How E-commerce Will Boost the FMCG Sector Post COVID-19
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As COVID-19 continues to create havoc with markets, industries and small businesses being shut, people in lockdown were abstained from buying non-essential items. Disruption of home deliveries meant that no one could buy any essential or non-essential items online.
The coronavirus outbreak has had a major impact on the FMCG sector. Some businesses in the FMCG sector are thriving, some are in lockdown and others are making significant changes to adopt the new ways to reach customers in order to continue trading. In a crisis like this, all companies have to adopt new measures to continue working in order to manage both existing and COVID-19 related risks.
In the current situation a business owner has to deal with a million concerns, prioritize time and resources. Companies are bearing the impact of the virus, facing challenges to adapt, and many are struggling to ensure business continuity and to protect employees from losing their jobs. The government has taken a few financial measures to ensure that businesses and individuals continue to function. However, the coronavirus outbreak has surely changed the business landscape. Therefore, it is vital to make the right decisions to protect employees and ensure public safety while helping businesses to stay open.
FMCG sector, the fourth largest sector in the Indian economy includes food and beverages, which accounts for 19 per cent of the sector, household and personal care, which accounts for 50 per cent of the sector and the remaining 31 per cent in healthcare. Though the FMCG market is expected to grow at 9-10 per cent by 2020 based on moderate inflation, increase in private consumption and rural income, as per an India Brand Equity Foundation report.
However, the impact of COVID-19 has increased the demand for household items and grocery items. The lockdown has led to a shift in consumption patterns of consumers. The pandemic has enforced a strict lockdown in India for months, has brought economic activity to a near standstill. The extended lockdown situation has lead to a change in consumption habits, moreover reduction in manufacturing activity, has impacted the disposable income and given rise to the demand among consumers in India. According to Nielsen, amid the ongoing pandemic situation in India has impacted the FMCG sector which is likely to grow about 5-6 per cent in 2020 including the consequences of COVID-19.
Due to obstacles in supply chain, the FMCG sector’s growth, including e-commerce, slowed down to 6.3 per cent in the first quarter of 2020. Out of this growth, 3.3 per cent growth is from organized trade, 1.9 per cent is from modern trade and 1.1 per cent is from e-commerce. The e-commerce contribution is higher in metro cities, however, other cities are also extending with an increase in the adoption of modern trade and e-commerce platforms.
Although e-commerce websites for goods and services have been adversely impacted by the strict lockdown situation in supply and demand overall, and has resulted in delivery delays or complete cancellation of orders. Several other challenges have emerged during this pandemic such as inflating prices to irrationally high levels, product safety concerns, deceptive practices and cybersecurity concerns. However, the necessity of social distancing, lockdowns and other measures due to the pandemic has led buyers to shift towards online shopping websites/sites, social media use, online payment methods. It has resulted in the growth of e-commerce businesses with an increase in sales of medical supplies, healthcare products, household essentials and food products.
As COVID-19 lockdown varying shopping behavior, indicating more consumers to avoid crowded places due to safety reasons, it is likely to heighten the adoption of e-commerce in India. Online grocery and gourmet foods shopping websites and retailers have been overwhelmed with orders since India’s strict lockdown started. Major shopping websites are currently engaged in the delivery of essentials. The demand has also encouraged more industry players to join in FMCG companies, and retail stores to have amped up their presence on online platforms with new apps, and tie-ups with logistics companies for home deliveries.
The impact of COVID-19 on e-commerce will promote the further progress of new policies for online purchases and supply. It is promoting all kinds of small businesses, the partnership in e-commerce activities by small producers, manufactures, retailers and consumers have also been increased. For several FMCG companies, e-commerce platforms are an important part of building a network, by programs like direct home deliveries or direct store deliveries, customer backhauls and nurturing partnerships with tech-enabled delivery platforms or apps. E-commerce boosts in enhancing business to consumer (B2C) deliveries also efficient in Business to Business (B2B) deliveries to distributors and retailers directly.
As this pandemic will have a long-term impact on consumer behavior and they have to adopt new strategies/polices to adjust with the current trend. Similarly, FMCG companies have to adapt to the external environment, the variation in consumers demand and behaviour as direct to consumer outreach will help FMCG companies to become more engaged and productive to sustain the business for the long run.