How is E-commerce Driving Growth in FMCG Sector & Catering to Consumer Demands?

The contribution of e-commerce to total FMCG sales is expected to go up to 11 percent by 2030.
How is E-commerce Driving Growth in FMCG Sector & Catering to Consumer Demands?

The FMCG sector exhibited resilience and reinvented strategies to evolve in the past two years. The sector witnessed remarkable transformation by adapting to digitization and building marketing strategies to meet changing consumer needs.

E-commerce is at the forefront of industry transformation and has the potential to gain market share within different channels. As per Nielsen, the contribution of e-commerce to total FMCG sales is expected to go up to 11 percent by 2030. Factors such as concerns around health, hygiene, sanitation, and nutrition have led to a shift in consumption habits. Increased shopping power among scores of consumers and preference for convenience and safety to shop with just a click from the comfort of their homes have paved the way for growth.
 
While the unprecedented Covid-19 outbreak posed a stupendous challenge in the early phases, several brands turned this adversity into an opportunity by upgrading themselves digitally. With disrupted markets and broken supply chains during one of the strictest and longest lockdowns in the world, FMCG brands were compelled to look for new ways to ensure business continuity amidst increasing demand for online groceries.
 
We have witnessed a steady online adoption of FMCG as first-time shoppers increased month-on-month during Covid-19.  The growing momentum encouraged a slew of industry players to spring into action and led retail stores to ramp up their presence on online platforms with new apps, and tie-ups with logistics companies for timely home deliveries. Recognizing the potential, not just large retail chains, but even smaller stand-alone outlets developed online routes and operationalized their website to allow consumers to place orders through it.
 
With consumers hopping to official websites of FMCG brands, manufacturing companies are now able to gather valuable customer data that’ll help to understand their purchasing habits and form a one-to-one relationship with their customers. It is also feasible to have a wider assortment of e-commerce compared to a traditional Retail format which will always have space constraints.
 
This tremendous growth is no longer confined to big cities and is being facilitated by factors such as internet penetration and affordable smartphones. E-commerce is gaining immense popularity even in the tier-II and tier–III cities of the country as they now contribute three of every five orders for leading e-retail platforms.  Due to these reasons, many FMCG companies are looking at exclusive tie-ups to launch their products on e-commerce portals first before taking them to the mass markets to gauge customer feedback.
 
Thus, e-commerce platforms are an important part of building a brand franchise, through programs like direct home deliveries or direct store deliveries, customer backhauls, and nurturing partnerships with tech-enabled delivery platforms.
 
Adapting to online purchase practices is not a choice anymore, but a necessity. Given that in the next decade, the new generation which has been brought up in a digital world will be making all the shopping choices, brands that wish to reach shoppers, need to meet them on their preferred platforms. FMCG brands need to recognize this opportunity and invest swiftly and decisively in e-commerce.
 
While the significance of retail brick and mortar stores continues to be paramount, e-commerce has taken off and is expected to further aid FMCG brands in offering seamless user experience and building enhanced trust which will help in attracting new shoppers and in turn unlocking higher sales potential & increasing market share in the longer run.
 
In the foreseeable future, e-commerce platforms and FMCG companies could look at enhancing the scope of their online offerings by increasing coverage for delivery; offering more convenient options; and going one step further by providing offerings that are hard to find offline to enhance the personalized experience for the consumers.

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