Increasing E-Commerce Trends and Shift towards Consumption Driving FMCG Growth

In an era of digitally connected things, consumers are on the verge of adopting e-commerce in various degrees across multiple categories depending upon their needs and market verticals. Emerging technologies, micro & macroeconomic conditions, cultural differences, government regulations and several other factors have influenced the evolution of e-commerce in FMCG sector. The e-commerce in FMCG has seen success in various verticals around the globe on the heels of increased investments in technology, start-up ventures and product innovation in several industry verticals.

The global FMCG market is expected to grow at a CAGR of nearly 4% and contributes near about 3.5% in the overall global e-commerce market. The evolution of e-commerce has opened a whole new shopping world, with a better experience and provides the quest for convenience. It provides hundreds of millions of customers with access to much greater assortment and wide options to choose from.

Changing customer habits and trend of online shopping has given rise to the e-commerce in FMCG sector. Thus, this has given rise to the three online shopping models which gives the convenient shopping experience based on customer’s choice are as follows:

• Buying online and picking up from the nearest store.
• Buying online and picking up at the nearest curb.
• Order groceries online and having them home delivered.

Reduced delivery time, increased convenience, better shopping experience, and increased number of options to choose from several brands are some of the advantages that attract customers to buy online. Moreover, rise in internet penetration, mobile wallets, online banking, increase in spending power, and improved infrastructure are the key factors supporting the way for increased online FMCG sales.

Health and Personal Care Products are on the verge of boom

Health and personal care products are the most widely purchased online and also the most frequently purchased, as per the latest study by Power Retail. The healthcare market accounts for nearly 33% of the overall FMCG e-commerce market, having the largest market and the beauty/personal care having the highest growth.

Global factors impacting e-commerce

Friction-free shopping is one new trend witnessing the growth of the market. It makes the buying process convenient and as automatic as possible. Advancements in the e-commerce of FMCG such as cashier-less stores, for instance, Amazon’s Alexa voice assistant is removing friction from FMCG shopping while establishing new shopping behaviors’.

Globally, Asia Pacific is expected to have considerable growth with China being the fastest-growing market with a market share of nearly 34%, followed by South Korea having around 22% market share.

The rise of going digital is changing consumer behavior, the way people discover and shop for products while creating new opportunities for growth in the FMCG industry. In order to capitalize on these opportunities, FMCG brands will need to expand their digital capabilities to gain the market potential. At the same time, the market players will have to adapt to the evolving customer behavior and competitive landscape influenced by new technologies.