FMCG sales on e-commerce sites to touch $4 billion by 2022: Nielsen
- Currently, e-commerce contributes 2% or $1.2 billion to the overall sales of FMCG
- Nielsen sees e-commerce’s contribution to sales growing on the back of growing smartphone penetration, increased data consumption, and efforts by large companies to make their products available online
Sales of fast moving consumer goods (FMCG) on the internet are expected to touch $4 billion by 2022, contributing 5% to overall sales of packaged consumer goods sold in the country, market researcher Nielsen said on Wednesday.
Currently, e-commerce contributes 2% or $1.2 billion to the overall sales of FMCG.
Nielsen sees e-commerce’s contribution to sales growing on the back of growing smartphone penetration, increased data consumption, and efforts by large companies to make their products available online.
Interestingly, the contribution of modern trade to FMCG sales will reach 10% by 2022, growing incrementally from the current 9%, Nielsen noted comparing the two sales channels. During the same period the share of traditional trade is set to shrink to 85% from the current 89%.
The uptick in FMCG sales online has led the research firm to start tracking sales of such goods on the internet, as increasingly more companies such as Hindustan Unilever, Dabur India Ltd, Nestle India, Godrej Consumer Products Ltd., among others, have set up teams to sell their brands online.
“India’s FMCG industry is now making its presence felt in the e-comm channel - appealing to consumers’ need for convenience, and in sync with increasing smartphone and internet penetration,” said Prasun Basu, South Asia Zone President, Nielsen Global Connect. “Nielsen India has launched a specific E-Trak index that will now measure FMCG consumer offtake in the e-comm space to give a complete picture of the changing marketplace”, he said. This will help manufacturers and marketers get data, information and insights that can be further used to hone their e-commerce channel sales strategy.
For now, Nielsen will track sales of 11 FMCG categories online in the top metros. These include refined oils , biscuits, packaged atta, vermicelli and noodles, spices, iodised salt, salty snacks, washing powder, packaged tea, toothpaste and utensil cleaners.
In its preliminary research on the market, Nielsen noted that online shoppers in the country’s top metros were showing higher instances of online shopping making 6% of all FMCG purchases through e-commerce. Amongst these, foods is the biggest contributor with 44%, followed by personal care (40%) and household care (13%).
In its September quarter earnings call, Mohit Malhotra, chief executive officer at New-Delhi based Dabur India Ltd said that e-commerce posted a growth of greater than 63%, taking its overall contribution to sales to 2.2% for the maker of Vatika hair oil and Real Juices. Earlier this year the company also rolled out a range of children’s hair care products only available online.
Last year, the local arm of Swiss packaged goods company Nestle India, launched its breakfast cereals online first. In fact, its popular Maggi brand was relaunched on Snapdeal in 2015 when the crisis-hit brand made a comeback.
However, Nielsen said that e-commerce is currently being used as an additional channel and not cannibalising other channels. “All channels continue to grow, buying behaviour differs across channels,” the report added.
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First Published:4 Dec 2019, 06:41 PM IST
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