maiden strategic business shift.
The multinational company plans to generate revenue amounting to over €300 million annually from this B2B marketplace, informed sources told the FE.
A B2B (business to business) marketplace is a digital platform that enables companies to connect with other organisations and conduct business all in one place.
Apart from its own brand, Unilever Bangladesh, already having a 60- per cent share in the Tk 300 billion FMCG market, has started selling several categories of FMCG goods of other companies on a pilot basis.
The pilot project has started in four upazilas in Mymensingh district.
The company plans to expand this operation to two dozen upazilas during this year - the project will be stretched all over the country within five years.
This service will soon be launched in the northern zone of the country, say the sources, adding that the ultimate target of the project is to earn €300 million annually after five years.
Through this B2B marketplace, products of other companies, including personal care, baby care, beverage, laundry care, and cooking oils, will be marketed.
Industry-insiders say that the company might invite investors to join the venture in a bid to create it as a separate and independent entity.
The first year of the piloting saw revenue of €2 million, they add.
According to the market reports, the FMCG sector is growing by 8 per cent annually, reaching a size of Tk300 billion already.
As the per-capita spending in this segment is just over Tk 2,050, market analysts believe that there is huge room for further growth here pro rata with the rise in per-capita income in the country -- now a trajectory of status change from the LDC club.
In India, the per-capita consumption for the same type of FMCG products is Tk 3,600, says an analyst, adding, "We still have a long way to go."
Unilever Bangladesh started its operations in the country in 1964 with soap products but now it has 28 brands of ten categories, and it is the market leader in nine.
Despite this strong presence, the multinational expands its distribution network to sell brands of other companies to maximise the market opportunity, observed the analysts.
However, a major challenge of the new venture is to address the issue of facing the distributors of other companies who have been selling the same products.
There will be a conflict of interest as the existing distributors are unlikely to welcome the arrival of such a big competitor on the market, people associated with the business told the FE.
They can show negative reaction and may create hurdles to resist the arrival of the new venture, they said.
Unilever Bangladesh is a joint venture between Unilever and the Bangladesh government.
Formerly known as Lever Brothers Bangladesh Ltd, the company was renamed as Unilever Bangladesh in 2004.
The Bangladesh government has 39.6-per cent share in the company and the rest is owned by the London-based Unilever.
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