How eCommerce Will Boost the FMCG Sector Post COVID-19


August 25, 2020
5 MIN READ
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The Covid-19 has drastically impacted the businesses and industries due to the nation been under lockdown since mid-March.

But this pandemic has observed a significant influence on consumer’s buying patterns, especially when it comes to FMCG sectors.

Some traders have responded well to it, while others are adopting new methods and technologies to reach their customers as much as possible.

The Changing Landscape

Online FMCG has seen an unprecedented surge in this pandemic. As most of the businesses are shut, the FMCG sector has become an essential commodity of the time, and with the following guidelines of social distancing has instigated consumers to embrace online grocery shopping.

Present Situation

As per the reports of IBEF, fast moving consumer goods (FMCG) is the fourth largest sector in the Indian economy, consisting of three major segments.

One among them is food and beverages, which holds 19 percent of the sector. Second is healthcare, which accounts for 31 percent, and third, household and personal care, which holds the remaining 50 percent share.

According to the reports, the FMCG market is anticipated to increase by 9-10 percent in 2020.

FMCG

Around 50% of the US consumers have shopped online for groceries due to the Covid-19 pandemic, out of which 14% are first-time users.

Thus, the retailers across the USA has expanded their supplies to meet the demand for online grocery. Similarly, online FMCG sales in India are also expected to shoot up by 4-5% this year.

Pandemic & Economic Turmoil – Impacton eCommerce Industry

  • In the month of March-May, the economy of the nation was adversely affected due to Covid-19. The imposition of complete lockdown caused chaos and lead to panic buying. The supply chain also observed major hit and several challenges like out of stock, late deliveries, damaged goods, and many more. Subsequently, lead consumers to choose the eCommerce way.
  • As per the recent Nielsen report, the statistics of online FMCG sales increased to 50% in the quarter moth of March, as consumers increasingly shopped from e-grocers, while local grocer’s share fell 220 basis points. This is expected to see further acceleration in demand as well as an increase in supply by the retailers.
  • The Covid-19 emergency has elevated the FMCG eCommerce business and is further expected to promote the policies of online purchase and supply. All kinds of small retailers, wholesalers, consumers have evolved themselves, and & 70% of the users are willing to use the online platform post-pandemic.
  • Online platforms are now playing a vital role for many FMCG companies by providing more platforms to reach their customers and widen the network. It is benefitting not only the business to consumers (B2C) modal but is also productive for wholesalers, distributors, and retailers directly (B2B) business to business modal.

The rural Indian market cannot be ignored

Lately, the FMCG sector in rural India has observed a higher growth at a faster rate as compared to the urban counterpart.

FMCG products hold about half of the total rural spending, semi-urban and rural segments contribute more than 40% of the overall profits of the FMCG sector in India.

About 12% of India’s population living in the villages, is set to be the driving force for the FMCG market at a large scale.

Hence, to penetrate the rural market, FMCG companies are introducing smaller packages for goods that will probably meet the lower-earning population of rural India.

Following certain methods will help businesses come up with new marketing strategies to infiltrate the online FMCG industry.

  • Irrespective of how long the emergency lasts, the online grocery market is predicted to cross over 10% by the end of the year, achieving more than forecasted, according to the reports published by Fabric.
  • Placing the online grocery industry in a fortunate position and soaring high sales. But this doesn’t mean that brick-and-mortar stores will not exist post-pandemic.
  • However, it has paved a way for a new era of grocery shopping, where traders need to enhance the user experience and adopt omnichannel strategies.
  • Which means retailers will have to develop a marketing plan and strategize in a way to meet the surge in demands.
  • Also, the growing demands of the consumers have invited more players in the market, trying to satisfy the consumers innovatively and attractively.

Summarizing

The evident change in the shopping behavior of consumers has been noticed during the pandemic.

People are trying to avoid going out in the public and maintain a social distancing, this means that online shopping is becoming a new norm and people seem to quite enjoy it.

But so many traders adopting this strategy is leaving consumers to demand more and better, thus making it a continuous process of engagement and involvement.

The FMCG companies need to adapt to all the changes as per the consumer’s demands and behaviors to sustain in the long run. Faster the industries evolve and show agility will gain the most advantages of the market.

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