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E-C MMERCE
IN FMCG
IS SUE 3 | SEPTEMBER 2016
E-COMMERCE:
DRIVING GROWTH FOR FMCG?
By Stphane Roger, Global Director of Shopper
and Retail
CONTENTS
In previous years, we have stressed the urgency Built on a different model to traditional FMCG
for packaged goods retailers and brands to retailers, they cater to the global consumers
invest swiftly and decisively in e-commerce. main demand convenience. Their rise presents
Simply put: we demonstrated that the FMCG an acute problem for incumbents: our figures
e-commerce market is unkind to latecomers. reveal that first-to-market online retailers enjoy
03 | Introduction For brands, the priority is to get on the shopping higher market share than their next competitor,
E-commerce: driving growth for FMCG? list. Our data shows that 55% of online shoppers a difference of at least 40% in France and up to
use the same shopping list from one purchase three times for the UK.
04 | E
-commerce hot spots to the next, giving a significant first mover
The global picture advantage. These figures would suggest that online is
the place to invest for FMCG: huge business
06 | Asia While the industry as a whole is relatively flat opportunities, valuable shoppers and an exciting
Eastern promise growing just 1.6% in the 12 months to June 2016 future. But unfortunately, its not quite as simple
08 | South Korea and forecast to slow further to 1.2% in 2017 as that. Of key importance for packaged goods
grocery e-commerce has a value growth of 15% retailers and manufacturers is making sure that
09 | Japan
on the previous year. It now accounts for 4.4% going online doesnt cannibalise their offline
12 | E urope of all packaged goods sales generating $48bn in business. Comparative research we conducted
A continent divided 2016. This is forecast to increase even further: by across the UK, France and China, showed that
2025, online packaged goods sales will be worth after one year of e-commerce adoption, British
13 | France an estimated $150bn, growing to 9% of total and French shoppers spent less overall. This
14 | Germany FMCG value. demonstrates a major risk of lost value for the
15 | United Kingdom industry if there is no clear differentiation when
Consumers needs are changing as they become marketing offline and online offers.
16 | United States of America increasingly time-poor and value conscious.
Behind the curve In China, 79% of shoppers choose their store This report will focus on three pillars to
depending on its proximity to their home or help retailers and brands navigate a future
20 |
Latin America commute. In Spain, 44% are looking for products in e-commerce:
Connected but conventional that help save them time. And where waiting
isnt an option, next hour delivery is becoming E-commerce hotspots this year, we have
24 | World of opportunity
increasingly available, although currently at a investigated the reasons why some of the worlds
How brands and retailers are driving premium price. consumers have made the switch to online
online sales so seamlessly, while others stay wedded to
28 | Forecast 2025 Shifting demographics are hastening these legacy retail. By comparing individual countrys
changes. In the next 10 years, GenerationZ will similarities and differences, we can spot patterns
Predictions for the future
be making the shopping choices. This generation and successes, offering the right advice for each
30 | Conclusion has never drawn breath in a non-digital world. market.
Streamed shopping, the future of FMCG? They are constantly connected to their devices,
where social media elevates their voice and A world of opportunity generating additional,
gives them a direct line to once faceless brands. or incremental, spend is possible. By looking
Today, over half of the adult population owns a across retail channels, this section will help
smartphone; by 2020, 80% will. If brands wish to brands to understand whether e-commerce
reach shoppers, they need to meet them on their provides additional value to the offline business.
platform.
The future of e-commerce our experts will
Supply is fast meeting demand. The past 12 look at the market as it stands to predict how
months have seen a rise in the availability of new e-commerce will look in 2025, allowing retailers
offers from Alibaba, Amazon, Uber and Instacart. to prepare for the future today.
