60% FMCG companies say e-commerce is critical platform for sales

More than half of FMCG companies (60%) have indicated that ecommerce is their most critical sales platform with almost three-fourth of mid-sized companies favouring ecommerce as their top sales channel, as per a latest study by NielsenIQ.

The study notes that emerging manufacturers are achieving 1.5 times higher growth in e-commerce compared to category averages in noodles, refined oil, biscuits, coffee, and packaged atta.

“Indian businesses are recognizing the growing importance of digital as a significant operational channel and are now crafting targeted strategies to win in this space. Consumers are embracing the unique benefits of e-commerce, driving increased traction for brands from emerging manufacturers across key FMCG categories,” said Pallavi Suresh, executive director – emerging brands at NIQ India.

She said these varied channel preferences across business sizes signal a broader retail shift in India and underscore the critical role of omnichannel strategies.

The report said convenience stores have seen high penetration in India at 48%, compared to the global average of 18%, with large companies leveraging this channel the most (58%) followed by the medium-sized (54%). The report said while traditional channels remain important for large enterprises, online and convenience stores now dominate the landscape for the small and medium businesses.

NIQ’s market measurement reported that the fastest-growing categories in 2024 till September are ready-to-eat products with a 52% increase, salty snacks and refined edible oils both growing by 41%, biscuits witnessing a 40% rise, and packaged atta growing by 39%.

Pricing strategies are critical for as many as 75% of the large businesses, 67% of medium-sized ones, and 66% small businesses who are facing inflation. To address this, large companies diversify distribution channels while smaller ones focus on cost management to safeguard their market position.

To combat the effects of inflation while maintaining profitability, 50% of the surveyed businesses replace materials with cost-effective alternatives. 49% plan to increase investment in distribution, signalling a focus on strengthening supply chains and expanding market reach. 47% reconsider product lines by removing low-performing products, and another 47% boost marketing investments.