E-commerce in FMCG firms may be worth $5-6 b by 2020: Google report
MUMBAI: In three years’ time, most of us could be buying most of our daily groceries online.
In a report titled Decoding Digital Impact: A $45 Billion Opportunity in FMCG, consulting firm BCG and Google estimate that by 2020, 40% of all FMCG purchases in India will be online, making it a $5-6 billion business.
This will be fuelled by a rapid rise in internet users, likely to grow more than 1.5 times from the current 390 million users to 650 million by 2020. “Rural internet users will contribute to more than 50% of the user growth in the next 3–4 years,” the report said. FMCG firms, some of the biggest advertisers on print, television, and digital media, will be forced to consider rural internet users’ preferences to market to them effectively.
“Rural internet users will contribute to >50% of the user growth in the next 3–4 years, similar to what happened in China in the report said, adding that the smartphone has become the go-to way to get online.
“Rural usage behaviour different from urban w.r.t medium (non-smart phones), type of apps (data light, vernacular) and needs (entertainment & education) and so requires a customised digital strategy,” it said. Rural users prefer watching video and in the vernacular, the report found. This means consumer firms may have to design their ads for short digital videos and tailor it to speakers of regional languages so they are appealing.
Besides, women will come online a lot more than men, even though today, 69% of urban internet users are men and only 31% are women. The percentage of women among urban users is expected to rise to 40% by 2020, as per data from the report.
Right now, large FMCG firms in India spend only about 10% of their advertising budgets on digital advertising, according to the report. This can rise to 25-30% and be worth $1.1 billion by 2020 and even reach 50-70% for select premium brands, the report said.
As consumers look for things to buy online, and brands advertise to them online, sales in certain FMCG categories are expected to be highly “digitally influenced”, the report said. For more discretionary items like baby care, fragrances, over 50% of sales are expected to influenced by online marketing, 45% in apparel, and 60% in consumer electronics, the report said. But for other daily need products like laundry and toiletries, less than 25% of sales are expected to come through online sales or advertising, the report said.