5G Technology & E-commerce

How E-Commerce can Drive Growth in FMCG Sector in 2023

BY - Guest author

Mar 04, 2023 / 8 MIN READ

How E-Commerce can Drive Growth in FMCG Sector in 2023

India is pushing for the adoption of 5G, and as a result, eCommerce and fast-moving consumer goods
(FMCG) companies are increasingly relying on more cutting-edge digital solutions to enhance their
customer experiences.

The fast-moving consumer goods (FMCG) industry has been significantly impacted by e-commerce,
with online sales of FMCG products expected to reach $1 trillion by 2023, according to a report by
FMCG Gurus. The accessibility and reach of online platforms, which enable FMCG companies to
broaden their clientele and boost sales, are the main drivers of this expansion.

Furthermore, according to a recent Nielsen report, eCommerce will account for 11 percent of FMCG
sales by 2030. That is eight times the present level. Therefore, FMCG firms must have robust
eCommerce platforms to meet anticipated consumer demand in the upcoming years.

Additionally, a PwC report reveals that nearly 75 percent of customers have bought FMCG products
online, with millennial and Gen Z consumers leading the trend. E-commerce offers FMCG businesses
a range of sales-boosting capabilities, including tailored recommendations, targeted marketing, and
faster checkout procedures. E-commerce enables FMCG companies to compile insightful information
on consumer preferences and behavior, which can guide product development and boost supply
chain effectiveness.

eCommerce Developments will Benefit FMCG Companies in 2023

A new class of market participants is emerging that is quickly upending the status quo and posing a
significant threat to well-established market players due to the development of digital technology
and the growth of eCommerce. These digital-native businesses stand out due to their creative
business strategies and adaptable operational frameworks, which allow them to respond quickly to
shifting market trends and consumer needs. They are therefore anticipated to significantly contribute
to growth in the fast-moving consumer goods (FMCG) industry in the upcoming years.

In addition, both new and established firms are reinventing their business operations by connecting
with reliable and larger eCommerce companies. Local kirana retailers are getting digital assistance
from new eCommerce start-ups to increase their operational footprint. This symbiotic relationship
enables these small businesses to tap into the vast potential of eCommerce, while eCommerce
platforms benefit from the rich diversity and local expertise of these traditional retailers.

This trend is leading to a surge in demand for online marketplaces and small local shops, which are
well-positioned to capitalize on the growing preference for contactless and secure deliveries. As a
result, we can expect continued growth in eCommerce channels, driven by the convenience and ease
of online shopping and the ability to access a broader range of products and services.

Over the past few months, the purchasing environment has seen a significant transformation. While
retail is still substantial, eCommerce has gained traction and is anticipated to further help FMCG
companies by boosting sales, expanding market share, and luring new customers. FMCG companies
gain in a variety of ways from the direct-to-customer (D2C) model that e-commerce encourages,
including:

Reach Customers Faster: Compared to the old system, the direct-to-consumer model enables
businesses to reach consumers with their products quickly. Additionally, since no middlemen are
involved, businesses can make higher revenues. Additionally, D2C lets companies initially reach out
to clients in small numbers before making the necessary adjustments to reduce risk based on the
market's response.

Gaining Trust: When customers visit a brand's official website. Businesses now have a great chance to
communicate with customers more effectively by providing a streamlined user experience, interface,
and relationship-building process.

Improved Operational Efficiency: By automating inventory management and order fulfillment

processes, FMCG companies can reduce costs and increase productivity. Additionally, e-commerce
platforms can also be used to streamline logistics, making it easier for FMCG companies to manage
the supply chain.

Effective Monitoring: Once a product hits the market, it is difficult for businesses to track it. While
manufacturers are unaware of how consumers perceive a brand, retailers are nevertheless aware.
The D2C model closes this gap by giving businesses greater control over messaging and packaging
marketing and a better understanding of how buyers perceive their products.

Final Thoughts

It is now essential to adjust to online shopping trends. Given that the new generation, which has
been raised in a digital world, will make all of the buying decisions in the coming decade, businesses
that want to connect with consumers must do so on the platforms they prefer. FMCG companies
must seize this chance and make an immediate, decisive investment in eCommerce.

While brick-and-mortar retail outlets still hold a significant amount of importance, eCommerce has
gained ground and is anticipated to continue assisting FMCG firms in providing seamless user
experiences and developing greater trust. This will help attract more customers and ultimately
unlock larger sales potential and growing market share in the long term.

eCommerce platforms and FMCG companies may consider expanding the range of their online offers
shortly by expanding their delivery coverage, providing more practical options, and perhaps going a
step further by offering products that are difficult to find offline to improve the personal experience
for the customer.