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COVID-19 impact | FMCG companies enter into innovative tie-ups to reach out to customers

Most FMCG companies plan to continue the partnership even after the lockdown.

May 19, 2020 / 04:51 PM IST
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In the past two months, the coronavirus-induced lockdown has led to innovative partnerships when it comes to delivery of essential goods, particularly from FMCG companies.

While Marico Ltd has launched Saffola Store on Swiggy and Zomato, cab-aggregator Uber India has launched a last mile delivery service and has partnered with online grocery firm BigBasket.

Kolkata-based firm ITC Ltd has launched multiple initiatives to participate in India's fight against coronavirus by tapping a range of distribution channels to ensure that supplies of essential food and hygiene products are delivered at the doorstep of its consumers during lockdown period.

ITC has joined hands with Dominos to deliver ITC’s essential items.Along with Dominos, it has also partnered with food delivery chains Swiggy, Zomato along with community centric apps such as Apna Complex, My gate, No broker and Azgo.

Through such tie-ups, ITC has ensured home deliveries of its brands like Aashirvaad, Yippee!, Sunfeast B Natural, Savlon and Fiama.

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Another Mumbai-based FMCG company, Godrej Consumer Products Ltd, has tied up with Zomato and Dunzo along with B2B supply chain start-up Shop Kirana and car rental company Zoomcar.

Tata Consumer Products too has listed its distributors on Flipkart.

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Most FMCG companies plan to continue the partnership even after the lockdown.

At a time when, stepping out has become risk for consumers due to risk of COVID-19, FMCG companies are entering in to tie ups to enable door-step delivery to consumers.

With supply chain concerns, and acute shortage of manpower, last mile delivery was becoming challenging for companies, particularly when there was high demand of essentials. This affected the sales of FMCG companies.

Marico, while declaring its Q4FY20 results, said their turnover from domestic business declined 8 percent YoY to Rs 1,146 crore due to lockdown.

The India business recorded a volume decline of 3 per cent, vastly affected by disruptions in the last fortnight of March, due to lockdowns initially enforced in some states and eventually all over the country, to contain the spread of coronavirus in India, Marico said in its release sent to the exchanges.

"Partnering with food delivery apps was the best thing FMCG companies could do. It is serving the purpose of delivering at the same time supply chain issue is resolved as delivery apps are directly picking up products from the distribution centres and shops, and getting them delivered to the consumer," said an analyst who closely tracks ITC, GCPL and Marico.

Market experts also pointed out that tie ups are a win-win for both the entities. For instance, Zomato gets the business if it has tied up with Marico and Marico is able to sell its products at the customer's door step.

Going forward, these tie ups will help FMCG companies improve their sales to an extent, and also help them to ride on the success of the on e-commerce as a channel.

According to a Nielsen report, contribution of e-commerce’s to overall FMCG sales in the country is at 2 percent currently and is expected to increase to 5 percent by 2022.

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Himadri Buch
first published: May 19, 2020 04:33 pm

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