Boomtime ahead for online FMCG sales, says study

Online sales of fast-moving consumer goods are set to grow rapidly in China this year, with the nation well on its way to be the leader in the FMCG e-commerce market, an industry report said on Wednesday.

Sales of FMCG goods through online platforms will reach $130 billion by the end of 2025, according to the "Accelerating the growth of e-commerce-2015 Edition" report published by market consultancy Kantar Worldpanel. The report also indicated that prospects for the global FMCG e-commerce market remain bright.

According to the report, FMCG e-commerce grew at a faster pace in Asia with China being the fastest growing market at 34 percent, followed by South Korea with 22 percent. In Europe, FMCG e-commerce grew 20 percent in the United Kingdom and by 12 percent in France. In South Korea, online FMCG sales accounted for 13.2 percent of the total FMCG market, compared with 10.2 percent a year ago.

The report forecasts online's share of FMCG purchasing in advanced e-commerce markets will double in the next decade and estimates that online purchases will reach 30 percent in South Korea, 15 percent in China and 10 percent in the UK and France.

With growth of 28 percent globally in 2014 alone, online sales are rising, particularly in the world's most advanced e-commerce markets, it said.

Jason Yu, general manager of Kantar Worldpanel China, said the e-commerce channel is providing FMCG players with genuine growth opportunities, especially at a time when overall market demand is weak.

"Our research shows that consumers in China, motivated by product choices, convenience and price, are increasingly embracing online channel for their daily needs," said Yu.

The appeal is widening, as e-commerce retailers rapidly expand their presence deeper into lower-tier cities, Yu said. With more investments into distribution networks and cold chain delivery as well as the promotion of cross-border e-commerce by the government, the growth looks set to continue well into the 2020s, he said.

The report is based on in-depth analysis of the purchasing habits of 100,000 shoppers in 10 biggest online FMCG markets and identifies the need for retailers and brands to prioritize their e-commerce strategies to take advantage of the real opportunities that e-commerce brings.

The report found that the typical valuable shopper profile is a family with young children, especially from urban-suburban, middle or upper class categories. For example, an average online shopper in the United Kingdom spends $66 per trip online compared to the $16 spent per trip in a brick-and-mortar store, four times more.

In terms of loyalty, the online share of the wallet, according to the report, is already high. In China, online shoppers spend 34 percent more buying diapers, 21 percent more on instant milk powder and 19 percent more on pet food.

Stephane Roger, global shopper and retail director at Kantar Worldpanel, said they have seen major changes in the structure of many retailers and brands.

International brands such as Mondelez, Walmart, Pepsico, Coca-Cola, Procter & Gamble and Unilever have implemented plans to future-proof their business for e-commerce. He said it seems that for these global leaders, the talk is fast turning into action.

Roger said that joining the e-commerce race is a matter of urgency. "Simply put: The market is remarkably unkind to latecomers," he said. "Winning among the retailers are those which first invested."

Tesco in the UK and France's E. Leclerc both enjoy an online market share double that of their offline counterparts. For brands, the urgency lies in getting on the shopping list.

Kantar's data show that 55 percent of online shoppers use the same shopping list from one purchase to the next, giving first movers a big advantage.