E-commerce led by quick-commerce emerging as ‘high growth channel’ for FMCG companies

FMCG players are witnessing strong growth in the overall e-commerce segment, led by quick-commerce platforms. Companies such as Dabur India, Nestle India, Hindustan Unilever and Tata Consumer have reported high double-digit growth on e-commerce channel in their Q1 earnings. A recent report by Kantar also noted that consumers in the top nine metros are increasingly adapting to e-commerce and quick-commerce mode, which is fuelling the premiumisation trend. Infact, quick-commerce is growing at a faster clip.

• Also read: FMCG players see dip in beverage sales in Q1

Dabur India in an investor presentation stated that the company recorded about 20 per cent growth in e-commerce channel and 70 per cent growth in quick-commerce in Q1FY25. In the earnings call, Mohit Malhotra, CEO, Dabur India said, “E-commerce channel is flying for us. We have got a structure and playbook in place to put this business on high growth track. Quick-commerce is now 30-35 per cent of our overall e-commerce business. We are working all the major players in this space and devising product mix and portfolio. This is a very high growth channel for us.”

3x growth

In the Q1 FY25 earnings call, HUL’s management stated that the e-commerce continues to “be a very strong growth driver” for the company “growing ahead of the market and at 3x of the modern trade growth.” “The shopper missions are different now between, say, quick commerce and beauty commerce. General trade, the kirana store would have a different set of customers. So increasingly, the market is getting segmented, and we have to consciously and we have been cautiously designing for channels across, in fact, we are now designing for customers,” the company’s management stated.

Tata Consumer Products stated that it witnessed 61 per cent growth on the e-commerce channel in the first quarter of the fiscal. On the earnings call, Sunil D’Souza, MD and CEO said, “We have seen overall e-commerce grow and within e-commerce, quick commerce grow quite significantly. It is difficult to quantify what is quick commerce and what is e-commerce but that said e-commerce is growing at 61 per cent and about 35 per cent of that is coming from quick-commerce.”

In the first quarter earnings statement, Suresh Narayanan, Chairman & Managing Director, Nestle said, “E-commerce sustained its upward trajectory, contributing to 7.5% of domestic sales and growing at double digit.” The packaged food company said that it saw “strong growth” in quick commerce in the June quarter driven by brands such as Kitkat, Nescafe, Maggi Masala-ae-Magic, Milkmaid and ready-to-drink portfolio.

A recent Kantar report said that household penetration growth in the top nine metros of quick commerce was estimated at 31 per cent , which was higher than e-commerce (19 per cent) in the 12 month-period ended April 2024 over an year earlier. It also noted that quick commerce channel is aiding the adoption of premium products and larger pack sizes.