Grocery E-Commerce Sales Growth Set to Eclipse Offline Within the Next Five Years

Grocery E-Commerce Sales Growth Set to Eclipse Offline Within the Next Five Years

Growth in the online FMCG sector is outpacing offline FMCG growth, with e-commerce sales growth set to surpass traditional retail sales growth within the next five years. While total FMCG retail sales growth currently sits at around 4% per annum, total retail e-commerce is predicted to grow by 20%, or an additional $2.1 trillion, by 2020.1

The latest trends in consumer purchasing online within the FMCG sector point to strengthening growth in online adoption and spend around the world according to a new report released by Nielsen, the What’s Next in E-Commerce Report. The report illustrates that while FMCG has historically trailed many other categories such as electronics, mobile goods and travel when it comes to online spending, that trend is set to change in the coming years.

As many of the existing barriers to e-commerce adoption are overcome, such as retail infrastructure and supply, environmental and cultural factors like credit card fraud, and logistics to support the ‘last mile’, e-commerce is set for exponential growth. These factors are being compounded by surging consumer demand for anywhere, anytime convenience.

The Nielsen report highlights four key influencers significantly impacting e-commerce growth trends around the world:

  • E-commerce is growing rapidly, but the growth factors are not uniform: Connectivity and accessibility to cheaper data and handsets play a key role in shifting consumer behaviour, and to a large extent smartphone reach is an early indicator of potential e-commerce growth. However, connectivity alone isn’t sufficient to drive e-commerce penetration. Supply factors and cultural nuances also influence consumers’ online purchase behaviour.
  • Drivers and barriers are similar, with one exception: The number one driver across most countries for e-commerce purchases is convenience, with the exception of the U.S. where consumers are more motivated by deals. Conversely, there are three key considerations when examining barriers to e-commerce. Firstly, the desire to examine an item before buying it – from grocery to apparel. Secondly, the lack of trust that retailers will meet expectations around freshness. And thirdly, concern over the level of quality of products bought online vs. in-store. Retailers need to alleviate these barriers to drive their share of the consumer e-commerce wallet.
  • The ability to win the elusive food basket will be key to success in retail e-commerce: The food basket, due to its reptitive purchase pattern, is the Holy Grail for retailers, however, food items remain largely absent from e-commerce sales. Winning the food basket is critical to succeeding in the online FMCG sector.
  • Wooing the omnichannel consumer: When it comes to retail e-commerce, Convenience, Price/Value, Assortment and Customer Experience are the highest-ranked considerations driving consumers’ online purchasing decisions. In order to develop a winning e-commerce strategy, retailers need to ensure they are prepared to over-deliver against each of these four drivers.

For an in-depth look at e-commerce trends around the world and the factors driving growth across the online FMCG sector, download the Nielsen What’s Next in E-Commerce Report.

Note: 1Worldwide Retail E-Commerce Sales: The e-Marketer Forecaster for 2016, e-Marketer, 2016