FMCG sales on e-commerce sites to touch US$ 4 billion by 2022: Nielsen

The sales of fast-moving consumer goods (FMCG) on the e-commerce sites are expected to reach US$ 4 billion by 2022, contributing 5 per cent to overall sales of packaged consumer goods sold in India, according to Nielsen, a market researcher.

Presently, e-commerce contributes 2 per cent or around US$ 1.2 billion to the overall sales of FMCG.

The rise in contribution of e-commerce to sales is because of growing smartphone penetration, increased data consumption, and the attempts by large companies to make their products available online.

Nielsen compared the two sales channel and noted that the contribution of modern trade to FMCG sales will reach 10 per cent by 2022, witnessing a growth from current 9 per cent whereas during the same period the share of traditional trade is will decrease to 85 per cent from the current 89 per cent.

The sales of FMCG products on the internet by various companies such as Hindustan Unilever, Dabur India Ltd, Nestle India, Godrej Consumer Products Ltd., among others has led the research company to start tracking the sales. 

"India's FMCG industry is now making its presence felt in the e-comm channel - appealing to consumers' need for convenience, and in sync with increasing smartphone and internet penetration," said Mr Prasun Basu, South Asia Zone President, Nielsen Global Connect. "Nielsen India has launched a specific E-Trak index that will now measure FMCG consumer offtake in the e-comm space to give a complete picture of the changing marketplace", he said. The manufacturers and marketers can get data, information and insights with the help of E-Trax index and can further used it to enhance their e-commerce channel sales strategy.

As of now, Nielsen will track sales of 11 FMCG categories online in the top metros consisting of refined oils, biscuits, packaged atta, vermicelli and noodles, spices, iodised salt, salty snacks, washing powder, packaged tea, toothpaste and utensil cleaners.

In its initial research on the market, the company noticed that online shoppers in the country's top metros were showing higher cases of online shopping making 6 per cent of all FMCG purchases through e-commerce. Among these, the biggest contributor is foods contributing 44 per cent, followed by personal care (40 per cent) and household care (13 per cent).

Mr Mohit Malhotra, chief executive officer at New-Delhi based Dabur India Ltd said that e-commerce posted a growth of greater than 63 per cent, taking its overall contribution to sales to 2.2 per cent for the maker of Vatika hair oil and Real Juices. Earlier this year, the company also launched a range of children's hair care products which is available online only.

Last year, Nestle India the local arm of Swiss packaged goods company, first rolled out its breakfast cereals online. The popular brand Maggi was reintroduced on Snapdeal in 2015 when the crisis-hit brand made a comeback.

Though, Nielsen said that e-commerce is currently being used as an additional channel and not cannibalising other channels. "All channels continue to grow, buying behaviour differs across channels," the report added.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.