Warc Blog

FMCG brands can gain from ecommerce

18 June 2014
GLOBAL: FMCG brands moving online are likely to secure additional revenue rather than, as many worry, see sales cannibalised from bricks-and-mortar stores, a new report has claimed.

Accelerating the growth of e-commerce in FMCG, from Kantar Worldpanel, is based on in-depth analysis of the purchasing habits of 100,000 shoppers in ten of the biggest online FMCG markets. It forecasts that global FMCG online sales will increase 47% from the current figure of $36bn to reach £53bn by 2016, while the ecommerce share will rise from 3.7% to 5.2%.

The report suggested that most of the barriers preventing retailers and brands from engaging with the online channel are perceived rather than actual. Ecommerce does not lead to reduced consumer loyalty, said Kantar Worldpanel, citing the case of UK supermarket Tesco. Its online shoppers spend 46% of their total grocery budget with the retailer, compared to just 29% for an offline Tesco shopper.

Nor does ecommerce simply substitute for in-store sales; rather the reverse is true. In China, according to the report, "over 50% of all online purchases are additional revenue for retailers and brands", a trend that is seen around the world.

South Korea is currently the most advanced market in terms of FMCG online shopping, with 10.2% of sales coming via this channel. The UK is in second place (4.9%), followed by France (3.9%), Taiwan (3.2%) and China (1.9%).

Asia is expected to be the major growth market over the next few years, with South Korea maintaining its leading position – by 2016, online FMCG sales are projected to reach 13.8% of the total. Online FMCG market share will also grow rapidly in Taiwan (4.5%) and China (3.3%).

In France the success of click and collect shopping will see it move into second place as 6.1% of FMCG sales take place online by 2016, compared to 5.5% in the UK.

Surveying the online retail landscape, Kantar Worldpanel noted that online shoppers tended to prefer branded products and often reused the same list for their grocery shopping, making it vital that brands got onto those lists.

"The future belongs to retailers and brands that see the bigger picture and leverage the opportunities provided to broaden their target markets," declared Stéphane Roger, Global Shopper and Retail Director at Kantar Worldpanel.

"Being a slow adopter has the potential to significantly damage sales and erode market share," he added.

Data sourced from Kantar Worldpanel; additional content by Warc staff

 
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