This document discusses a report by Bain & Company and Google India on the growing impact of digital technologies on consumer goods in India. It finds that online sales of consumer packaged goods in India could reach $5 billion by 2020, significantly influenced by the country's growing internet population which is projected to reach 650 million by then. The profile of online consumers is also shifting from older urban males to include more women, younger generations, and consumers in smaller cities and rural areas, expanding the potential market. However, many consumer goods companies have been slow to develop digital strategies to capitalize on these changes.
Get up to date with all the digital trends in India with this comprehensive 60 page book from Google India. An absolute must for anyone in the marketing industry. Strongly recommended for all others.
There has been a sudden switch in the buying and selling pattern of the customers in all over India, which created the growth of e-commerce industry. This switch can also be noticed in the automobile industry. The online penetration of auto sector in the world market is approx. 0.7% in 2019. It was challenging for automobile ecommerce industry to make it successful in India, but eminent players of India have made it possible. To learn the possibilities and success of auto ecommerce industry go through this document.
Ground Zero 4.0 | Scaling Up - Event ReportRedSeer
Executive Summary
The report is compiled of all the topics that were discussed at Ground Zero 4.0 and has been
segregated based on RedSeer’s research and panel inputs.
Key Findings:
1. Digital India
2. Retail
3. D2C
4. Education
5. Healthcare
6. Grocery
7. Etailing
Get up to date with all the digital trends in India with this comprehensive 60 page book from Google India. An absolute must for anyone in the marketing industry. Strongly recommended for all others.
There has been a sudden switch in the buying and selling pattern of the customers in all over India, which created the growth of e-commerce industry. This switch can also be noticed in the automobile industry. The online penetration of auto sector in the world market is approx. 0.7% in 2019. It was challenging for automobile ecommerce industry to make it successful in India, but eminent players of India have made it possible. To learn the possibilities and success of auto ecommerce industry go through this document.
Ground Zero 4.0 | Scaling Up - Event ReportRedSeer
Executive Summary
The report is compiled of all the topics that were discussed at Ground Zero 4.0 and has been
segregated based on RedSeer’s research and panel inputs.
Key Findings:
1. Digital India
2. Retail
3. D2C
4. Education
5. Healthcare
6. Grocery
7. Etailing
e-commerce industry in India is going through an aggressive transformation and while it can be the sunshine sector for growth, it is imperative to understand the limitations and risks in the sector, and handle these risks effectively. Addressing these risks should be our top most priority to avoid this boom turn into a bubble. It is possible only when euphoria over virtual cash flows, imaginary cash rich P&L statements and outrageous valuations makes way for a structured growth plan across the business parks and government corridors, backed by more realistic aspirations, but of course, with the same enthusiasm
With more than 680 million internet users, more than 500 million smartphone users, cheap data and a young aspiring population, India is providing a very healthy environment for the E-commerce market to grow.
Although, future growth of E-commerce in India shall be truly Indian as growth will depend on tapping the tier 2 and 3 cities. Consumers in these tier 2 and 3 cities are very different from English speaking metro-dwellers - they prefer vernacular languages, access the internet using smartphones and have very local preferences. Let us talk about this industry.
Broadly, e-commerce means doing business over the internet. This implies that either goods can be delivered offline or products can be “digitalized” and delivered online. E-commerce however is marred by serious drawbacks. India only has 100 million active internet users. This implies that the internet usage in India is pretty poor. The problem is further aggravated by the fact that there is low credit card penetration coupled with slow internet speeds and fulfillment issues. As of today e-commerce is merely a 10 billion dollar market in India which is 1/6th of the US market. Despite this gloomy scenario, there are some important trends in e-commerce to look out for. This includes the fact that offline retailers are trying to go online, media biggies are getting into e-commerce, e-commerce platforms are gaining traction and mobile commerce is just beginning to take off, examples being banks and Indian Railways.
1. Online skill-based real-money gaming market in India is estimated to grow to become ~$3.8 Bn1 by 2024 speed of growing smartphone penetration, low cost of data and vast digital payment infrastructure allowing individuals access to instant real-time inter-bank transactions.
2. Introduced to Indian market in early 2010 and pioneered by Dream11, Fantasy sports contributed ~ 30% of the RMG market in 2019. Fantasy sports market has witnessed exponential growth in recent years fuelled by increasing user base, high engagement and increasing investor interest and is expected to grow by ~60% till 2024.
3. Casual online real-gaming market contributed ~70% of the total RMG market in 2019. However, it is expected to grow relatively slower at ~35% when compared to fantasy sports.
4. Driven by high growth opportunity in RMG market, horizontal players have started foraying in the segment. In 2019, Paytm entered the casual gaming space with Paytm First Games.
E-COMMERCE AND THE FUTURE OF RETAIL: 2015Cooper Smith
The retail sector is undergoing a major transformation driven by digital. Technology is changing the way people shop, as well as how retailers operate.
We've created a slide deck highlighting the biggest e-commerce trends in retail. Some of the topics we cover in the deck include:
The size of the retail and e-commerce markets.
