Consumers across developed and developing markets have shown significant preference for e-commerce and continue to embrace online shopping to address their growing need for convenience, better pricing, product assortment and ease of delivery. In Asia Pacific 43% consumers surveyed by Nielsen are already using e-commerce platforms for home delivery of products. Similarly, 25% of consumers in Africa and Middle East, followed by 20% in Latin America are already buying products online for home delivery.
With rising consumer uptake across e-commerce categories, online FMCG growth is accelerating across the globe. In fact, our Future Opportunities in FMCG E-commerce study estimates that online FMCG growth will accelerate four times faster growth than offline sales in the next five years.
Total global online fmcg sales are expected to reach as high as us$400 billion by 2022
Consumers’ buying habits are shifting toward online, and their changing product preferences have created the need for FMCG companies to address demand and consider FMCG e-commerce integral to their overall business strategies. However, some barriers that pose challenges ahead of established brick-and-mortar businesses: handling perishable products and limited shelf life of FMCG products, scaling up the online model beyond few markets, lack of infrastructure to support delivery solutions, and regulatory framework compliance.
Our report identifies 10 key drivers that explain current FMCG e-commerce success in 34 markets globally. Markets with supporting drivers for such as high population density, a pro-business landscape, postal reliability, internet penetration and a savings-conscious society will enjoy greater online FMCG success.
Many countries in Asia, for example, are setting the pace for online FMCG growth, thanks to the presence of large e-commerce brands, innovations in technology, investments in infrastructure, smartphone penetration and increased consumer demand. South Korea is leading the way in e-commerce globally, with nearly one-fifth (18%) of all FMCG sold via online channels, closely followed by China (16% of FMCG sold online). We expect European markets to provide some growth opportunities for online FMCG over the next five years, with more than a quarter of consumers (26%) there already using e-commerce services for home delivery of products.
In Europe, the FMCG online growth is expected on account of ageing population (older generations will prefer to have items delivered), consumers experiencing changes in work-life dynamics, increasing congestion, urbanization and growing need for convenience. U.K. is leading the total share of FMCG online sales (6.3%), closely followed by France (6.1% of FMCG sold online) that has a nationwide click-and-collect e-commerce model since early 2000s making e-commerce successful despite low population density. In some other markets such as India, Brazil, Russia and Greece the key drivers indicate poor threshold value and hence they demonstrate lower percentages of FMCG online sales.
Here is a snapshot of how online FMCG sales compares across few global markets based on 10 key drivers.