LONDON: Sales of groceries through e-commerce platforms are expected to account for 9% of the global FMCG market and be worth $150bn by 2025, a new report has forecast.
According to research firm Kantar Worldpanel, the worldwide e-commerce grocery market reached $48bn in the 12 months to June 2016, accounting for 4.4% of global FMCG sales, and e-commerce is on course for taking a greater share of the overall FMCG market in the coming years.
For example, the overall FMCG market remained flat in the UK over the last year, but e-commerce sales of groceries grew by 8.3%, taking its overall share to 6.9%.
It means the UK is placed third in Kantar Worldpanel's rankings of the top 10 countries for the share taken by e-commerce in the FMCG market.
Digitally developed South Korea is the world's largest online FMCG market by value share (16.6%), followed by Japan (7.2%), the UK (6.9%), France (5.3%), where the Drive collection model has proven a success, and Taiwan (5.2%).
China, at 4.2%, is ranked sixth in terms of e-commerce share of market, but the country also recorded the biggest growth of 47% over the past 12 months.
Meanwhile, adoption across Latin America is currently very low with the exception of Argentina (1%), while in the US only 1.4% of groceries are bought online.
At first glance, the report appears to confirm the rapid adoption of e-commerce platforms for FMCG shopping, but Kantar warned there are signs that the rate of growth is slowing and that retailers have some challenges to overcome.
Commenting on the UK market, Fraser McKevitt, Head of Retail and Consumer Insight at Kantar Worldpanel, said: "By 2025 we expect online FMCG in the UK to be worth $14bn with a market share of 12%: almost double its current share.
"This year's sales increase of 8.3% is encouraging, but falls well below the double digit growth we've seen in previous years. Higher minimum delivery charges have dissuaded some shoppers, but the UK has also reached a stage where most people who wish to shop online are already doing so, meaning growth has slowed.
"We know that two-thirds of shopping trips currently contain too few items to meet the minimum spend online, meaning consumers have no choice but to favour bricks and mortar for much of their shopping.
"Until retailers work out how to offer these smaller baskets – and do so profitably – online, we're unlikely to see growth pick up again."
Data sourced from Kantar Worldpanel; additional content by Warc staff