The breakdown of e-commerce sales by product category.
How legacy retailers are faring.
New e-commerce players.
Disrupting last-mile delivery.
The companies mentioned in this year’s presentation include:
Walmart, Target, Amazon, eBay, Google, Uber, JCPenney, Gap, Kroger, Kohl’s, Macy’s, Safeway, SuperValu, Albertsons, Blue Apron, HelloFresh, Plated, Instacart, FreshDirect, Peapod, Fresh Market, Harris Teeter, Whole Foods, Birchbox, Olay, L'Oreal, Avon, Ulta, CVS, Walgreens, Sephora, Postmates, FedEx, UPS, US Postal Service
e-commerce industry in India is going through an aggressive transformation and while it can be the sunshine sector for growth, it is imperative to understand the limitations and risks in the sector, and handle these risks effectively. Addressing these risks should be our top most priority to avoid this boom turn into a bubble. It is possible only when euphoria over virtual cash flows, imaginary cash rich P&L statements and outrageous valuations makes way for a structured growth plan across the business parks and government corridors, backed by more realistic aspirations, but of course, with the same enthusiasm
With more than 680 million internet users, more than 500 million smartphone users, cheap data and a young aspiring population, India is providing a very healthy environment for the E-commerce market to grow.
Although, future growth of E-commerce in India shall be truly Indian as growth will depend on tapping the tier 2 and 3 cities. Consumers in these tier 2 and 3 cities are very different from English speaking metro-dwellers - they prefer vernacular languages, access the internet using smartphones and have very local preferences. Let us talk about this industry.
Broadly, e-commerce means doing business over the internet. This implies that either goods can be delivered offline or products can be “digitalized” and delivered online. E-commerce however is marred by serious drawbacks. India only has 100 million active internet users. This implies that the internet usage in India is pretty poor. The problem is further aggravated by the fact that there is low credit card penetration coupled with slow internet speeds and fulfillment issues. As of today e-commerce is merely a 10 billion dollar market in India which is 1/6th of the US market. Despite this gloomy scenario, there are some important trends in e-commerce to look out for. This includes the fact that offline retailers are trying to go online, media biggies are getting into e-commerce, e-commerce platforms are gaining traction and mobile commerce is just beginning to take off, examples being banks and Indian Railways.
1. Online skill-based real-money gaming market in India is estimated to grow to become ~$3.8 Bn1 by 2024 speed of growing smartphone penetration, low cost of data and vast digital payment infrastructure allowing individuals access to instant real-time inter-bank transactions.
2. Introduced to Indian market in early 2010 and pioneered by Dream11, Fantasy sports contributed ~ 30% of the RMG market in 2019. Fantasy sports market has witnessed exponential growth in recent years fuelled by increasing user base, high engagement and increasing investor interest and is expected to grow by ~60% till 2024.
3. Casual online real-gaming market contributed ~70% of the total RMG market in 2019. However, it is expected to grow relatively slower at ~35% when compared to fantasy sports.
4. Driven by high growth opportunity in RMG market, horizontal players have started foraying in the segment. In 2019, Paytm entered the casual gaming space with Paytm First Games.
E-COMMERCE AND THE FUTURE OF RETAIL: 2015Cooper Smith
The retail sector is undergoing a major transformation driven by digital. Technology is changing the way people shop, as well as how retailers operate.
We've created a slide deck highlighting the biggest e-commerce trends in retail. Some of the topics we cover in the deck include:
The size of the retail and e-commerce markets.
The breakdown of e-commerce sales by product category.
How legacy retailers are faring.
New e-commerce players.
Disrupting last-mile delivery.
The companies mentioned in this year’s presentation include:
Walmart, Target, Amazon, eBay, Google, Uber, JCPenney, Gap, Kroger, Kohl’s, Macy’s, Safeway, SuperValu, Albertsons, Blue Apron, HelloFresh, Plated, Instacart, FreshDirect, Peapod, Fresh Market, Harris Teeter, Whole Foods, Birchbox, Olay, L'Oreal, Avon, Ulta, CVS, Walgreens, Sephora, Postmates, FedEx, UPS, US Postal Service
Find out how BC's Ministry of Justice approached practical reform and access to justice through designing and delivering better services, for citizens, partners, and professionals alike. Learn how the participatory and experimental methods of service design are being used across BC's Courts in a number of projects to improve experiences and deliver on timely and balanced justice, changing minds and attitudes along the way.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Is Healthcare the Next big opportunity in ecommerce in India? Kapil Khandelwa...Kapil Khandelwal (KK)
My views the bubble in ecommerce investments in India and is healthcare the next big opportunity
kapil khandelwal
QuoteUnquote with KK
www.kapilkhandelwal.com
Top Digital Trends Shaping Digital India by NASSCOMDivya Jain
Take a look at some of the best digital trends helping shaping up a digital India in 2018. Insights shared by NASSCOM experts.
https://community.nasscom.in
Emerging trends in E-tailing: A novel perspectiveBella Meraki
E-tailing (or electronic retailing) is the selling of retail goods on the Internet. It is the most common form of business-to-consumer (B2C) transaction. Now it has become the new shopping method. When most of the consumers spend more time for social meetings, entertainments and other recreational activities, there is hardly any time for physical shopping. E-tailing sites provides exclusive feature which no other retail outlets can offer and makes the customer shopping experience new and worthwhile.