2
02 03
3
E-COMMERCE HOT SPOTS E-COMMERCE HOT SPOTS
DENMARK
BELGIUM POLAND
1.3% RUSSIA
1.4% FRANCE
0.4% ROMANIA
16
Online grocery shopping is steadily While countries like South Korea and China are 14
growing across the world but, confusingly, embracing the digital shopping experience,
12 UK SOUTH KOREA
countries where we might expect to see a the US and Latin America remain less engaged
discernible adoption of online grocery in although e-commerce is still on the rise in 10
mature economies such as the US and Germany, these regions. The question retailers must ask is Frequency ARGENTINA
8 CHINA
and emerging markets including Brazil how to continue growth in the digital East, and JAPAN
FRANCE
e-commerces share remains small. encourage further development in the West. 6
PORTUGAL
Such a wide spectrum of adoption represents The future development of e-commerce is 4
a global puzzle of performance for FMCG strongly connected to the culture, habits 2 GERMANY
BRAZIL
e-commerce. and beliefs of each country. Retailers and MEXICO
SPAIN
brand owners need to understand where a 0
This year, we have endeavoured to investigate target country is positioned in order to design -10 0 10 20 30 40 50 60 70 80
-2
the reasons why some of the worlds consumers marketing and sales strategies which will Penetration
have made the switch to online so seamlessly, properly impact those shoppers. A one size fits
while others stay wedded to legacy retail. all approach will not work. Source: Kantar Worldpanel, Gfk, Intage, iri 2015
04 05
ASIA ASIA
ASIA:
EASTERN
PROMISE
CHINA
EMBRACING THE
CHALLENGE OF CHANGE
By Jason Yu, General Manager, China
E-commerce in Asia is very good at record high sales of 91.2 billion RMB
creating artificial festivals or events ($20 billion), 62.6 billion spent through
Asia has been leading the way The swift level of adoption of the This closeness between groups and as internet reds) trying new lipstick to celebrate a certain day. Often the mobile app alone. It plays to key
in e-commerce for the past online shopping models in Asia doesnt individuals in society means that products from Maybelline. Consumers this manifests through an acronym category strengths for e-commerce:
decade, most notably in China where necessarily follow economic strength or adoption of new technologies diffuses could comment via a live message or a word that sounds similar to 30% of sales were baby related; 22%
more online purchases are made than even growth. So what does unite it in its fast. Trends, word-of-mouth, and board within Meipai and a direct link something else, to create a reason comprised cosmetics.
anywhere else in the world. South Korea race to digitisation? activities where people can work embedded in the video stream directed for people to buy something for their
is the worlds largest market by value together are valued highly, particularly visitors to the Tmall site of Maybelline, loved ones. This year, P&G China and Alibaba
share for purchasing packaged goods One possible explanation is that Asia, in comparison to cultures which value where they could buy the lipsticks they VR Lab jointly launched the VR
online (16.6%). Japan, Taiwan and China like Latin America, shares a collectivist third-party advice and research over saw. 10,000 lipstick products were sold An example of this is Chinas May Boy Friend and VR Girl Friend
are the next biggest in Asia. culture: one that is based on valuing recommendations or advocacy. in just two hours. the 20th (520) celebration. When marketing campaign on 20thMay,
the needs of a group or a community pronounced in Chinese, 520 sounds using VR technology on Alibabas
In contrast, there are many developing over the individual. This manifests Celebrities and social influencers Whilst the shopping festivals play like I love you. Using this wordplay Taobao app. In their virtual world,
markets within this region that still rely in a higher incidence of risk-seeking are unsurprisingly huge drivers of to many types of product besides as the perfect excuse retailers fans can have their idols wake
on more traditional trade and have very behaviour because of what sociologists e-commerce in China, particularly groceries, there is a natural benefit for created the internets answer to them from their sleep, make them
low online adoption, but it is possible call the cushion effect, a trait found in among younger audiences. retailers and brands in this space as the Valentines Day. Meanwhile, 520s breakfast; even propose to them, all
that as they develop they will skip over places like China, by which family and familiarity of buying online spreads. platonic antidote Singles Day through VR technology. And thats
the stage of modern trade, such as social networks will help out any group This year, using the video sharing Singles Day has led to an increase in (11th November) has become the not all, their idols also shopped with
supermarkets, and go straight to online. member who loses a lot of money after app Meipai, Maybelline promoted a families trying the e-commerce channel largestonline shoppingday in the them for P&G Rejoice products, which
selecting a risky option. In contrast, live internet stream of its new brand for groceries from 30% in 2013 to 49% world, with profits exceeding the USs were easily added to their carts or
in individualist cultures such as the ambassador, Angelababy, and various in 2016. Black Friday. Last year, it achieved followed through a click.
