Online sales of FMCG outpace offline sales globally

Monday, Nov 06, 2017 21:02

Total retail e-commerce is predicted to grow by 20 per cent, or an additional US$2.1 trillion, by 2020. — Photo

Growth in online sales of fast-moving consumer goods (FMCG) is outpacing offline sales globally, according to a new report by performance management company, Nielsen.

The Nielsen report, What’s Next in E-Commerce, highlights the latest trends in consumer purchasing online within the FMCG sector, and points to strengthening growth in online adoption and spends around the world.

While the total FMCG retail sales growth currently sits at around 4 per cent per annum, total retail e-commerce is predicted to grow by 20 per cent, or an additional US$2.1 trillion, by 2020.

“The FMCG sector has been experiencing slow or no growth globally, but we are now seeing signs of strengthened growth as well as premiumisation across the sector, driven in many cases by e-commerce,” said Prashant Singh, Nielsen’s Head of E‑Commerce, Growth Markets.

“And as the source of FMCG sector growth continues to shift to online channels, it will be increasingly critical for retailers and brands to understand the fundamental drivers and influencers to enable them to develop a comprehensive and successful digital strategy,” he added.

According to Singh there are four key influencers significantly impacting e-commerce growth trends around the world. Firstly, e-commerce is growing rapidly, but the growth factors are not uniform. Connectivity and accessibility to cheaper data and handsets play a key role in shifting consumer behaviour, and to a large extent, smartphone reach is an early indicator of potential e‑commerce growth.

“However, connectivity alone isn’t sufficient to drive e-commerce penetration. Supply factors and cultural nuances also influence consumers’ online purchase behaviour,” he said.

Secondly, there are three key considerations when examining barriers to e-commerce: the desire to examine an item before buying it, the lack of trust that retailers will meet, expectations around freshness and the concern over the quality of products bought online and in-store.

Thirdly, the ability to win the elusive food basket will be the key to success in retail e‑commerce, he said.

Food items remain largely absent from e-commerce sales. “Winning the food basket is critical to succeeding in the online FMCG sector,” he said.

Finally, the omnichannel shopping trends should be concerned. “When it comes to retail e-commerce, convenience, price, assortment and customer experience are the highest‑ranked considerations driving consumers’ online purchasing decisions.

“In order to develop a winning e-commerce strategy, retailers need to ensure they are prepared to over-deliver against each of these four drivers,” Singh said. — VNS

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