How FMCG in India Needs to Step Up Its Digital Game

This piece originally published in Business Standard.

India stands on the cusp of dramatic growth in internet and e-commerce activity. With more than 650 million Indians set to be online by 2020, the country is second only to China in projected internet users. And the future will be different. Until now, English-speaking adult males belonging to a higher socio-economic class (SECs) A/B and living in large cities have been the bulk of e-commerce shoppers. However, women, Generation Zers ("digital natives" born after 1995) and consumers in small-tier towns will propel the growth story.

These changes will have huge implications for fast-moving consumer goods (FMCG) companies. By 2020, as much as $35 billion of FMCG sales will be digitally influenced, including $5 billion of actual FMCG e-commerce sales, according to conservative estimates.

But the future, as they say, is already here; it's just unevenly distributed. For pragmatic Indians, the internet is often simply about adapting a new medium to their day-to-day life. A Bain & Company-Google lead-user research found that about 80 per cent of such consumers were more likely to try new brands and products when buying online than when buying offline, and a similar percentage were willing to spend more when buying online. Online shoppers are looking for not just the best products at the lowest prices, but also a better experience than that at brick-and-mortar stores.

Indian consumers are engaging on digital platforms across the entire consumption cycle. In the early stages, Google searches grew rapidly: There was a 63 per cent increase in Google searches in FMCG in the last quarter of 2014 (versus the same period in 2013), with food products, infant care and beauty making up the majority of the searches. While searching in categories such as beauty and food, viewers demand video content as evidenced by YouTube search growth (viewing time by women for FMCG-related content increased by 400 per cent in 2014 versus 2013, with 40 per cent of that viewing done on mobile phones). Unsurprisingly, more than a fifth of online urban female consumers note a digital influence on their FMCG purchase decisions, while 35 per cent of urban males online are similarly influenced.

Read the full article at Business Standard.

Nikhil Prasad Ojha

Head, Strategy practice, Bain & Company, India.

Sachin Khandelwal

Principal, Consumer Products, Bain & Company, India.