US, a person is expected to bear the other internet celebrities (known locally
consequences of their own decision.
06 07
??? ASIA
21.1%
Free delivery
Range and
ALMOST
100%
promotion
South Korea has the worlds most developed
digital economy and owes this largely to a
combination of innate cultural appetite for new Internet & Wifi
technologies and digital accessibility. Thanks everywhere
of consumers
+35%
to high internet speeds and 85% smartphone
penetration, almost 100% of consumers aged
between 10 and 40 shop online, especially Smartphone aged between
penetration
through mobile. In additional, South Korea is very
advanced in their financial payments systems, 10 and 40 JAPAN
which makes the purchase process easier.
Digital creativity shop online
The situation is different from the early days of
online retail, four or five years ago. Now, the
online channel is positioned as one of the most PENETRATION
important purchase channels, particularly for
the baby categories. And it is becoming more Figures for 12 months to June 2016
66.9%
pronounced due to the increase of cross-over Source: Kantar Worldpanel
shoppers, who make purchases on- and offline.
14
This is now being mirrored in China with the
advent of social commerce. Chinese e-commerce Changing media consumption Therefore, when considering
company JD.com has partnered with social in Japan promotional activities for e-commerce,
platform WeChat, enabling its users to browse Smartphone usage has been growing we need to consider the ways in which
merchandise offered by JD.com while staying in in Japan for many years: as of the end people access information. Using data
the chat app. of 2014, 64.2% of all households had a from its internet-based panel, Intage
smartphone1. segmented consumers in accordance
In the next decade, South Korea is expected to with how they access information in
see online FMCG share surge to 25%. Because Moreover, with the widening range of order to identify information exposure
crossover shopping will accelerate and omni- content available, the ways in which patterns. This resulted in the creation of
shoppers will become more common, existing people access information e.g., a profile of specific segments designed
e-tailers will be trying to enter the offline market, watching TV content through the to identify which promotions might be
and existing offline retailers will be trying to Internet is growing more diversified. effective for each audience.
develop their online business.
1. 2014 Communications Usage Trends Survey, Ministry of Internal Affairs and Communications
8 09
ASIA
ASIA
TREND-CHASERS
Gender age distribution n Male 48.3% n Female 51.6%
15.0 14.8
14.3
10.4
11.8
10.5
9.3
6.4
4.3
3.2
0.0
Age 10s 20s 30s 40s 50s 60s 10s 20s 30s 40s 50s 60s
POSITIVE INDIVIDUALISTS
and behaviours are widely divergent:
e-commerce shopping is whereas one segment is easily
11.8
10.3
Interview with Mayuko Suzuki, Intage Japan 9.1
7.4 7.3 6.1
2.5
How is the retail landscape thinking about hybridisation. At least retail too: Japan views its malls like 0.0 0.0
changing in Japan? one online retailer has a service where one-stop shops for everything you
Online has certainly developed and goods are delivered to a locker. They need; youll not only see a cash store, Age 10s 20s 30s 40s 50s 60s 10s 20s 30s 40s 50s 60s
effected a change in the landscape. then let the purchaser know which but also a hospital and nail care service
But, it is interesting that even though locker the parcel is in to go and pick up all in one place.
we have an online channel now, we still whenever they want to. Personality Information / brands to which they Preferred medium
have the same shopping frequency in Online were starting to see retailers For this group, expressing individuality respond best YouTube
offline channels compared to 20 years Where do you see the retail not only selling wine or liquor but is important. They enjoy finding and Brands and products that Curation apps
ago. landscape going in the near future? advising what kind of liquor or wine sharing information based on their own differentiate them from others Instagram
Actually, the innovation that were is recommended for you. Its this tastes, and actively interact with other Brands that express their
Is the future of retail more having is not just around the product, additional helpful human element that people. individuality/taste
convenient and accessible? but how a service is wrapped around is thriving in Japan. Brands that are talked about
Definitely. Even online retailers are it. There are hints of this in traditional Information and brands trending on
social media
10 11
EUROPE EUROPE
EUROPE:
A CONTINENT
DIVIDED
well here because it satisfied the same
WHY IT WORKS replenishment and stock-up shopping
OVER HERE, BUT mission as the hypermarket but adds
NOT OVER THERE the crucial element of convenience, with
no extra charge.