Webchutney Digital Automotive Report 2010Sidharth Rao
Webchutney's Digital Automotive report, 'Inside the Mind of the Wired Car Buyer' is a definitive guide to understanding the influence of Online in driving consumers' car purchase decisions in India.
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Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
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The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
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4. Adding to cart: Digital’s impact on consumer goods in India | Bain & Company, Inc.
Page 2
Key takeaways
• The online population in India is large and growing rapidly: 650 million Indians will be online
by 2020 and up to 250 million will be shopping online, spending more than US$50 billion
• At least $5 billion of that spending will be for fast-moving consumer goods (FMCG)
• Significantly, more than one-third of total FMCG sales in 2020, or an estimated $35 billion, will
be affected in some way by digital activity
• The population of online users, buyers and influencers is steadily shifting from well-off adult males
in large cities to women, digitally savvy Generation Zers and residents of smaller cities
• There is a growing mobile Internet revolution in India, with some analysts predicting that at least
50% of online buying will take place on a mobile device by 2020
• Indian consumers are already employing digital media in the purchasing cycle and across all
FMCG categories
• Two powerful lenses indicate a category’s online progress: digital density (online sales as a
proportion of overall sales) and digital influence (the influence of digital information on
consumers’ online and offline buying decisions)
• These lenses highlight three primary online category types—Digital Frontrunner, Digital Emergent
and Digital Laggard—with different implications for each
• Three categories will likely see rapid growth in 2020: infant care (25%–30%), male grooming
(20%–25%) and beauty (8%–10%)
• FMCG e-commerce is witnessing the emergence of four online retail business models: the online-
only multicategory generalist, the online-only category specialist, the brick-and-mortar retailer
with an online channel and the FMCG brand with an online portal
• While digital is a high priority for most FMCG companies, many are still hesitant to engage.
Four main barriers block the way: economic and logistical challenges, insufficient metrics, a lack
of appropriate talent and poor infrastructure support
• To compete in the digital era, we propose that FMCGs shift through five “gears”: Stop and rethink
the role of digital in their categories, brands and portfolios; choose where to focus among
consumer and product segments; perfect the online and offline consumer experience; reallocate
resources in marketing, promotion and research; and build the capabilities and partnerships
necessary to deliver and sustain change
5. Adding to cart: Digital’s impact on consumer goods in India | Bain & Company, Inc.
Page 3
Introduction
India stands on the cusp of dramatic growth in Internet and e-commerce activity. While Internet penetration
today is only a third of that in the other three BRIC countries (Brazil, Russia and China), we anticipate rapid
growth over the next few years, with more than 650 million Indians online by 2020—which would make India
second only to China in projected Internet users. Many of these users will be women and “digital natives,” born
during or after the introduction of digital technologies.
As a result, the retail environment and shopping practices of everyday Indian consumers will change in ways
that older generations might find hard to imagine, creating tremendous opportunities. By 2020, these Internet
users will generate more than US$50 billion in total online sales.
As these opportunities materialize, we ask: What is the size of the prize for fast-moving consumer goods (FMCG)
companies? Who is the new Indian online consumer? What barriers are keeping some FMCG companies from
embracing digital technology? If there are frontrunners, what are they doing differently? How can FMCG
companies realize the full potential that Internet growth has to offer?
To help answer these questions, Bain partnered with Google to survey approximately 1,600 “lead” consumers—
consumers who have Internet access, belong to higher socioeconomic classifications (SECs) and reside in metro
or Tier-1 cities.1
We also spoke with several leading FMCG companies, retailers and other ecosystem players, such
as creative and media agencies and IT and analytics firms. The conclusions are striking, as are the implications
for FMCG businesses.
First and foremost, there is a great deal at stake for FMCG companies. Yet leading players are holding back.
Few have articulated a digital strategy, and most are not fully using digital technology across the value chain.
Some industry leaders have begun to experiment and innovate, but even they seem to systematically underestimate
the power and potential of the Internet to transform businesses.
If FMCG companies in India are to win the race for the digital consumer, we believe they must move quickly to
gain mindshare—and wallet share—in the growing online community. Those who do not could face material
opportunity costs, not only in terms of revenues and profits, but also in digital shelf space, scarce ecosystem resources
and connections to digitally savvy shoppers.
