It is expected that by the year 2017, 48% of the world’s population will have internet access and the number of mobile-connected device will exceed the number of people on the planet.
The FMCG sale on ecommerce websites is roughly around 3.7% of the total FMCG sales worldwide.
In spite of this less than promising figures, FMCG ecommerce sales has the potential to rise up to 28% if 60% households use ecommerce websites just once a month for their grocery shopping.
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This figure is not far from being a reality as mobile technology percolates into every aspect of our daily activities.
FMCG Ecommerce Advantage
The advantage for FMCG industry is in the form of the high margins they maintain while trading online.
Hence, they are able to offer periodic sales where the same products can be sold at fantastic prices and irresistible deals can be made.
On the Ecommerce platform the margins are further raised as a number of middlemen get eliminated.
It was assumed that the growth of the FMCG sector would be driven by the number of women adopting online shopping as a conducive mode.
However, in reality the men have been as big a contributing factor as the women.
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In fact, men have been the driving factor and early adopters until recently. Further, consumers living in the non-metros rely heavily on online purchases for the wide selection available and also the competitive prices.
Business Going Bust in the New Market
As ecommerce is changing the landscape, a number of businesses are becoming obsolete. Amazon and iTunes have taken over Virgin Megastores, HMV, and Woolworths with their great deals on audio, video and books.
Consumer electronics are the second most highly purchased goods on the internet and the fierce competition has had a major impact even on large companies such as Samsung, HP, and Sony.
In fact, many new mobile phones such as One Plus One, Lenovo and Micromax devices are being launched directly on ecommerce portals.
This creates a strategic and cost advantage as partnering with multi-retail ecommerce websites creates a collaborative edge. What holds true for major retail products can be easily adjusted to the needs of the FMCG industry.
Google’s “Peak Hour” app may help shoppers beat the queue in supermarkets, however, online shopping portals help beat the trip to the supermarket altogether.
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Maintaining an Edge over the Internet
Internet offers a wider market base, but with that comes bigger competition, hence FMCG sector, which has always been vulnerable to competition, is further driven in the race.
The best way to keep customers engaged and interested is by offering them something different and much more. So, the Buy1Get1 offers, 50% slash sales, seasonal sales and out-of-season sales lend the cumulative leverage for growth.
There are multiple websites offering the same products at different prices, and to make the price wars apparent, there are price-compare websites that take a cut in the share as well.
Multiple offers on a single product, added to it loyalty schemes have all pushed prices to all time lows and rendered an exceptional shopping experience to customers.
Is it only the price?
Mega FMCG sales are an opportunity to establish customer loyalty and also to dispose existing stock to make way for fresh stocks.
A large part of online shopping is impulsive as users browsing the website stumble upon deals or interesting products.
Search Engine Optimization and social media marketing campaigns ensure that these products are prominently advertized in the most frequented websites.
This leads to a number of flash purchases of products that are not very highly priced, but just right for an impulse purchase.
Also, from purchase and billing history, the buyers preferences are auto-saved and special offers on their past purchases are constantly flashed while they are browsing the web.
Since, most of the FMCG are repeat purchase items, a good offer on these is always preferred over other impulse purchases.
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The way ahead
The future of shopping lies largely on the internet and though its impact on FMCG brands will remain relatively small, it will not be long before people recognize the benefit of picking their grocery online.
In the midst of the various commitments and engagements, grocery shopping will be another task that will be relegated to the virtual world.
Apart from the vast choices and offers, there is also the advantage that the entire grocery list will be delivered at the doorstep at a convenient time and in neat packages.
Quality will not be a big concern either as competition ensures that the business delivers its best and returns policies are designed accordingly.
There might be an argument that a large part of the ultimate buyers may not easily adopt online shopping for FMCG as they do for other retail goods, but we have already witnessed that change is inevitable.
These factors, coupled with the regular offers are likely to make FMCG a competitor to reckon with for other retailers on the internet as they fight for consumer attention.