At an internet penetration rate
of 73.5%, the European region is Secondly, in France, Drive attracts
FRANCE
second only to North America in suburban families: while for the overall
terms of connectivity. Still, varying French population penetration is around
levels of FMCG e-commerce share 22%, it jumps to 50% for families with
across the continent remains a young children.
puzzle. The UK (6.9%) and France
(5.3%), for example, stand far ahead
of Germany (1.2%), despite their LESSONS
proximity both geographically and as By Frdric Valette, FROM FRANCE
three of the five largest economies in
the world.
Director of Retail Market-leading supermarket chain
Insights, France E.Leclerc has embraced Drive as a
In fact, this incongruity should key element of its channel strategy.
barely come as a surprise. Unlike As a notoriously individualistic culture The concept of hybridisation is
their Asian and Latin American and home to the hypermarket, France something that traditional retailers
counterparts, European countries would initially be seen as an unnatural will pursue, not merely as an
remain extraordinarily different from ground for e-commerce growth. But opportunity but in order to rein in
one another in terms of cultural in recent years the popularity of the their expenditure and maximise
values. Here our experts explore three unique Click-and-Drive model has their margins. Retailers simply cant
nations and how e-commerce is soared; now accounting for 5% of all afford to keep buying vans and
working to meet the diverse needs of FMCG value share and has grown by hiring drivers and pickers, its a very
each population. 20% in the last year. A drive-thru version expensive way to make money.
of click-and-collect, it allows shoppers
$69 online
to order online and then pick up their Supermarkets should try ideas
orders without having to leave their car. such as part-bagging, where staple
goods are packaged for consumers
So why is this model so peculiar to just before they arrive at a store, freeing
one country? While click-and-collect them up to shop for other more
certainly exists in other markets, peripheral items.
nowhere else is it the dominant format
for e-commerce sales. Anything that retailers can do to
get consumers to take part in the
Firstly, the French retail network is shopping experience rather than do
$32 in-store rooted in its own invention the it themselves is important for their
hypermarket which represents 50% continued success.
Average spend in France of all sales. The Drive model works so
ONLY
N
ew entrants: AmazonFresh finally
launching in the UK, with two hour
6%
UNITED KINGDOM delivery to some parts of London.
N
ew approaches: Tesco trialling lower
minimum spend (25) with success
By Ed Nash, Director but has now reverted back to 40 for
of the population
E-commerce share of grocery in the home delivery; Morrisons teaming up
UK is the third-largest globally, which with Ocado to address logistics.
14 15
UNITED STATES OF AMERIC A UNITED STATES OF AMERIC A
BEHIND
US
Head of Research at Kantar Retail
THE CURVE
Why has FMCG e-commerce In the UK, if you put down four poles:
not taken off in the States as one in central London, one somewhere
we might have thought? between Manchester and Liverpool,
When considering what enables a retail one in the northeast, and one in
The US has long been at the ecosystem to be successful, we break Scotland, youd probably get 80% of the
crux of the e-commerce puzzle it into three variables: connectivity purchasing power in the UK from about
of performance. Home to Silicon (can people access the system easily?), 100 kilometres of those four poles. Thats
Valley, Uber, Amazon and the city consumer (culture, income, geography) a good market for e-commerce because
that never sleeps, its staid efforts at and profitability (can anybody make you can very easily reach lots of people
moving grocery shopping online have any money doing this?). who are spending a lot of money. Thats
baffled onlookers. why e-commerce developed the way
Its also important to understand it did in the UK, where youve got a
Last year marked the painful end of the primary category holding back very strong home delivery component.
Tescos ill-fated American venture, value share. In the States, the share of That was the way everybody initially
Fresh & Easy. Most American non-food e-commerce in is relatively approached the problem because the
shoppers, especially those in consistent with other technology- assets you need to make e-commerce
car-dominated California, are connected markets. There are certainly work are small: anybody can go buy a
accustomed to grocery shopping selected grocery categories that have van.
on a considerably larger scale. The very relatively high e-commerce share,
company was also forced to expand like diapers for example. The way e-commerce developed in
quickly, and on unsatisfactory retail France is more indicative of how it may
sites, to try to meet the overheads of Geography evolve in the US. Frances geography
its large-scale infrastructure.
