Digital revolution is driving the FMCG consumption in India. A report from Nielsen, called the “The Nielsen Future Opportunities in FMCG E-commerce” has indicated the online growth of FMCG products is surpassing offline growth in India. According to Nielsen data, the Asia Pacific region is expected to provide some of the biggest growth opportunities for online FMCG over the next five years:43% of the region’s consumers already using e-commerce platforms for home delivery of products, and a further 15% indicating better internet connectivity would increase their propensity to shop online.
If we look at the India story, the Indian e-retail market has grown three times in the total FMCG retail sales in the last two years. As per industry data, 40% of FMCG purchases in some select categories will go online by 2020. Understanding the gravity of the matter, a session took place at Indian Retail and E-retail Congress (IReC) 2019 titled FMCG: Harnessing the Digital Potential, which casted the light on leading trends of which are driving FMCG sales via digital channels.
While opening the session, SushantRabra, Partner Digital Consulting Services, KPMG, sheds light on key highlights including digital commerce has started contributing 6-7% of many FMCG companies in India. Online is an emerging channel, which cannot be ignored and is poised to grow 2X and 3X depending upon the company and the category. Digital is a crucial growth driver for top-line as well as bottom-line.
However, managing this digital transition from offline to online is proving to be a challenge to many companies. Industry veterans who were also the part of panel, had to strike out trends in the online FMCG space while speaking at IReC2019, which recently concluded in the capital city New Delhi.
Social platforms such as Instagram, Facebook amongst others are becoming integral part of human life. Speaking on same, Ashish Jain, Head – Digital and eCommerce, Godrej and Boyce, said, “When everything is changing people are subsequently going to products from social media platforms, it is the one trend which is clearly coming out, for instance, Instagram could a good platform to feature food product along with the recipe.”
Jain further adds that digital has empoweredbrands to serve niche set of consumers, for example, if the company is looking to serve only 100 customers across India who could be an ideal clientele to consume those sort of products and services, it is made possible through digital channels by catering to those individual entrepreneurs and brands. Therefore, the whole landscape is changing where the entire consumption scenario is changing and is now largely driven by digital influence.
In the era of tech innovation timeframe for farm to fork cycleis reducing drastically, but that is creating its own set of challenges. Speaking further on same, Sameer Shaikh, AGM, Regional Head-Buying & Merchandising, Bigbasket, said,“Due to social influence, people now have easier way of expressing themselves and at times feedbacks can be negative also, forcing us to take prompt action.” No doubt, digitisation has widened the scope of data exchange and feedback exchange from customers, which ultimately helps us in improving our product and services.
Changing Retail Shelves
Due to lot of data exchange, companies are now experimenting with newer products which were never there on traditional retail shelves. Speaking further on same, Sharad Sharma, Head of eCommerce, Havells India, said, “I have seen the industry for a decade now. In last few years so much has happened in this space and primarily driven by the consumers. So, I will keep consumers in the centre of all the activities happening around. When I say consumer they are driving not only the tractions but also putting the pressures on organisation in terms of changing the products they offer to customer.”
Due to digital influence customers are able to collate data and customise their product and services as per the need of customers. This change is driving consumers and organisations to different directions. Therefore, a lot of product innovation is happening.
Going further, Sharma adds, “Seamless experience is once such thing which is demanded by the customer as they don’t care about channel of purchasing. Whether online or offline, they are looking for same kind of experience without any pricing difference.”
Digitisation is forcing the companies to adopt a digital-first approach.Speaking on technology deployment, Anil Bhavnani, Director BPO and Digital transformation, Pfizer said, “I represent pharmaceutical company and the part of much regulated market. Consumers are very important part for us where we are looking to embed technologies such as chatbots. We aim to leverage technology in order to make entire experience more seamless. “
Having said that,Bhavnani also stressed that the company is also looking at middle or back offices to see where they can put their digital wing forward. The company is trying to bring automation in its finance and accounting processes.
Exploring the Unexplored
Digital has really changed the entire game of customer service. Speaking further on same, ShikhaLal, Director – Quality Capabilities & Digital Transformation, Unilever said, “Ofcourse, ecommerce is a huge opportunity. In fact, our 5.4% global turnover comes from ecommerce and we really hope to increase the number.”
Lal also adds that ecommerce comes with its own set of challenges including managing counterfeits and ensuring sustainability since it requires a very different kind of value chain, including primary packaging with a viable range of innovation.
Echoing Shikha, Anant Goel, co-founder and CEO–Milkbasket, said, “Digital is creating an unknown territory for us. Nobody knows how this market is going to evolve in the times to come; what would new convenience parameters that customers are looking at; and what would new products that customers might want?
Moreover, there is a prevailing fear of disruption in business model, since it is still an evolving model. Digital is a six to seven hundred billion dollar market, which is largely untapped and comes with huge challenges. It has created a huge consumer base, which is growing continuously and everybody is looking to acquire that.