Online sales for FMCG did not stem from increased spending by existing online buyers but from the rising numbers of households buying online and from increased frequency in buying and spend. According to NielsenIQ, a global measurement company, this signals the end of the beginning of e-commerce in Asia.
In its latest thought leadership, NielsenIQ, warns retailers that as e-commerce transitions to the next phase, there are five challenges that retailers need to face: greater fragmentation in retail, redefining of the role of physical stores, divergent realities, increased fight for consumer attention, and the race to last mile fulfillment. See infographic 1.
"We have entered the end of the beginning of e-commerce in Asia and those who rest now will sleep through the most formative time of growth for e-commerce," states Vaughan Ryan, Nielsen IQ's Consumer Intelligence managing director in Asia. "The technological advancements and creativity of the last decade have made the retail world more advanced—leading to an environment where trust is solidified, where it is more than logistics but more about pushing the envelope on personalized discovery and curation, where there is exploration of new categories, and seamless omnichannel integration."
While e-commerce has been viewed to transform retail, Covid-19 accelerated its trajectory to its readiness to transition to the next phase.
NielsenIQ reports that where e-commerce is more developed in markets such as Korea, where over 3/4 of the population buy their FMCG products online, the increase in buyers over the last 12 months grew by 5.1%.
In comparison with markets that are more developing in nature, the growth was dramatic, demonstrating that consumers are now more comfortable with shopping online. In Thailand, there was a 58% increase in the number of households buying online.
While the rate of change will vary across borders due to each country's state of digital maturation, NielsenIQ believes that almost all the growth in retail fast moving consumer goods will come from e-commerce moving forward.
In Thailand, while online FMCG contribution has been historically dominated by non-food category, NielsenIQ observes positive growth momentum in 2020 for the food category. From January to December 2020, NielsenIQ reports that the food category grew by +74% versus +60% growth shown by non-food. The challenge according to NielsenIQ is how retailers and brands could make this momentum sustainable. See infographic 2.
"We've seen the catalysts that have drawn consumers online and we know there are still a number of obstacles to overcome. To sustain online FMCG traction, retailers and brands will need to focus on how they can solve consumers' changed needs by differentiating their offerings in the omni-shopping journey. They will need to solve for overall satisfaction and experiences in the areas of time, convenience, availability, and value based on consumers' altered circumstances to truly differentiate themselves," says Pornvadee Porningmast, NielsenIQ's Consumer Intelligence head in Thailand.
Source: NielsenIQ