Dec, 2016      |     ANIL KUMAR , UJJWAL CHAUDHRY

E-FMCG Market in India

Online FMCG in India is very nascent- pointing to a vast growth potential


Anil Kumar

Anil Kumar

CEO

ujjwal chaudhry

ujjwal chaudhry

associate director

  • A short perspective document on the online FMCG/grocery sector and key players
  • Assessed through a regularly tracked set of performance indicators

Study Background

Objective

Gathering insights on multiple aspects of the online FMCG/grocery retail market in India including :-

  • Industry size and online penetration
  • Market share and insights on key players
  • Consumer Shopping Behaviour
  • Customer satisfaction in terms of-

1.Shopping experience (Web and App)
2.Overall value proposition (Prices, availability, quality and variety)
3.Delivery experience ( Delivery time, packaging quality etc.)

Research Approach

RedSeer's Integrated Research Approach TM , incorporating the following-

  • Primary Interviews with 300+ shoppers
  • Merchant Interviews

Note: 1. Sales/GMV related performance numbers are broad estimates
2. USD 1=INR 60 has been assumed across the deck

Disclaimer: The numbers and analysis quoted in the report have been developed through RedSeer research with industry experts and customer survey. The report is a fact-based study and should not be interpreted as a recommendation document.

FMCG/Grocery retail in India is a USD 450 bn opportunity- but online penetration is very low (0.1%)

Compared to other economies as well, online FMCG in India is very nascent- pointing to a vast growth potential

Compared to other economies as well, online FMCG in India is very nascent- pointing to a vast growth potential

We expect this USD ~0.6 Bn market (2016) to steadily realize its potential and grow to USD 5+ Bn by 2020

In the current market, BigBasket is clear overall leader with Amazon FMCG close behind

BigBasket had highest volumes and AOV in 2016; along with Amazon FMCG, it was the only player to record strong sales growth in 2016

BigBasket and Amazon FMCG drove sales growth in 2016 through new initiatives i.e. Express Delivery, Amazon Now and Amazon Pantry

Key developments in 2016

Player

  • Launched its Express delivery service in 8 cities in 2016, through which it delivers orders in 90 minutes. As of December 2016, 25% of the orders are express delivery
  • Share of private labels has to grown to nearly 35-40%
  • Shut down its operations in 9 cities in the beginning of the year 2016
  • Changed model to Inventory model towards the mid of 2016
  • ZopNow started offering e-grocery as a Service (SaaS) solution to large brick-and -mortar retailers towards the end of 2016
  • It launched online retail stores for More and Hypercity along with their branded apps in mid 2016
  • Amazon Now, which offers express delivery, launched its operations in 3 more cities (Delhi, Hyderabad and Mumbai) besides Bangalore towards the end of 2016
  • Amazon Pantry, which offers next day delivery, was launched in Bangalore in September 2016 after a successful pilot in Hyderabad. Later it was launched in 6 more cities
  • As of Dec' 2016, 10-12% (and growing) of Amazon's FMCG sales were driven by Now and Pantry

Majority of shoppers spend less than $ 17 ( INR 1000) per transaction when shopping for FMCG/grocery online

Most popular categories purchased online are grocery/staples and fruits and vegetables

App is the preferred shopping medium for most online FMCG/grocery shoppers

Prepaid orders continue to dominate the E-FMCG- a possible fallout of demonetization in Nov'16

RedSeer Consumer Excellence Study tracks satisfaction of online FMCG/grocery shoppers on 19 key metrics

1

Desktop/Web Shopping Experience

1.Design and Look
2.Speed of Loading Page
3.Ease of Navigation
4.Product Details
5.Checkout Process
6.Payment Gateway

2

App Shopping Experience

7.Design and Look
8.Speed of Loading Page
9.Ease of Navigation
10.Product Details
11.Checkout Process
12.Payment Gateway

3

Value Proposition

13.Attractive Price and Discounts
14.Product Quality
15.Product Variety
16.Product Availability

4

Delivery Experience

17.Delivery Time
18.Packaging Quality
19.Courtesy of Delivery Executive

Big Basket emerges as the clear overall favourite amongst online shoppers

RedSeer Consumer Excellence Study Q1 CY17- Survey Mix

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