SINGAPORE (Nov 9): Signs of strengthening growth and an increase in the number of products commanding a premium are beginning to emerge across the fast-moving consumer goods (FMCG) sector, according to Nielsen.
Findings from the performance management company’s latest report, What’s Next in E-Commerce, points to strengthening growth in line adoption and spend around the world – and illustrates that the trend of slow or no growth in the FMCG sector is about to change.
Citing 2016 research data from eMarketer, Nielsen says FMCG e-commerce is set for exponential growth as total retail e-commerce is predicted to grow by 20% or an additional $2.1 trillion by 2020, compared to current total FMCG retail sales growth of 4% per annum.
Prashant Singh, Nielsen’s Head of E-commerce, Growth and Markets believes it is hence increasingly critical for retailers and brands to understand the fundamental drivers and influencers, so as to develop a comprehensive and successful strategy in line with these trends.
In a Thursday press release, Singh shares the following advice based on what he has identified as key influencers of e-commerce growth trends around the world.
Look beyond connectivity
While connectivity, accessibility to cheaper data and smartphone reach play a key role in shifting consumer behaviour, Singh points out that supply factors and cultural nuances also influence consumers’ online purchase behaviour to a large extent.
Consider the barriers
In Nielsen’s view, retailers need to alleviate a number of barriers to drive their share of the consumer e-commerce wallet – from the desire to examine an item before buying it, to a lack of trust that retailers will meet expectations of freshness when it comes to food. Another key consideration is addressing concerns over the level of quality of products bought online versus in-store.
Win the food basket
Singh considers the consumer food basket a “Holy Grail for retailers” due to its repetitive purchase pattern, which makes it critical to succeeding in the online FMCG sector even as food items remain largely absent from e-commerce sales.
Target omni-channel consumers
In order to develop a winning e-commerce strategy, retailers need to over-deliver against four drivers of consumers’ online purchasing decisions, says Singh. These are namely: convenience, price/value, assortment, and customer experience.
“The retail sector is experiencing its own iteration of a ‘Kodak moment’. Shifting the balance between high-margin in-store baskets to currently low-margin online baskets requires courage, conviction and insight. For those willing to take a calculated risk, the rewards are there for the taking, as share of growth continues to skew toward online channels,” concludes Singh.