E-commerce sales in FMCG to grow twice as fast as modern trade

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Published: December 4, 2019 3:42:44 PM

Share of e-commerce in FMCG sales is expected to grow to 5 per cent worth $4 billion in 2022 from 0.5 per cent in 2016 and 2 per cent in 2019.

The majority contribution of 6 per cent to the sector’s sales via e-commerce channel comes from metros.

Share of e-commerce in FMCG sales is expected to grow to 5 per cent worth $4 billion in 2022 from 0.5 per cent in 2016 and 2 per cent in 2019, Nielsen India said on Wednesday as it launched its new solution — E-Trak Index for tracking FMCG e-commerce sector. Interestingly, e-commerce FMCG sales will grow twice as fast to reach the 5 per cent share in comparison to modern trade. While the latter took 11 years to grow from less than 1 per cent share to 5 per cent in 2010 and overall 23 years to likely reach 10 per cent in 2022, e-commerce channel is likely to take around 6 years to acquire 5 per cent share.

“E-commerce has seen a transformative journey and is now a $1.2 billion industry growing from 0.5 per cent contribution in 2016 to a 2 per cent contribution in 2019, and slated to be 5 per cent in 2022 – this is in half the time that brick and mortar retail took to evolve,” said Sharang Pant, Head-Retail Measurement Services and Retailer Vertical, South Asia, Nielsen Global Connect. The 5 per cent growth by 2022 will come with contraction in the share of traditional trade from 89 per cent in 2019 to 85 per cent in 2022 while modern trade or organised retail will go up by 1 per cent from 9 per cent currently.

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The majority contribution of 6 per cent to the sector’s sales via e-commerce channel comes from metros. Within this share, food items contribute 44 per cent sales followed by 40 per cent from personal care and 13 per cent with respect to household care products. However, unlike categories such as online e-commerce marketplaces, foodtech, cab-hailing, e-pharmacies, Nielsen claimed there is no clash between online and brick-and-mortar FMCG channels. “These channels are not cannibalizing each other, and all continue to grow with e-commerce outpacing modern trade and traditional trade,” Pant added.

Globally, India’s 2 per cent online share of all FMCG spend mirrors similar share of other countries including Canada, Turkey, Malaysia, Denmark, Colombia having 2 per cent online share followed by countries like Russia (1.5 per cent), Mexico (less than 2 per cent), Spain (1.2 per cent), Italy (1.7 per cent), South Africa (less than 1 per cent) etc., according to Nielsen. South Korea with 20 per cent, 17 per cent in China, 7.6 per cent in Brazil, 7 per cent in France, 6.3 per cent in the UK, 6 per cent in Singapore etc. are the leading economies having highest online share percentage to respective FMCG sales globally.

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