E-commerce channels prompt FMCG companies to launch digital only brands

Plunge Daily , Oct 31, 2020

FMCG companies are eyeing e-commerce channels and have also begun to launch their digital only brands. They have also boosting their online presence as digital purchases has accelerated significant during the pandemic.

RS Sodhi, Managing Director of Amul, during a panel discussion at a FICCI event pointed out that in the past six months, e-commerce has multiplied by nearly two to three times for the sector. He said online retail was earlier contributing only three per cent to the market, and just within six months, it is contributing seven to eight per cent. Pawan Agrawal, CFO Marico Ltd, said online sales for the company grew by about 40 per cent in the first half of the current fiscal year, and the e-commerce channel contributed eight per cent to the total turnover in the second quarter of the current financial year.

Companies are stepping up in terms of direct-to-consumer channels. Most notedly, Dabur India has come up with several new products, such as apple cider vinegar, new products in the Dabur Baby Range and Dabur cold-pressed mustard oil, exclusively for the online market. Adarsh Sharma, executive director sales Dabur India Ltd, said that in that post-COVID world, online retail has emerged as the most preferred contactless method of making purchases. He said this trend is likely to stay. “We have seen our online business more than doubling and had a saliency of over six per cent in Q1 2020-21 compared to 1.5 per cent in Q1 of 2019-20. We expect the saliency to remain around five to six per cent this year.”

The sudden surge in consumer demand for online retail services could be due to the implementation of social distancing norms and lockdown measures countries have taken to contain the pandemic, these new norms are finding increasing acceptance amongst consumers and adoption by traditional businesses. Ankur Pahwa, an advisor at EY India E-commerce and Consumer Internet Leader, Transactions Diligence Partner, had earlier said that segments such as on-demand delivery services related to fresh produce, online education, social engagement platforms from gaming to OTT platforms, online collaborative tools, e-pharmacies, online consultations are a few areas that may have witnessed triple digit growth. He said companies in the mentioned segments have witnessed triple digit growth, with millions of new consumers onboarding their platform in the last couple of months to cope in dealing with the health crisis.

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