Bryan Gildenberg, Head of Research The population density of the US is
difficult for e-commerce because people
is a lot more like the States: a couple
of very big cities on opposite sides
Analysts pegged the poor uptake of atKantarRetail: in incredibly densely populated areas of the country; about 15 or 20 major
the small convenience retail model or very sparsely populated areas and population centres in the middle, and
on a tacit misunderstanding of youve got a number of population then a lot of empty space. Home
American values. Reports showed centres that are quite significant. delivery doesnt make any sense in
that US shoppers disliked Fresh &
Easys shrink-wrap food packaging
and its self-checkout system: alien
to a nation that prefers to reward
personal service. Pre-packaged
sandwiches went squarely against
the supermarket tradition of deli Frances geography is a lot
more like the States: a couple
counter dishes prepared to order
in-store where people prefer to ask
for precise measures of ingredients to
suit their taste. of very big cities on opposite
There are clear parallels here to the
sides of the country; about 15
lagging e-commerce market. The
high level of individuality ingrained
or 20 major population centres
deep in American culture makes it in the middle, and then a lot of
very difficult for businesses which
require the relinquishment of choice empty space
and autonomy on the part of the
shopper to succeed in the long term.
16 17
UNITED STATES OF AMERIC A UNITED STATES OF AMERIC A
18 19
L ATIN AMERIC A L ATIN AMERIC A
CULTURAL BARRIERS TO
E-COMMERCE ADOPTION
By Cecilia Alva, Client Business
Development Director, Latin America
For the majority of Latin America, One issue faced across the entire Latin
e-commerce is lagging far behind American market is a lack of trust in
LATIN AMERICA traditional methods of shopping, with e-commerce. This firstly lies in payment
the exception of Argentina where it is methods where shoppers dont feel safe
exceeding usage compared to the rest sharing their credit card details and
of the region. data online. Secondly, there is the lack
of trust when purchasing fresh FMCG
This Argentinean anomaly provides a items. This is even seen in regular online
guiding light for online retailers trying shoppers, they tend to avoid buying
At first glance, it might be easy to succeed in Latin America. Compared fresh meat, fruit and dairy through
to dismiss the lagging growth to those countries which are not e-commerce, favouring those items less
of FMCG e-commerce as a seeing notable growth in e-commerce, likely to expire.
mere symptom of the regions Argentinas main customers are seniors
comparatively poor connectivity. and small families looking for the Another barrier for e-commerce in Latin
convenience of getting regular trolley America is that shoppers perceive online
Nicaragua and Guatemala, for items, delivered to their front door. to be more expensive than traditional
example, report a woeful 27.1% and Other countries have a much younger bricks and mortar stores. Both these
31.5% penetration respectively, audience and do not reach these other obstacles for retailers can be combated
far below the global average of demographics. by educating shoppers to help them
49.7%2. overcome these concerns.
The lesson to be learnt here is that other
But Latin America as a whole territories in Latin American need to Research from Kantar Worldpanel
succeeds the Middle East, Asia, expand their shopper base by attracting confirms how this negatively affects the
and Africa in the proportion of its and then recruiting new consumers. very premise of e-commerce more than
population using the internet. More That said, Argentina needs to catch the other regions. It explores confidence
developed markets like Argentina, attention of the younger shopper to issues related to this unwillingness to
Chile and Brazil boast more continue to see growth. change, and how brands and retailers
LATIN AMERICA:
internet users per capita than Italy, can overcome them.
Turkey or even China.
So, with 55.9% of the population For the majority of Latin America,
CONNECTED BUT
online, why is e-commerce and
specifically FMCG e-commerce e-commerce is lagging far behind
traditional methods of shopping, with
still in such an embryonic stage?
Generating just $345 million each
CONVENTIONAL
year, it accounts for only 0.2% of
the total FMCG market value. The the exception of Argentina where it is
appeal of online grocery shopping
to Latin American shoppers is
exceeding usage compared to the rest
unarguably extremely low. of the region
2
www.internetlivestats.com
20 21
L ATIN AMERIC A
1. 3.
