Inventory Purchase Recommendation for Merchants in Traditional FMCG Retail Business

Ying Li, Muhammad Daffa Robani, Victor Suciu, Joy He-Yueya

Abstract: Small and micro merchants in the traditional FastMoving Consumer Goods (FMCG) retail business play a vital role in developing economies. In Indonesia, 82% of the population gets their day-to-day groceries from traditional trade merchants. Our work aims to help these grocery merchants prosper by increasing their sales and improving their inventory turnover cycle. To this end, we conduct an in-depth analysis of merchants’ inventory-buying behaviors from a transaction record dataset and propose several item recommendation methods for merchants’ inventory based on insights gathered from the data. For analysis, we investigate the stock-keeping unit (SKU) coverage, the SKU selling speed, merchant repeat purchase patterns, the growth rate of monthly spending, as well as their correlations with total monetary spending by merchants. Our recommendation methods consider recency and utility of SKU selling speed, and are implemented using popular item-based recommendation and content-based filtering algorithms. The inventory recommendation system was deployed and tested in production. Initial results show a lift in click-through rate (CTR) and also show that merchants are accepting the recommendations of SKU items for their inventory that they had never bought before.