6. Adding to cart: Digital’s impact on consumer goods in India | Bain & Company, Inc.
Page 4
India on the cusp
Digital’s time is now
With just 24% of its population online today, India’s Internet penetration is still just about a third that of the
other BRIC countries (see Figure 1) and similar to less developed countries, such as Yemen and Angola.2
Yet in absolute numbers, the Indian online population is already large and growing rapidly. With approximately
250 to 300 million Internet users, it is the second-largest country by users globally—just behind China and
ahead of the US.3
To better understand the challenges and opportunities ahead for this rapidly growing online community, we
conducted extensive research—surveying 1,600 lead consumers, holding in-depth discussions with leading
FMCG companies and partnering with Google to provide additional data and insights (see Appendix).
Our research indicates that online penetration in India could reach 50% by 2020, much higher than many have
anticipated. Some estimates put the number of Indians online in five years at 650 million, with India continuing
to hold its second-place position.
An FMCG foot on the accelerator
The implications of our findings for e-commerce are tremendous. With less than one-fourth of Internet users
shopping online today, the e-commerce market in India, excluding travel and financial transactions, is still
nascent—just $5 billion in size. Online sales make up less than 1% of total retail sales, compared with 6% in
China. Yet we believe online sales in India are poised for huge growth. As Internet penetration continues to rise,
we anticipate that up to 250 million Indians—about 40% of the forecasted online population—will be
shopping online by 2020, generating upwards of $50 billion in e-commerce. According to our consumer
survey, availability of a wide range of products, availability of premium brands, and online deals and discounts
will drive a large part of the shift to online sales.
The implications for FMCG e-commerce in particular are even greater, with online sales of FMCG set to
grow at a faster pace, reaching $5 billion by 2020 under conservative estimates. Digitally influenced FMCG
sales, in turn, could be as high as $35 billion, based on a forecasted $100 billion FMCG total market size
(see Figure 2).
7. Adding to cart: Digital’s impact on consumer goods in India | Bain & Company, Inc.
Page 5
Figure 1: E-commerce in India is still nascent
Sources: eMarketer (2014E); Google data; Bain analysis
% of Internet users who buy online
Internet penetration
100%
75
50
25
0
0 25 50 75 100%
India
Indonesia
China
Brazil
Mexico
Germany
Japan
South Korea
US
UK
Russia
Figure 2: E-commerce in FMCG: A $5 billion opportunity by 2020
Sources: Euromonitor; Google data; Bain analysis
India FMCG
X =
Online sales Size of prize
~$50B
2014 2020E 2014
0.2–0.3%
5.0%
~$0.1B
~$5.0B
~50x
2020E 2014 2020E
~$100B
~2x
As high as $35B when
including digitally
influenced sales
8. Adding to cart: Digital’s impact on consumer goods in India | Bain & Company, Inc.
Page 6
The new digital nation
A changing online demographic
The composition of online buyers in India is changing almost as rapidly as the market itself. Today, a little less
than 40% of the online population resides in the country’s top 35 cities and accounts for close to 60% of online
shoppers; about half are adult men and nearly three-quarters belong to SEC groups A and B.4
The future will
be quite different.
Women will primarily lead the growth of Internet usage and e-commerce over the next few years—especially
members of Generation Z, whom we define as those born in India after 1995—along with residents of rural
areas and smaller cities.5
• Women. Although they are the primary decision makers and influencers for offline FMCG purchases in
Indian households, women are underrepresented online and account for only 15% of Internet users today,
compared with 24% of the overall population. But this statistic is estimated to reach more than 30% by 2020,
with 200 million women online, significantly boosting the potential for e-commerce and digitally influenced
sales in India. We note the subgroup of working women is even more promising: They spend twice as much
time online as the average nonworking women we surveyed and are 1.5 times more likely to buy FMCG
products online. The recent boom in the online apparel and accessories market, almost entirely driven by
women, provides a taste of things to come.
• Generation Z. The 500-million-strong members of Generation Z, those digitally savvy Indians born after 1995,
make up a new generation of FMCG consumers in every sense. These young Indians, particularly the 200
million “screenagers,” born between 1995 and 2002, will begin to play an important online role as they
become financially independent over the next few years.
• Rural areas and smaller cities. Although Internet penetration to date has been highest in the metro and
Tier-1 areas, growth is now far more rapid in the less populated Tier-2 and Tier-3 cities.6
As early as 2013,
more than a third of the buyers in India’s Great Online Shopping Festival—a day of discounts across e-commerce
websites—came from Tier-2 and Tier-3 areas. Similarly, more than 70% of FMCG samples shipped to consumers
during the Grand Diwali Mela 2014, a more recent online shopping festival, were delivered to Tier-2 and
Tier-3 cities. By 2020, rural Internet users in India will account for 40% of the country’s total Internet users.
This change, coupled with an increase in rural annual per capita disposable income from $480 today
to $630 in 2020, will make this segment easier to target online and more valuable (see sidebar, “The
online Indian”).
The influence of mobile technology
India’s online growth and its changing online demographics are being strengthened by the mobile Internet, as
low-cost mobile phones and tablets give easy and inexpensive online access to many who might not be able to
afford a PC or a wireline Internet subscription. Smartphones now cost as little as $30, and 3G and 4G network
infrastructure is growing rapidly, enhancing connection quality and speed and reducing data costs. Data plans are
already half the price they were just four years ago.