Encourage Emulate
incremental change offline customer
Routes to success: a Familiarity is the key to success service
customers perspective in Latin America. Retailers should The proliferation and development
Research from Kantar Worldpanel begin introducing technology into of smart devices has created a world
asked shoppers across Argentina, stores such as cashless payments and of opportunity in which retailers
Bolivia, Brazil, Chile, Colombia, Ecuador, easy-to-use interfaces where customers and brands can retain a service
Mexico, Peru and Venezuela what can compare products and pricing. relationship with their customers
was stopping them from purchasing Store-to-door delivery would be a outside the store. Our data shows
online. The answers were unsurprising: preferable model in this stage of the the act of using the internet to
Latin Americans simply prefer the market. Customers have all the benefit search for information is a good
conventional shopping experience, they of home delivery while minimising the indicator of their propensity to buy.
like to see produce, touch it and be uncertainty created by a long time
advised by salespeople they trust. distance between payment and true Service personnel should use their
ownership. advisory role, prized among Latin
2.
The road to a thriving market for FMCG American shoppers, to recommend
e-commerce across Latin America is Guarantee value websites and apps which can help
undoubtedly strewn with deep-rooted Wanting to see and touch the shopper navigate the online
barriers. But, it is not without its produce is top on the list resources available.
4.
proponents. The majority of shoppers of many consumers reasons for not
recognise the benefits of shopping shopping online, but it scratches the Ignite advocacy:
online: in Mexico, 58% actually enjoy surface of a much larger issue: quality online shopping
the process of ordering from home. In of goods. This has been overcome as a social norm
Colombia, over half of those we spoke
with admitted the channel was effective 72% 47% in other more developed markets by
promising, even guaranteeing, that only
Countries in Latin America invariably
have a collectivist culture; that is to
at avoiding long lines at the checkout the best quality goods will be chosen. say, there is a high reliance on and
and saved time. loyalty to their community. The
Models through which the customer most powerful marketing tool,
Four-fifths of shoppers in Brazil pays on delivery would not only better therefore, is advocacy. Brands and
appreciate that e-commerce enables 30% emulate the traditional door-to-door retailers should provide the tools
them to shop at any time. Over half of trade understood by Latin American needed to encourage e-commerce
Peruvians declared a value in accessing
exclusive online promotions and over
63% consumers but would also cede them
greater control, allowing them to refuse
shoppers to recommend the
service to their peers, reducing the
two-thirds of Argentineans think home purchase of products deemed to be not perceived risks with which it is often
delivery is the biggest benefit offered by up to standard. associated.
e-commerce. 70%
These advantages have been well
communicated by retailers and brands Almost half of Generation X finds sharing the focus remained purely commercial
alike. Consumers understand them their personal information too much a and value-oriented. Exclusive online
clearly, but their cultural tendency risk. The Boomers (over-50s) simply do promotions came top, with 48% quoting
toward loss aversion means that the not have access to the internet, and it as a reason they or their fellow
messages are often not strong enough n In the store I can see and take even if they do have little or no idea shoppers would shop more online.
to outweigh the risks. In short, to the product at the same time how to use it.
succeed, retailers and brands must n I would rather buy something The second and third most suggested
either heighten the end-value of these for my house at the store Even among the 15% who have made improvements relate to delivery: speed
benefits or significantly lower the n In the store the salesperson online purchases in other sectors, the and cost respectively. This correlates
barriers preventing shoppers from can answer my questions phrase most used to describe why this well to the main benefit of traditional
enjoying them. n The stores offer more behaviour had not extended into FMCG shopping: being able to order an
promotions was a simple: I am not used to it. item and take it home immediately.
For many, a lack of knowledge fuels n I do not trust giving my By shortening the time between the
their uncertainty and suspicion. Even personal information Our research asked shoppers what would point of purchase and the moment
Millennials shy away from FMCG need to happen in order to increase of delivery, consumers would not only
e-commerce, with 76% reporting that Source: Kantar Worldpanel 2016 online purchases in FMCG. Interestingly, reduce uncertainty anxiety but also
they like to see a product before making having previously cited a lack of trust retain the impulsive reward-based
a commitment to purchase. In older and physical contact as barriers to entry, enjoyment of shopping in general; a
generations, this uncertainty grows into their recommendations did not include characteristic much more prevalent in
mistrust. either as items for improvement. Instead, the Latin American culture.
