With the online buying ecosystem creating consumer trust and confidence in India, the share of e-commerce channel has grown three times within total FMCG retail sales, according to the Nielsen Connected Commerce Report 2018.
The report provides an understanding of the global connected consumer, shopping traits, category evolution and barriers to identify future growth prospects. It identifies the top online category and the changes in category penetration along with online purchasing behaviour and consumers’ expectation from online
The report, which looked at consumers’ online purchasing habits, said while global online grocery purchasing grew 15% in the last two years, leading to an estimated $70 billon additional sales in online FMCG, in India 98% of consumers who have access to internet have made a purchase online.
Travel, fashion, IT and mobile continue to have major share in online transactions with 69%, 66% and 63% of consumers, respectively. But, the categories posting the most significant growth in e-commerce channel include packaged grocery, where 40% of online consumers made a purchase. Grocery grew 21% on a base growth rate of 33% in 2017, fresh groceries growth of 17% moved to 41% as against 35% in 2017 and baby hand children products were up 10% to 32% as against 29% in 2017, the report said.
“From tracking the e-commerce evolution in pioneering countries like South Korea, where online sales now account for a staggering 20% of the total FMCG sector, we know that consumers follow a certain pattern of online shopping behaviour,” said Sameer Shukla, executive director – retail measurement services, Nielsen, South Asia.
“Travel, fashion and IT/mobile products are typical categories for first-time online shoppers, but as their familiarisation, comfort and trust levels increase, their category repertoire expands into areas like beauty, personal care and baby products, and then moves to packaged and fresh grocery categories. This is evident from the significant jump we have seen in online purchasing within grocery and food delivery in recent years. At the same time, with the large scale data democratisation, millions of Indians are being connected and there remains a lag between getting connected and transacting. Therefore, while the numbers have grown in absolute, the percentage of transacting Indians has declined marginally in 2018. This also means that there is a huge untapped potential for online shopping across categories in coming years,” Shukla said.
The report points out that consumers are more open to purchase packaged and fresh groceries online when they are offered certain purchasing options and quality assurances. About 60% of consumers pointed towards the need to offer and improve hassle-free refund, replacement experience and free-of-cost delivery. If such offers are made, they are likely to make purchase with higher frequency.
With the rise of consumer adoption in online purchasing, the continuously evolving e-commerce space has blurred the lines between online and offline, notes Shukla. “A few years ago, e-commerce purchase was focused on non-perishable goods such as travel, fashion and books, but over time we are seeing a rise in purchases across new categories. Looking ahead, the next wave of evolution in online purchasing behaviour will likely be driven by innovations in digital capabilities like personalised recommendations based on programmatic consumption and online behaviour,” Shukla said.