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With its relatively late entry into the digital world, it seems India is skipping a stage in the standard Internet-
penetration model, with mobile Internet taking the lead over fixed-line broadband. There are currently 140 million
smartphone users in India, with the numbers increasing rapidly. By 2020, some analysts estimate that at least
50% of online buying will take place on a mobile device.
We already know that India is a country of texters, Tweeters and WhatsApp users. According to eMarketer, India
is among the world’s fastest-growing nations in terms of social network usage. India is also WhatsApp’s largest
market. In addition, smartphone users with mobile Internet access are more active on social media and more
likely to watch videos, read articles and blogs, and search for information.
The online Indian
• A mobile nation
–– About 70% of Internet users have online access through their mobile phones
–– More than 90% of Indian smartphone users access the Internet daily
–– India is the largest market for WhatsApp and the second-largest market for Facebook
• Women on the rise
–– Lead urban female online consumers are spending an average of 75 minutes a day
on the Internet
–– More than one-fifth of these women already note a digital influence on their FMCG
purchase decisions (a brand website, a YouTube video, a blog, an online ad or another
online source)
–– 50% of women who shop on the Internet have bought FMCG online, while 10% of all
women buying FMCG have shared their buying experience post-purchase on the Internet,
whether they purchased online or offline
• Younger generations gaining importance
–– For today’s 18– to 25–year-olds, the average time spent online each day is about 100 minutes,
with the greatest time spent on email, search and social media
–– About 40% of “screenagers” (those born between 1995 and 2002) living in urban areas
have access to a mobile device, with 3 million using mobile broadband on personal phones
–– Around 50% of “screenagers” prefer surfing the Internet on their phones to watching TV
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Feeling digitally empowered
For pragmatic Indians, the Internet is often simply about adapting a new medium to their day-to-day life. Online
puja and prasad religious portals, for example, have been around a long time and have now expanded to
nonreligious products and services. At the same time, the Internet is creating a new class in India of digitally
empowered users. Like many online users around the globe, these viewers are demanding the entertainment
they want, when and where they want it. YouTube, which allows users to view and share videos on their own time
schedule, saw viewing time for women for FMCG-related content increase by 400% from 2013 to 2014, with 40%
of that viewing time now taking place on mobile phones. Content creators and marketers have begun to follow
consumers online; the popular televised quiz show Bournvita Quiz Contest, for instance, moved fully online in
late 2014.
This phenomenon of empowerment is particularly pronounced in e-commerce, with online shoppers becoming
ever more demanding and adventurous. They are not just looking for a better experience than that afforded by
brick-and-mortar stores; they are also searching for the best products at the lowest prices. In addition, our lead-
user research, which looked at online FMCG consumers in high socioeconomic groups in India’s top 13 cities,
found that about 80% of these high-end consumers were more likely to try new brands and products when
buying online than offline, and a similar percentage were willing to spend more when buying online. Over the
next three to five years, we expect the rest of the online FMCG buyers to follow this lead.
Engaging across the full cycle
India’s new digital consumers are engaging across the entire consumption cycle. In the early stages of the cycle,
Google searches grow rapidly, including everything from information gathering to recipes to advice on infant care.
In fact, we found a 63% increase in Google searches online in FMCG in the last quarter of 2014 compared with
the same period the previous year, with food products, infant care and beauty making up the majority of the
searches (see Figure 3).
Searches on YouTube are also increasing rapidly, with viewers demanding video content in categories such as
beauty and food. In addition, more than one-fifth of lead urban female online consumers note a digital influence
on their FMCG purchase decisions, while 35% of lead urban male online consumers are similarly influenced.
The highest influence comes from online ads, followed by social networking, search websites and “how to” videos.
While online purchases of FMCG products are still relatively low, we found that 40% of online respondents who
currently do not buy FMCG products online intend to do so in the next 12 months, with the intent to purchase
highest in the beauty and infant care categories. We also found that 10% of lead online consumers are sharing
their experience post-purchase, writing product reviews or rating products. Such information sharing can have
a profound influence on the purchasing decisions of other consumers—hurting or bolstering sales, reputations
and profits.
Note that consumer concerns about the credibility of online retailers, the quality of products and the sharing of
financial information online need to be addressed in the short term to boost the online shopper base.
Not all categories are equal
There are wide differences in the stages of e-commerce development across categories in India, from the home
care category, with just 1.5% of lead users buying online, to infant care, with 3% of lead users buying items in this
category. In addition to convenience, factors such as online discounts, availability of a wide range of products
and availability of premium or international brands are creating e-commerce growth.
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Products with a predictable rate of use, such as diapers, tend to have a high digital density, while impulse purchase
categories such as cookies and confectionary, have a much lower density. One reason is that the consumer’s end-to-
end shopping journey is often far simpler offline than online; online shopping can be overly complicated for an
impulse buy such as a pack of Oreos or a can of Coke.