22 23
WORLD OF OPPORTUNIT Y WORLD OF OPPORTUNIT Y
BRAND MASTERCLASS
HOW BRANDS AND
RETAILERS ARE DRIVING In China as beauty products represent
By creating innovative ideas and
listening to the culture of the
Adding something extra
Online shopping can feel like a
ONLINE SALES
50% of all e-commerce purchases market they are aiming at, the gamble for many consumers, with
in FMCG, we do not see this risk of below brands are establishing a the potential to fail to live up to
cannibalisation yet. Online purchase is strong e-commerce market on a expectations in real life.
still a premium or prestige occasion and global scale.
a greater tool to connect with brands To combat this, LOral launched
The issue of cannibalisation AVERAGE MARKET SHARE OF ONLINE that are not available offline. Driving sales through a MakeUp Genius app which
Brands and retailers the world over are AMONG SHOPPERS WHO USE THE CHANNEL communications has now been downloaded over 6
having to invent new ways to engage Once shoppers have begun shopping Some brands have found success million times allowing shoppers to
with shoppers online. With the risk of 25 online they are more likely to continue by pairing social media marketing virtually try on makeup, swapping
cannibalisation of bricks and mortar doing so. Among this group in the UK, directly with e-commerce to drive out colours and shades all while
stores, its vital for them to offer for example, almost a quarter (23.3%) frictionless sales. Last year, Coca- teaching you how to better apply
20
something new and exciting to drive of all spend is through e-commerce, Cola launched Freestyler in the UK. the products.
them to this channel, without losing resulting in fewer trips to physical stores. The app allows users to create a
interest in physical channels. 15 cocktail of 100 Coca-Cola brands, Accelerating the new
n Korea Online has proven to be fertile ground including Lilt and Dr Pepper. Recipes product development
Comparative research we conducted 10 n UK for brands. Kantar Worldpanel data can be saved and taken to places process
across the UK, France and China n China shows that the share of the market for with a Freestyle machine, where In China, many players have
showed that after one year of branded goods is on average much they simply scan a QR code to get started to launch their innovations
5 n France
e-commerce adoption, British and higher online than it is in store. For their personalised beverage. Users exclusively in Tmall stores to capture
n Spain example, in Spain brands have a 75%
French shoppers spent less overall. This can also share their favourite mixes the lucrative early bird sector,
is partly because online still fails to 0 n Japan share of market online compared to with other users and friends over create the vibe through digital
generate impulse purchases: 55% of 2013 2014 2015 64% offline. social media. The concept has also campaigns as well as executing a
shoppers re-use the same shopping list been launched in the US, where the very pragmatic test and learning
for the next purchase. app has 1.1 million downloads. process that is useful to fine-tune
Source: Kantar Worldpanel 2016
the marketing mix when launching
Creating a frictionless in other markets or channels.
PERCENTAGE EVOLUTION OF ONLINE PLUS OFFLINE SPEND 2015 VS 2016 product experience
The possibilities afforded to brands Protecting your offline
by the much-touted Internet of sales
CHINA FRANCE UK Things are already being realised. Brands need to find ways to make
Nestl has recently introduced a online an additional way to sell
Nespresso coffee machine, Prodigio, products, not cannibalise their
ALL SHOPPERS +5.4% +0.7% +0.3% that connects to an app on a
consumers phone via Bluetooth.
in-store activity. Offering products
exclusively through certain channels
Prodigio keeps count of how many is a popular move.
capsules used, the app knows how
many have been ordered. P&G China sells lines specific to
Alibabas Tmall while in Japan,
ONLINE
+5.9% +0.6% +0.8%
The app then alerts the consumer Nestl has launched the first ever
ADOPTORS 2016 when they are running low and Kit Kat made with toppings on
offers a one-touch re-order button. it individually packaged in a
The technology blurs the digital with customised box which is available
the physical, providing a seamless only in Kit Kat Chocolatory shops
journey from consumption to in Tokyo or through the LOHACO
ONLINE delivery. online store.
