Shopping online? Your favourite brands may be saving their best for you

Large fast-moving consumer goods (FMCG) companies such as Marico, Zydus Wellness and Godrej Consumer Products, even ice-cream makers such as Baskin Robbins are creating special versions of their products for buyers on quick-commerce platforms–from new variants to more premium offerings. Some are even testing new products there based on preferences of the urban online shopper. 

For instance, Marico, which sells edible oils, hair oils and oats, will take more gourmet variants of its oats to quick commerce, even as its honcho said it is looking to customize offerings for online platforms “across all brands". Godrej Consumer Products Ltd (GCPL) is experimenting with launching products together on online and offline channels, with online showing better traction. 

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Then, Zydus Wellness, which makes butter, sugar-free and health drinks, sells its plant-based Nutralite butter exclusively on quick commerce platforms, and more offerings are on the way. And Baskin Robbins has floated ice-cream flavours and combinations that are not available offline.

The move by these companies comes in the backdrop of the surging popularity of quick commerce, even though the channel currently brings in just 2-7% of overall sales for larger companies. 

Overall, per data shared by Nielsen IQ, the value share of e-commerce stood at 13% in the top eight metros for the 12-month period ended 31 March. This growth was on account of increasing online shopper penetration, more purchase occasions, and increasing basket sizes, NIQ said. 

“There will be a wider portfolio due to the growth in quick commerce," said Anand Ramanathan, consumer products and retail sector at Deloitte in South Asia, while pointing out that FMCG has traditionally operated with fewer assortments and a narrow portfolio. 

“However, now companies will have to launch and try which products work across which platforms, adding to their complexity," he said. “You will have more frequent product launches; that’s a new capability that companies will have to build given this shift."

Who’s doing what

In an interview with Mint last week, Saugata Gupta, managing director and chief executive officer of Marico Limited, said the company is designing a channel-wise portfolio. 

Also read: Marico calls it—India’s FMCG sector to rebound this financial year

“The shopper in quick-commerce is different from the (online) marketplace; consequently, the portfolio and the stock-keeping unit mix that goes in these channels should be different," said Gupta, adding that the company could look at new product launches for online channels as well.

“It (e-commerce) is a very good channel to test market some new products," he said. “We will continue to do that. Some of the premiumization of the core portfolio could be led via these channels." 

Quick commerce is now 3% of Marico’s India business as of the March quarter. Between brands such as Plix (supplements), True Elements (foods) and Saffola, the company is investing significantly in quick commerce to drive growth in its foods business. 

Mumbai-based GCPL has been pushing more premium products online, both e-commerce and quick commerce, before scaling them up offline. It recently launched its Cinthol range of foam body washes both via quick-commerce as well as general trade stores in Tamil Nadu as an experiment. 

Response on quick-commerce was relatively encouraging due to the channel’s salience with more affluent shoppers, said the company’s management. Last year, it launched its Hit Matic mosquito repelling machine priced around ₹550 only on e-commerce, apart from Park Avenue Deo gift scents. 

“Quick commerce is a channel that we are very happy with, because it solves a genuine need of convenience," Sudhir Sitapati, chief executive officer, GCPL said at the company's media roundtable earlier this month. 

Sitapati said quick-commerce has experienced exponential growth over the past two years, particularly benefiting mid-sized product packs that offer higher margins for companies. 

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For Zydus Wellness, the parent company of Complan drink and Nycil talc, online commerce accounts for 10-11% of its business; of this, the share of quick commerce is 40%. According to its chief executive, the share of large packs across its portfolio has been rising across online platforms. It is ramping up supplies to such packs across these platforms.

“Modern trade is a great place to buy large packs, but there are some specific packs designed for online channels—their share has been going up," said Tarun Arora, chief executive officer (CEO) at the Ahmedabad-based company, in an interview with Mint. “Therefore, we are seeing how best we can serve urban online shoppers with specific stock keeping units whose demand has gone up."

Even categories like ice cream, where impulse and instant gratification play a big role, are seeing rapid transformation in the way consumers interact with brands. 

“With this behaviour in mind, we have been bringing in a range of SKUs that are tailored for this ecosystem," Mohit Khattar, CEO, Graviss Foods, Baskin Robbins, told Mint. “These include flavour profiles and formats that appeal to the consumers who frequent these platforms." Today, nearly a third of the company's business comes from food delivery, of which a significant part can be attributed to quick commerce, he said.

“Apart from the very popular ice cream cones, bars and cups, our range also includes ice cream funwiches, ice cream cake slices, multilayered ice cream doublet bars and bite sized ice cream rocks," said Khattar. “We have also recently introduced creamy milkshakes in low sugar and no added colours for quick commerce."

What about offline

India is a large general trade market. Across such stores, consumers buy small sachets of shampoos for single use, family packs of soaps, 1 kg packs of flour, biscuits, colas and chips on a daily basis.

General trade continues to be stressed on account of growth in online and modern trade retail in the top 10 markets; users of general trade are also more burdened by greater inflation and buying smaller packs or switching to cheaper brands. 

“E-commerce is still growing at 30-40% because it is talking to consumers who don’t have a problem with inflation and are driven by convenience," said Sanjay Sharma, CEO of Orkla India that sells MTR brand of packaged foods. Sharma declined to comment on the company's quick-commerce strategy.

It also helps that users of quick commerce are more insulated from the broader slowdown in the FMCG market. FMCG volumes grew 5.1% in the March quarter amid a 5.6% price hike, according to NielsenIQ. However, urban market growth decelerated in the March quarter, growing 2.6% year-on-year, declining both sequentially and annually.

Offline retailers, often small family-run stores, which still represent a significant portion (over 70%) of the fast-moving consumer goods market in India, have expressed concerns regarding quick commerce platforms and their adverse impact on their business. 

Zydus’s Arora said keeping differentiated packs also helps overcome some challenges with traditional trade. “It also helps overcome the trade conflict…but it’s more focused on what the consumer needs because there is a behaviour shift that is happening," he said.

According to experts, as quick commerce continues to reshape urban shopping habits, consumers can expect to see even more tailored products hitting their screens and doorsteps.