Looking below the surface, e-commerce is not the only lens into a category’s online success. The influence of
digital information on buying decisions, whether from Internet research, online reviews or some other source, is
equally important. Our survey revealed, for example, that consumers research the male grooming category more
than any other—although the e-commerce penetration of the latter categories remains modest. Among women,
skin care and hair care have the highest growth in searches.
Putting these lenses of digital density and digital influence together, we find three types of FMCG categories
online (see Figure 4):
• Digital Frontrunner. Categories for which the digital impact is high on both prepurchase and purchase, and
consumers are already engaging heavily online, for example, male grooming and infant care. For male
grooming, a very high online population, especially young males, drives this engagement. For infant care,
prepurchase influence is high due to the sheer magnitude of information available online to answer the
questions of young parents, and purchase incidence is high due to attractive deals for products like diapers, as
well as the convenience of home delivery of regularly used bulky items.
Figure 3: FMCG-related Google searches have witnessed strong growth, mostly from mobile devices
Note: Basic keywords used were not related only to FMCG products, e.g., food-related searches include queries on recipes.
Source: Google search data
63% overall increase; food and infant care
account for 60% of searches
As a result of the increased use of smartphones,
more than 50% of search is now via mobiles
FMCG Google search trends
+63%
Google searches by device type (contribution)
Growth
100%
80
60
40
20
0
Q4 13 Q4 FY14 Q4 13 Q4 FY14
Infant care
Food
Skin and makeup
Hair care
Beverages
Male grooming
Other
55%
57%
74%
83%
53%
88%
Growth
122%
22%Desktop
Mobile
devices
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FMCG companies competing in the Digital Frontrunner categories have no option but to raise their digital
game quickly for engagement and e-commerce in particular, as these categories are most likely to witness the
emergence of disruptive business models such as the Dollar Shave Club, which is challenging the traditional
way of selling shaving implements.
• Digital Emergent. Categories for which consumers are engaging heavily with digital media during prepurchase,
but are largely buying offline. Hair care and skin care categories have high prepurchase digital engagement,
influenced by consumers’ desires to discover the latest trends and fashions or to address specific problems,
such as acne or dandruff. While the current online purchase incidence is low, recent market trends indicate
significant growth to come over the next three to five years.
As these categories move from Emergent to Frontrunner over the next few years, FMCG companies that
move quickly, identifying ways to nudge consumers from prepurchase research to online purchase through
appropriate interventions, will be best placed to capture a disproportionate share of digital consumers’
minds and wallets.
• Digital Laggard. Categories in which digital influence during prepurchase and purchase is low, and consumers
have engaged only minimally with digital media; these categories include packaged food, beverages, home care
and oral care. These are relatively low-involvement categories, and some have yet to see full-scale, organized
player participation.
Figure 4: Not all categories are digitally equal
Digital influence
(% researching
online)
Notes: Lead consumers belonging to higher socioeconomic classifications (A, B and C), residing in Tier-1 and Tier-2 cities, with Internet access; socioeconomic classification is
based on education level and occupation of the household’s chief wage earner, and segments urban India into seven groups (A1 to E2)
Source: Bain-Google consumer research (n=1,449)
Digital density
(% buying online)
Digital emergent
• Skin care and makeup
• Hair care
Digital frontrunner
• Male grooming
• Infant care
Digital laggard
• Packaged food
• Beverages
• Oral care
• Home care
High
Low
Low High
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While these online categories are still immature, a further segmentation by usage occasion reveals fast-
digitizing product pockets. For example, while soft drinks belong to an impulse category and seem
unlikely to move online, planned purchases of large packs may shift quickly to digital. FMCG companies
operating in the Digital Laggard categories could benefit from a nuanced understanding of occasion-based
purchasing behavior, offering attractive deals and convenience to help consumers move online for these
low-involvement categories.
Beauty: Set to explode
Women frequently look for beauty inspiration and advice online, making beauty (skin care, makeup and hair care)
the second-most searched FMCG category, with 78% growth in Q4 2014 over the same quarter the previous year.
However, only 15% of beauty searches are brand related—the rest relate to trends, tips, problem resolution and
other topics. This gap presents an opportunity for brands to associate themselves with relevant interest areas
and create content around them.
Hindustan Unilever Limited (HUL) was one of the early movers with its online platform “Be Beautiful,” which
pioneered a YouTube beauty revolution in India by signing up the leading beauty bloggers to generate high-
quality content. By 2020, we expect a material share of the beauty and personal care categories to move online,
with 25% to 30% of total sales in male grooming, 20% to 25% of sales in infant care and 8% to 10% of sales
in the beauty category taking place over the Internet.
Food: Waiting to happen
Indian Internet users are increasingly looking for new recipes and culinary inspiration, making food their most-
searched FMCG category. Their passion for food-related topics is not limited to consuming content: India
is also among the top online contributors to cooking-related content globally. Cooking is among the top 5
categories on YouTube India by viewing time, while 4 of the top 10 YouTube food channels in Asia by viewing
time are Indian. In addition, chefs such as Sanjay Thumma and Nisha Madhulika have built mammoth fan
followings, with millions of YouTube viewers.