REPEATERS +8.1% -1.4% -2.4%
2015 AND 2016
24
25
WORLD OF OPPORTUNIT Y WORLD OF OPPORTUNIT Y
RETAIL MASTERCLASS
The loyalty of online While the cannibalisation of offline sales
makes for a potentially damaging entry into
Shoppers could select products directly from
posts about its Story on a Plate campaign and
shoppers is greater e-commerce for retailers, they cannot afford to head straight to the checkout.
ignore it. Our insight shows there to be a huge
than the average first-mover advantage and, with pure-play tech Reclaim the shelf appeal
offline shopper. companies like Amazon opening in markets
across the world, securing a shopper base early is
In an effort to close the gap between how
people actually shop for FMCG and the existing
26 27
THE FUTURE OF E-COMMERCE THE FUTURE OF E-COMMERCE
28 29
CONCLUSION
STREAMED SHOPPING,
THE FUTURE OF FMCG? ABOUT US
Luis Simoes, Global Chief Strategy Officer
For more information, please contact About Kantar Worldpanel
Though very impressive, the rise of the Manufacturers need to add new performance
e-commerce channel is not adding revenue to indicators such as presence in the shopping list Stphane Roger, Kantar Worldpanel is the global expert in
the FMCG sector as a whole. Indeed, the impact and visibility on screen, but the development of Global Shopper and Retail Director shoppers behaviour.
is often quite the opposite as deal hunting digital shopping and delivery platforms offers stephane.roger@kantarworldpanel.com
becomes easier and shopping lists limit impulse them an opportunity to cut the middleman and +34 93 581 96 62 Through continuous monitoring, advanced
purchases. own the relationship with shoppers. Here also, analytics and tailored solutions, Kantar
there is more competition to expect from new Or to find a local contact please see Worldpanel inspires successful decisions by
What the development of FMCG e-commerce brands whose cost of entry has dropped as they www.kantarworldpanel.com brand owners, retailers, market analysts and
does mean though is that an unprecedented can either go direct or use online marketplaces. government organisations globally. With over
shake-up and redefinition is taking place in The findings in this report are based on 60 years experience, a team of 3,500, and
the industry. The cards get thrown up into For now, shoppers clearly benefit from tracking the purchase of more than 500,000 services covering 60 countries directly or through
the air, with traditional players being offered this growing rivalry as it puts pressure on shoppers in key countries spanning three partners, Kantar Worldpanel turns purchase
opportunities to better or transform. This results price, increases their options and improves continents. All of the data is correct as of June behaviour into competitive advantage in markets
in the most complex, competitive, unpredictable convenience dramatically. Not only do we 2016 and annual increases are the 12 months as diverse as FMCG, impulse products, fashion,
and interesting era in the industry yet. see greater competition among more players leading up to this date. baby, telecommunications and entertainment,
but, more importantly, a blurring of purposes among many others.
Bricks and mortar retailers have the most appear between them: traditional retailers go We monitor every purchase via every channel
contradictory task: investing in online online, pure players consider developing stores on a continuous basis. This means we can
development, all the while knowing it will and manufacturers become also retailers. We understand online dynamics and its impacts
cannibalise their in-store sales rendering them can also foresee payment giants and media on offline business. We also identify ways to
less profitable. Their challenge is to combine their owners joining the party where media and retail drive revenue by showcasing best-in-class
online presence with their physical stores and converge to deliver a seamless and integrated performance from a brand or retailer
a unique understanding of shopper behaviour. path to purchase. Only time will tell how many perspective from around the world.
They also need to redesign their relationship with players actually survive this battlefield.
manufacturers and brands, which are both eager
to go direct to shoppers. Eventually, with the growing ubiquity of
connected technology in our homes, I can
Pure players are the new kids on the block and anticipate a world of fulfilment without shopping,
they have little to lose: born digital, they can where my things are able to precisely order
focus on attracting shoppers and delivering what I need, where replenishment is delivered
quickly. Until they need to make a profit which conveniently, where grocery becomes a service I
might prove more complex these agile players subscribe to and forget about. Our data partners
are disrupting all sectors and challenging the
incumbents. Much the way streaming is the new experience
of music, isnt the future of shopping actually not
shopping at all?
30 31
www.kantarworldpanel.com