FMCGs, retailers continue to forge direct consumer link as lockdown eases

A report by Avendus Capital, released this week, found that India’s e-tail market will touch $200 billion in five years, from $40 billion now
Consumer-facing businesses have had to reorient themselves during the Covid-19 pandemic and target their audiences directly since people have been wary of stepping out to shop.

While tie-ups with online platforms such as Swiggy, Zomato, Dunzo, Flipkart and Domino’s for last-mile delivery gained currency during the lockdown, many of these initiatives have now reduced as businesses normalise. That’s not to say that direct-to-consumer (D2C) programmes have ended altogether. The focus of fast-moving consumer goods (FMCGs) is also shifting to online channels.

A report by Avendus Capital, released this week, found that India’s e-tail market will touch $200 billion in five years, from $40 billion now.

That’s a five-fold growth in five years, says Neeraj Shrimali, executive director, digital and technology investment banking, Avendus Capital, led by a surge in online shoppers, many of whom are seeking convenience, differentiated products as well as a safe and easy shopping environment.

“E-tail will increasingly become India’s organised retail,” Shrimali says. “And brands that think digital-first will have a distinct advantage.”

Retailers and FMCG companies agree but add that the offline shopping experience will not altogether vanish. Footwear retailer Bata, for instance, has continued with its D2C initiatives that includes sending mobile stores to housing societies and neighbourhoods. The company has also reopened its physical stores. “The mobile store programme is still on in 35-40 cities,” says Bata India CEO Sandeep Kataria.

Then there is Bata’s WhatsApp programme, which allows consumers to select and order shoes from a catalogue. These are then home-delivered to them. Kataria says this has clicked especially with senior citizens, children and homemakers.

Titan’s jewellery division, Tanishq, has introduced a host of virtual features such as video consultation, appointment-based selling, virtual try-ons, digitised catalogues and home deliveries.

“Our video calls have gone up to four hours at a stretch with big-ticket sales of up to Rs 10 lakh for wedding jewellery,” says Ajoy Chawla, CEO of Titan’s jewellery division. He says these initiatives will continue for at least another year. On Tuesday, Hindustan Unilever Chairman and Managing Director Sanjiv Mehta said that the company had doubled its sales on the ecommerce channel to nearly 6 per cent versus last year.

According to a recent Nielsen survey, FMCG companies would continue to focus disproportionately on ease and convenience of delivery.

Companies will have to go beyond distribution tie-ups, says Simranjit Kaur, associate vice president, Avendus Capital. They will have to have a dedicated product and price strategy for the online market, away from the traditional market, she adds.

Most FMCGs have launched digital-first or digital-only brands in the last few years and are expected to increase these roll-outs in the months ahead.

Among others, names such as Lenskart (eyewear), Licious (meat startup), Mamaearth (skin care) and Boat (audio wear) have all created extraordinary value within two to three years of the launch, and have seen funding activity increase as a result, Kaur says. Avendus predicts the addressable market for D2C brands at $100 billion in five years.

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