With the online buying ecosystem creating consumer trust and confidence in India, the share of e-commerce channel has grown three times within total FMCG retail sales, according to the Nielsen Connected Commerce Report 2018.
The report provides an understanding of the global connected consumer, shopping traits, category evolution and barriers to identify future growth prospects. It identifies the top online category and the changes in category penetration along with online purchasing behavior and consumers’ expectation from online shopping.
The report, which looked at consumers’ online purchasing habits, said while global online grocery purchasing grew 15 percent in the last two years, leading to an estimated USD 70 billon additional sales in online FMCG, in India 98 percent of consumers who have access to internet have made a purchase online.
Travel, fashion, IT and mobile continue to have major share in online transactions with 69 percent, 66 percent and 63 percent of consumers, respectively. But, the categories posting the most significant growth in e-commerce channel include packaged grocery, where 40 percent of online consumers made a purchase. Grocery grew 21 percent on a base growth rate of 33 percent in 2017, fresh groceries growth of 17 percent moved to 41 percent as against 35 percent in 2017 and baby hand children products were up 10 percent to 32 percent as against 29 percent in 2017, the report said.
“From tracking the e-commerce evolution in pioneering countries like South Korea, where online sales now account for a staggering 20 percent of the total FMCG sector, we know that consumers follow a certain pattern of online shopping behavior,” said Sameer Shukla, executive director – retail measurement services, Nielsen, South Asia.
“Travel, fashion and IT/mobile products are typical categories for first-time online shoppers, but as their familiarization, comfort and trust levels increase, their category repertoire expands into areas like beauty, personal care and baby products, and then moves to packaged and fresh grocery categories. This is evident from the significant jump we have seen in online purchasing within grocery and food delivery in recent years. At the same time, with the large scale data democratization, millions of Indians are being connected and there remains a lag between getting connected and transacting. Therefore, while the numbers have grown in absolute, the percentage of transacting Indians has declined marginally in 2018. This also means that there is a huge untapped potential for online shopping across categories in coming years,” Shukla said.
The report points out that consumer are more open to purchase packaged and fresh groceries online when they are offered certain purchasing options and quality assurances. About 60 percent of consumers pointed towards the need to offer and improve hassle-free refund, replacement experience and free-of-cost delivery. If such offers are made, they are likely to make purchase with higher frequency.
With the rise of consumer adoption in online purchasing, the continuously evolving e-commerce space has blurred the lines between online and offline, notes Shukla. “A few years ago, e-commerce purchase was focused on non-perishable goods such as travel, fashion and books, but over time we are seeing a rise in purchases across new categories. Looking ahead, the next wave of evolution in online purchasing behavior will likely be driven by innovations in digital capabilities like personalized recommendations based on programmatic consumption and online behavior,” Shukla said.― The Financial Express