While e-commerce growth rates are normalising, the online channel remains a key one for brands, as retail becomes omnichannel. Riding this wave entails more than distribution. Brands must have a comprehensive digital shelf strategy, encompassing insights into online behaviour, inventory management, logistics, partnerships and new business models. This briefing explores the e-commerce strategies of three leading fmcg players.
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Riding the e-commerce wave means more than merely distribution for fmcg brands. Devising and executing digital shelf strategies require new insights into the value chain, which include understanding consumer behaviour online, inventory management, logistics, partners and new business models.
Despite having wide product portfolios, most major fmcg companies seem to win on the back of a particular category, given their competitive advantages. While pet care steers online success for Nestlé, Unilever banks on its beauty and personal care products. For the more specialised firm Kenvue, consumer healthcare and personal care are the core of its online offer. Companies still have significant opportunities to tap into their secondary categories by finding new markets of growth and e-commerce partners, and through product development.
Seasonality is a key aspect to strategise for fmcg brands in the online space. While seasonality also has an impact on offline sales, e-commerce performance is more sensitive to these shifts, given they impact both consumption and channel shifts. Developing an e-commerce strategy that hedges seasonal risks through portfolio diversification can yield greater levels of success.
For most fmcg companies, e-commerce is a business of thinner margins. Given that many leading fmcg brands are household names fulfilling mass needs, many are starting to differentiate through premiumisation and innovation. Notably, the acquisition of digital native and prestige brands is coming into play to address new consumer trends and capture value online. This is also changing the fmcg landscape, reflected in business reorganisation.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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