While FMCG firms have been facing the headwinds of a slowdown for a year now, Flipkart hasn't seen any significant decline in sales on its platform. In fact, the company believes that FMCG category might actually ease first-time shoppers to Flipkart, Nishit Garg, Vice President — Beauty, General Merchandise, Home and Furniture at Flipkart, told Financial Express Online. Further, FMCG remains one of the most potential categories for e-commerce platforms with the category witnessing 150% annual growth, he added. Nishit Garg also talks about why tier 2 and tier 3 shoppers are the next growth drivers for FMCG category and how increasing consciousness about health and wellness is shaping the segment.
Edited excerpts of Nishit Garg's conversation with Prachi Gupta:
Has ongoing slowdown affected sales of FMCG products in the past few quarters?
FMCG category consists of daily essential products and everyday needs of consumers. It is one of the categories that have the potential to bring and ease first-time e-commerce consumers to the platform. Catering to the "necessity" items, this category hasn't seen any kind of significant impact online as consumers continue to shop for them as part of their monthly routine.
What is the outlook for the FMCG category in general (not just health and nutrition)?
India's FMCG category is well poised to grow backed by increased disposable income, heightened rural consumption and the entry of niche categories. Growing awareness, easier access, and changing lifestyles are the key growth drivers for the consumer market. E-commerce plays a key role in driving consumption as well. Today, with increasing access to the internet, it is estimated that 40% of all FMCG consumption in India will be online.
As per a Nielsen study, one in every two items bought online in India is an FMCG product spanning across categories such as cosmetics, food and beverages, skincare among others, making FMCG products remain the most sold items on e-commerce platforms by volume. It is further estimated that e-commerce will contribute to 11% of FMCG sales by 2030. The category, on average sees month-on-month growth of 9% (July-December 2019) while the annual growth is nearly 150%.
What are other emerging trends under the FMCG Category?
E-commerce has been shaping the global retail market and India is no exception to this phenomenon. While a nascent category on e-commerce, FMCG is seeing steady uptake online as well owing to growing awareness, easier access, and changing lifestyles that are driving the consumer market. The India story is slowly moving to Tier 2 and 3 consumers, who are perhaps first-time e-commerce users but have sufficient disposable income now to shop online. We have seen significant demand coming in from cities like Lucknow, Jaipur, Gurgaon, Patna, Kanpur, Varanasi and Guwahati. The Tier 1 story is not far away. Metros today contribute to about 22% of our online FMCG business.
Another interesting trend is around India's saving culture. It is a known fact that markets where populations save more, tend to also spend more online. Today e-commerce is able to penetrate every corner of the country. At Flipkart, we are able to service 100 % of the pin codes, solving for access and reach. This makes essential shopping in the FMCG category more robust and frequent.
Why is the health and nutrition category important to Flipkart? What are the factors driving the growth of health and nutrition products? Is it just for Flipkart or a general rising interest in the category?
Today, Indian consumers have become more health-conscious and are quite cognizant of what they are consuming. They are prioritizing organic and natural products and laying emphasis on their fitness. This is a key driver for the prominent growth of such products on our platform.
12% of the demand for such products come from cities such as New Delhi, Bangalore, Kolkata, Mumbai, Pune, Hyderabad, Chennai, Lucknow and Gurgaon. The category is getting further niche with, Superfoods such as honey, chyawanprash, peanut butter, green tea/coffee, edible seeds and apple cider vinegar gaining more popularity and demand.