Despite such a thriving ecosystem, the digital influence on product purchase is low because food and beverage
brands have been relatively inactive on the Internet to date. We expect this to change, however, as brands such
as Saffola Masala Oats, Maggi, Knorr and others move quickly to create recipe videos integrated with their
product offerings.
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How FMCG companies are responding
A complex digital landscape
FMCG companies interested in pursuing a digital strategy in India face a budding yet already complex e-commerce
landscape, with myriad players competing for a share of the online wallet (see Figure 5).
Four types of players have emerged so far:
1. Pure online generalists such as Flipkart, Snapdeal and Amazon are leading the charge with their multicategory
models. Flipkart has captured a substantial portion of the e-commerce market through its unique services and
delivery and payment options. Snapdeal, the highest-trafficked e-commerce site in India, caters to the shopping
needs of customers across more than 4,000 towns and cities and boasts more than 20 million members.7
2. Pure-play, online-only companies focused on groceries, such as BigBasket and AaramShop, are competing
by offering consumers a wider assortment of grocery products than normal—from imported merchandise,
such as gourmet cheeses, to locally sourced spices. In addition, they offer consistent quality, such as cleaned,
cut and packed vegetables; and convenience, including shopping lists and guaranteed delivery with fixed time slots.
Figure 5: The evolving e-commerce landscape
*Not an exhaustive list
Source: Bain analysis
Model
Pure online
generalist players
Pure online
specialist players
Click-and-mortar
retailers
FMCG players
Examples* State of play
• Flipkart
• Snapdeal
• Amazon
• Have a head start
• Challenge: Quick, time-bound delivery
• Promising start
• Challenge: Ability to scale up
• Recent entrant
• Challenge: Viable omnichannel model
• Focused on consumer engagement
• Challenge: Viable delivery logistics
• Grocery: BigBasket, AaramShop
• Lifestyle: Myntra, Jabong
• Big Bazaar Direct
• Nature’s Basket
• Shop Paper Boat
• Shopping Aashirvaad Ready Meals
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3. Traditional brick-and-mortar retailers that have developed an e-commerce portal, including Big Bazaar Direct
and Nature’s Basket. However, these are still in the early stages and traditional retailers have just begun
experimenting with such omnichannel business models in the hopes of maintaining and enhancing
their competitive edge.
4. FMCG brands that have launched e-commerce sites to sell directly to consumers. For example, Indian ethnic-
drinks brand Paper Boat, from Hector Beverages, has an online shop at shoppaperboat.com to make its
products more accessible to consumers.8
Similarly, Aashirvaad, one of India’s leading brands of food and kitchen
staples, has launched an e-commerce portal at shopping.aashirvaad.com.
We know it’s big, but we’re waiting
Despite these emerging models, most FMCG companies have so far taken a tentative approach to the online
opportunity in India. They seem to understand that digital activity will end up being substantial, and they have
a fairly accurate view of what their future engagement with digital will be. In addition, our conversations with
top FMCG players found that 70% see digital as a high priority, while 90% say they expect to at least double both
their spending on digital marketing and their sales from e-commerce in the next three to five years. Yet only 40%
of these companies have articulated a digital strategy. Even among those that have, the majority still treat digital
as a standalone element to be pursued independently. They have not accepted that digital will be pervasive and
will therefore need to be integrated into all elements of existing strategies. As PepsiCo India CEO D. Shivakumar
noted, “It is not about digital marketing, but [about] marketing in a digital world.”
Looking to the digital future, most FMCG companies believe the biggest influence on their top line will come from
either digital advertising, digital engagement, e-commerce or Big Data, the enormous quantities of data being
generated through digital technologies today. Nonetheless, there is currently wide variation in how and where
companies are using digital technologies. Our survey found that 70% of companies with a digital footprint use
e-commerce, while half use digital for customer insights. However, very few use digital across the variety of areas
needed to take full advantage of its potential. In fact, only 15% of companies use digital technologies across the
value chain, from consumer engagement to e-commerce, consumer insights and supply chain planning.
In addition, many companies are being extremely cautious about establishing their own e-commerce sites, with
three-quarters relying on e-commerce retailers for sales. Many of these are also wary about the categories to include,
with niche or premium categories more likely to be marketed and sold online than any other categories, given that
their target consumers—well-educated, middle- to high-income shoppers—are more likely to be found online
as well.
Facing the barriers
While FMCG companies can rely, in part, on their brand images and consumer relationships, they face some
important barriers to online success.
