FMCG sector makes big gains on e-commerce channels during pandemic

The pandemic has accelerated the expansion of the FMCG sector’s footprint in the e-commerce channel.

According to marketing data and analytics firm Kantar that tracks household spends, e-commerce channels’ penetration for FMCG purchases grew nearly five times in the top nine metros, compared to pre-Covid levels.

E-commerce channels’ penetration for FMCG product purchases grew to 15.6 per cent in the 12 months ended May this year, compared to a mere 2.4 per cent in the 12 months ended in May 2019 in these key cities, it added.

K Ramakrishnan, MD-South Asia, Worldpanel Division, Kantar told BusinessLine, “Covid has given a significant push to online FMCG purchases, so much so that the penetration in most town classes has more than doubled.”

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Indian consumers are turning to e-commerce to buy bigger packs and experiment with new and niche products. “E-com consumers tend to be more experimentative in terms of variants as well as have better traction for the niche segment,” Kantar noted. For instance: Granola and Muesli products have witnessed higher traction online, compared to the overall breakfast cereals segment.

According to Kantar’s estimates, between April 2020-March 2022, nearly 10.7 millon households bought FMCG products online, spending nearly Rs 3,035 crore. Of this, nearly 13 per cent ( 1.4 million households) were found to be evolved e-commerce FMCG buyers, making higher spends and buying a larger number of categories online.

About 10 per cent of the households were found to be evolving e-commerce FMCG shoppers, and nearly 53 per cent were found to be first-time buyers of FMCG products online.

“The key is that not only are more and more households buying through the e-commerce channel, but more are retaining. And those retaining with the channel are increasing the number of categories and spends through the channel. We expect this trend to continue into the future as smaller towns are equally getting on board the Ecommerce FMCG wagon, as the bigger metros. Ecommerce platforms also seem to give an impetus to experimentation and trials of new and niche products and brands,” Ramakrishnan added.

E-commerce now accounts for 17 per cent of the overall FMCG consumption among evolved buyers, who are affluent and make average spends of about Rs 5,620.