Ecommerce News

Fewer phones, more FMCG items flying off ecommerce shelves, Retail News, ET Retail

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When it comes to buying big-ticket items like smartphones and televisions, consumers are moving back to brick-and-mortar stores from e-commerce while it’s the opposite for daily necessities, according to companies and market researchers.

The share of e-commerce in total smartphone sales was 45% in 2023 compared with 48-49% in 2021 and 2022, according to Counterpoint Research data. For products such as televisions, the contribution has dropped to 29-30% from 34% last year, while for washing machines it’s down to 18-19% from 21%, industry executives said.

For fast-moving consumer goods (FMCG), companies like ITC, Emami, Marico, Parle Products and Dabur have reported a growth of 3-5% percentage points in e-commerce contribution in the last one-two years, driven largely by quick commerce. In fact, the contribution of alternate channels – e-commerce and modern retail together – now account for one-fourth of the total sales for companies like ITC, Emami and Marico.

“When it comes to buying branded essentials, there is a habit change which is happening with consumers preferring to buy from quick commerce apps,” said Santosh Desai, managing director, Futurebrands Consulting. “On the discretionary front, it’s a correction which is happening across categories considering the surge of e-commerce during Covid, since a big section of consumers still prefer touch and feel for apparel or electronics.” Company executives said the rise of e-commerce in FMCG is due to convenience and the instant gratification provided by quick commerce platforms whereas the trend of premiumisation in apparel and electronics is bringing consumers back to stores.

In smartphones, online channel share reached its peak during the pandemic as there were restrictions on offline sales, said Tarun Pathak, research director at Counterpoint.

“With the restrictions over, offline channels again started gaining share driven by the push by the brands, premiumisation and reduced disparity in offers and pricing when compared to online channels,” he said.

For ITC, the contribution of alternate channels has gone up to 25% of FMCG sales as compared to 17% in FY20. For Emami, the contribution of e-commerce has reached almost 13% of total sales, overtaking modern trade for the first time at 11%. For Dabur, e-commerce contribution is up from 7% to 10% in the last two years.

The contribution of e-commerce to overall sales surged for staples to 9-10% in 2023 from 6% in 2021, according to a report by Nuvama Institutional Equities released this week.

Emami vice-chairman Mohan Goenka recently told analysts that growth in modern trade was 17-18% in the September quarter while for e-commerce it was 50%.

To be sure, e-commerce is still growing in the discretionary categories due to wider penetration in smaller towns, which drove sales during the festive season. However, company executives said growth at large retail chains is much higher.

Anant Jain, head of market intelligence at researcher GfK India, said online sales of tech and durable products like televisions, refrigerators and washing machines grew significantly between January and November.

  • Published On Jan 4, 2024 at 09:05 AM IST

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