Ecommerce accounts for nearly a third of several electronic categories, research shows

Source: ETRetail.com, Feb 20, 2021

Ecommerce now accounts for nearly a third of several electronic categories, almost half of smartphones sold and about a fifth of all apparel sales in India, increasing at their highest pace in 2020 when most consumers hunkered down in their homes due to Covid related restrictions and feared shopping at brick-and-mortar stores, as per just released data by researchers GfK, Nielsen, IDC and company officials.

For daily essentials and fast moving consumer goods, sales tracker Nielsen said the e-commerce spurt is more prominent in the metroes.

E-commerce contribution to total FMCG sales touched an all-time high of 2.8% in 2020 up from 1.9% a year back. In metroes, the contribution is at 7.5%. Large manufacturers like Hindustan Unilever, ITC, Nestle and Marico have said their e-commerce contribution has more than doubled in 2020 to around 5-6% of total sales.

For television and home appliances, e-commerce contribution has surged by 3 to 5 percentage points of total sales in 2020 over the previous year.

E-commerce accounts for 31% of total television sales last year up from 27% in 2019, for microwave oven it has grown from 32% to 37% while for refrigerator and washing machine online now accounts for 12% (7% in 2019) and 18% (14%) respectively as per GfK data.

Mobile phone researcher IDC India said e-commerce sales of smartphones grew by 12% annually to account for 48% of total sales in 2020 up from 41.7% in 2019, even as the overall market declined by 1.7% last year.

Company CEOs and trackers said the shift to e-commerce last year might be permanent for most of the categories.

“With consumer preference for e everything, there are clear tailwinds for this business. As consumers get used to assortment and convenience of ecommerce, we believe this will continue to stick,” Sanjiv Mehta, chairman at Hindustan Unilever said in a recent earning call.

GfK India managing director Nikhil Mathur said the pandemic triggered a structural shift in buying behavior through increased preference of online shopping via general shopping apps, brands’ own websites and social media.

“This digitalization trend is expected to continue with evolving consumer needs and choices across big and small cities. With life coming back to normal and offline retail seeing increasing footfalls, omni-channel experience will be key for success,” he said.

However, IDC India’s research director Navkendar Singh said the contribution of e-commerce to total smartphone sales may come down in 2021 to around 43% to 46% with some consumers shifting back to brick-and-mortar stores as vaccination picks up pace and overall Covid cases are expected to decline.

Fashion
Aditya Birla Fashion & Retail (ABFRL) said its lifestyle business in e-commerce channel grew 45% during last quarter, while Arvind Fashions (AFL) saw sales from online channels, both from marketplaces like Myntra as well as its own portal, more than double last quarter with omni-channel annualized sales at over Rs 1,000 crore.

“Our ecommerce business recorded 230% growth over last year and now contributes to 20% of our business, ” Shailesh Chaturvedi, chief executive of AFL told ET earlier this month.

Companies, however, said demand at brick-and-mortar sales is not affected by the exponential growth in online as price tags and discounts are now similar in both the channels.

“The e-com business is fairly independent from the exclusive brand outlet business that requires physical space. What we have ensured is that we have parity on pricing, discounts and so on, so that the consumer gets the same price experience across various channels. So to that extent, the one does not affect the other,” Vishak Kumar, chief executive officer – lifestyle business at ABFRL.

In fact, companies have started using brand outlets as fulfillment centres for online delivery and as a result, also opening more stores to reach a wider network that can service ecommerce sales as well.

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