#digivine: FMCG ecommerce – not going anywhere!
Look at India around you, and you will see a land of extremes. The FMCG (fast moving consumer goods) category in India is a replica of this, with products catering to each section of the Indian population layered very well with the SEC/LSM categorisation that we marketers do to target the right population.
Years ago we saw the birth of modern trade which gave a glimpse to all large and small FMCG players a potential that could be harnessed for the better. They were supposed to allow more control to the FMCG players and better inventory management along with organised profits, so on and so forth. From that point, we can say that this potential is still not realised yet, with only 9 per cent of FMCG sales coming through this organised retail format. This is still an urban phenomenon and lacks the personalisation of service that Indians crave for.
The ecommerce story is now unfolding the very same way. A lot of effort, money and patience has been put here to unravel the potential and will be done so over the next few years. I believe that though this story will not fade away but there will be no scale to run this business in a profitable way. Look at the way the traditional business runs. It is very personal with the grocer knowing the buyer for months if not years. He lends a credit limit to him every month to retain him. Does home delivery over a call for even a small item like a ‘thandai’ or a can of coke. They can even return the products easily if they do not like it. The Indian buyer loves this personalisation that ecommerce can never deliver. Also the economics does not work out. All buyers today look for deals and discounts, which is a kind of stereotype that ecommerce has been labelled with these days.
It has been driven by the Flipkarts, Bigbasket and Snapdeals of the world which run these deals as customer acquisition tactics and will not fly in the long run. As this category is not where you can run this as price points are in tens of rupees and weights in gms. And I am not even getting into the delivery aspect of the business which is the Achilles heel of Indian ecommerce ecosystem.
My take here is FMCG ecommerce whatever that is going to happen is going to take a pie out of modern retail and not change anything else within the ecosystem. It remains to be seen what will the Flipkarts, Bigbaskets and Snapdeals of the world do about it as we move ahead. Will they keep pumping investor money down the drain to keep the consumers coming back with deals and discounts? Also interesing will be the strategies of large players like HUL, P&G, J&J, Godrej, etc. Will they see through this smokescreen and make the right investments going forward.
Let’s wait and watch….
