E-commerce platforms, which are typically known for discounts on consumer electronics and large appliances, are fast becoming a significant channel for fast moving consumer goods (FMCG) as well, with such portals expected to contribute 11% of the total FMCG sales by 2030, according to a latest study by market research firm Nielsen.
While e-commerce currently accounts for only 1.3% of the total FMCG sales, it is fast gaining traction, considering its share was a mere 0.4% just two years ago in 2016.
“E-com channel contribution to India FMCG sales now stands at just over 1% and has grown at over 101% since last year; in specific product categories and markets the contribution is already touching double digits of total category value sales,” said the Nielsen report.
Interestingly, product categories like diapers and liquid toilet soaps have seen the share of e-commerce sales more than double between July 2016 and September 2018.
Breakfast cereals also saw the share of e-commerce sales rise from 2% to 3.6% in the same period.
Meanwhile, the market research firm expects the FMCG industry to grow at 12-13% in the fourth quarter ending December 31 even as the segment faces headwinds in the form of falling rupee, rising crude prices and below average rainfall this year.
This is only slightly higher than the 10% growth registered in the fourth quarter of 2017. Nielsen takes into account the calendar year and not financial year while making projections.
Incidentally, the third quarter of 2018 saw the FMCG sector growing at 16%, which included a 13% volume growth and 3% price-led growth when compared to the corresponding quarter of 2017.
On a different note, the research firm highlighted the fact that the share of modern trade, currently at 10% of the total FMCG sales, is very low when compared to other similar markets and hence offers huge scope for growth.
In countries like Phillipines, Malaysia, Thailand and China, the share of modern trade in total FMCG sales is in the range of 55% to 75%.
Nielsen, however, added that modern trade sales had increased substantially over the last few years and events like demonetisation and GST actually helped fuel the growth with consumers moving towards plastic money.
Modern trade refers to supermarkets and hypermarkets like Big Bazaar, DMart, Star Bazaar and Reliance Fresh among others.
