Indians are purchasing FMCG products online at more than three times the frequency compared to a year ago. According to Kantar’s Asia Pulse Report, online shopping trips surged from 19% in the October-December 2023 quarter to 61% in the same period of 2024. This remarkable growth has been driven by the rapid expansion of quick commerce, prompting FMCG companies to rethink and restructure their sales strategies.
The online shopping landscape in India has witnessed an unprecedented transformation, with consumers engaging in online Fast-Moving Consumer Goods (FMCG) shopping over three times more frequently than they did a year ago. According to Kantar’s Asia Pulse Report, online shopping occasions surged to 61% in the October-December 2024 quarter, up from just 19% in the corresponding period of the previous year. This significant shift is attributed to the rapid expansion of quick commerce (q-commerce), compelling FMCG companies to revamp their sales strategies to align with evolving consumer preferences.
Urban consumers in India have demonstrated a marked preference for convenience over cost, fueling the quick-commerce boom. The ease of instant deliveries has made online grocery shopping a habitual practice, forcing traditional grocery retailers to recalibrate their approaches. In response to this trend, major grocery retailers are rolling out deeper discounts and enhancing their delivery speed, while q-commerce platforms continue to accelerate their operations to cater to the growing demand.
Notably, India’s surge in online shopping frequency stands in sharp contrast to China’s stable online shopping trips, which have remained steady at 12-14% despite the presence of a well-established q-commerce market. Analysts attribute India’s rapid growth to the increasing demand for instant gratification, a key factor in driving this digital transformation.
The rise of q-commerce has had a discernible impact on India’s traditional retail sector. The share of kirana stores, which have long dominated the country’s retail landscape, dropped from 81% in the December 2023 quarter to 79% a year later. Though the decline has been gradual, some kirana shopping has evidently shifted online, as the share of e-commerce, including q-commerce, rose from 2% to 3% in the same period. Meanwhile, the share of supermarkets has remained steady at 8%.
Retail giants such as Avenue Supermarts (DMart), Reliance Retail, and Spencer’s Retail have acknowledged the intensifying competition from q-commerce players, especially in metro cities. To counter the challenge, these retailers have introduced aggressive discounting strategies and, in some cases, have even launched their own q-commerce operations using existing store networks.
The traditional trade sector, however, has been vocal about the competitive disadvantages posed by q-commerce. Traders and distributors have been lobbying with the government to ensure fair pricing and margin strategies across all retail channels. With q-commerce now accounting for over a third of an FMCG company’s online sales, brands are adapting by developing specialized teams to engage with q-commerce platforms, introducing new product formats, and adjusting price points.
Despite the rise of digital shopping, FMCG companies remain committed to supporting kiranas. Leading players like HUL, Dabur, and Marico have introduced measures such as easing credit limits for small retailers, streamlining stock-keeping units (SKUs), and increasing direct supply to neighborhood stores. “Kiranas are still an important channel for most FMCG companies, and slowdown concerns are being addressed proactively,” noted Dabur India CEO Mohit Malhotra.
As India’s online FMCG shopping continues to evolve, brands and retailers must strike a balance between embracing digital growth and sustaining traditional trade to maintain a holistic retail ecosystem.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.