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Why are FMCG companies turning to e-commerce portals for product launches?

FMCG experts said it is a go-to-market strategy for these companies to promote their products first on an e-commerce portal to create the buzz about the product and judge customer behaviour

November 26, 2018 / 04:04 PM IST
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Be it a chocolate, chips or your favourite noodles, you will be able to find it on an e-commerce portal before it hits the supermarket shelves near you.

FMCG companies are looking at exclusive tie-ups for a limited period to launch their products on e-commerce portals first before taking it to the mass markets.

Last week, FMCG major ITC tied up with Bigbasket for selling YiPPee's My range noodles. The products were available on Bigbasket for one week, following which it was distributed to all modern format and general trade stores across India.

“Digital e-commerce is an important opportunity area. The digital world, including e-commerce platforms, are effective tools to strengthen the brand’s visibility and build a consumer franchise, ”Hemant Malik, Divisional Chief Executive-Foods Division of ITC, said, adding that over the last few years the e-commerce segment is growing at over 120 percent for ITC.

Not only ITC, Mondelez too had launched its augmented reality-enabled Amazon Exclusive Cadbury Dairy Milk Silk Gift Box around Valentine’s Day and Diwali. At a recent event, Herjit S Bhalla, Managing Director, Hershey India, said the company is looking for an e-commerce exclusive product from Hershey in the future.

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Bigbasket’s Co-Founder and Chief Executive Officer Hari Menon too sounded optimistic about the possibility of FMCG players like Hindustan Unilever, DaburBritannia, Marico and Emami tapping the e-commerce space for a limited period with an exclusive launch of products.

Menon believes e-commerce platforms are the best platforms for launch of products as it helps FMCG companies receive customer feedback and data.

“When we do exclusive tie-ups, our objective is to see what are customers doing and how are they behaving. We capture that data as we are digital and feed them back to the company, which helps them figure out what the initial reaction is for the product,” Menon said.

FMCG experts said it is a go-to-market strategy for these companies to promote their products first on an e-commerce portal to create the buzz about the product and judge customer behaviour.

“The online shopping for food and grocery items is gaining acceptability among Indian consumers. Online players such as Amazon and Flipkart, along with online grocers such as Bigbasket and Grofers, have boosted the consumer confidence for online food and grocery shopping,” an analyst from a brokerage firm said.

In India, rise in internet penetration or better internet connectivity, online banking, mobile wallets, the overall rise in consumer spending and improved infrastructure is leading the way for increased online FMCG sales.

According to market research firm Nielsen, contribution of e-commerce to total FMCG sales is expected to be 11 percent by 2030. e-commerce contributed 0.4 percent to FMCG sales in 2016 and 2018. The same is expected to be around 1.3 percent of the branded packaged FMCG sales.
Himadri Buch
first published: Nov 26, 2018 04:02 pm

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