• Economic and logistical challenges. Economics and logistics are important challenges for FMCG companies
wishing to move into e-commerce. The legacy skills and infrastructure of these companies have been established
primarily for neighborhood kirana stores and the organized retail sector, and do not tend to address the
requirements of digital technology. Their warehouses are centralized, for example, and point-of-sale
data informs their demand forecasting data—neither of which will necessarily work in e-commerce. As a
result, these companies have found it difficult to meet consumers’ top-up demands and to cost-effectively
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trial personal-care products. In addition, experts estimate that a delivery cost of Rs 60 to Rs 70 (or less) is
needed to make the economics of digital commerce work. As the current costs of residential delivery are
anywhere from Rs 150 to Rs 200—or 15% to 20% of the average online FMCG basket—this effort
is economically unfeasible.
• Lack of relevant metrics. Most of the FMCG companies we interviewed are used to traditional metrics such
as reach and frequency. When it comes to digital, although many metrics are available that can be tracked in
real time, such as views, comments, “likes” and time spent, there is a need for simple metrics that demonstrate
the effect of digital exposure on the opinions of end consumers, on brand image and on sales. As Beiersdorf
India’s Managing Director Rakshit Hargave put it, measurement is “the single biggest parameter” holding
companies back from significantly increasing their digital expenditures.
• Lack of appropriate talent. Most of today’s FMCG businesses lack the in-house expertise to use digital
technologies effectively and, given the nascent stage of India’s digital efforts, external talent is hard to find.
At Hector Beverages, a start-up using digital technology to play on the edges of the mainstream beverages
industry, co-founder and CEO Neeraj Kakkar confirmed the company has not been able to find the right
digital agency, as “talent is phenomenally scarce.”
• Lack of infrastructure support. FMCG companies looking to industry partners, such as advertising agencies,
for metrics and other digital marketing support have not found a compelling value proposition. Insights into
consumers’ online behavior and digital shopping trends have been slow to materialize. It has been interesting
to see new ecosystem players like media agencies begin to respond, moving more quickly than the traditional
creative agencies. Some have set up in-house creative and analytics teams with digital expertise, or they
developed strategic partnerships with digital creative agencies in order to move up the value chain. Traditional
creative agencies must now play catch-up.
Our conversations with top FMCG firms indicate four main barriers to digital fluency from the company perspective:
economic and logistical challenges; a lack of relevant metrics to measure reach and efficacy; a lack of appropriate
talent, both in-house and within the ecosystem; and a lack of infrastructure support.
The frontrunners
Despite the barriers, it is clear that a number of FMCG companies have already innovated and tasted success.
Coke Zero, for example, had a highly successful launch on Amazon.in, where it was sold exclusively for two weeks.
The company sold 1,700 cans in four hours on the first day and more than 100,000 lakh cans in 13 days. AaramShop,
another online success, integrated its online and offline efforts by providing a digital interface that allowed consumers
to transact with their local kirana shops, closing the logistics gap.
Hector Beverages, in turn, set up an in-house digital team to overcome the lack of talent in the existing ecosystem.
In addition, Nestlé established a social command center to monitor all social media chatter across brands; the
findings have been used to draw insights and provide support in both digital strategy formulation and
content creation.
Nonetheless, the absence of many of the established FMCG companies online has also left the digital field open
to small, existing players with new business models, as well as to entirely new and niche players. These companies
tend to be more flexible and therefore more likely to utilize digital technology to develop disruptive business models.
There are already several US examples, including Dollar Shave Club, which launched its membership service
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with a YouTube video in 2012. The service, which delivers a monthly package of razors and other personal
grooming products by mail, received 12,000 orders in the 48 hours after the video was released. It now has more
than 600,000 members and sells more than 24 million razors a year.
Time to enter the race
The race has begun, and premium- and niche-category players are already on the track. If FMCG leaders are
not prepared to enter this race in the next three to five years, we believe they will experience material opportunity
costs in terms of lost revenues and profits. The overall costs could be much larger than they currently appear, given
that several more product categories will have a high proportion of both e-commerce sales and digitally influenced
sales than the few niches for which this is true today.
Losing the first-mover advantage could have long-term implications as well, including reduced market share
due to a loss of digital shelf space—the result of a lower ranking in online searches and lower-ranked products
on retailer websites. Lower market share could also mean a loss of mindshare—and wallet share—in the growing
community of online consumers.
Adding to this dilemma, companies that enter the market later will find it increasingly difficult to recruit new
Generation Z consumers. These consumers, many of whom will become independent decision makers over
the next five to six years, were raised with the Internet. Late entrants will find it increasingly difficult to dislodge
early movers who have already captured the mind space of, and established emotional connections with, these
digitally savvy shoppers. Finally, FMCG latecomers could face a crunch in gaining access to scarce but important
resources in the ecosystem, including talent, technology and intellectual property.
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How to win in the Indian online market
Getting into high gear
While there are different paths to success in multichannel retail, we have found that businesses that successfully
take advantage of digital media tend to do three things consistently well: They educate themselves about their
target consumers, they become best in class in engaging those consumers digitally and they deliver a “perfect”
shopping experience, both online and off.
To take on these three challenges and overcome the four primary barriers discussed previously, we propose that
FMCG companies move through five “gears.” Just as in driving a car, shifting into each of these five gears, in
turn, will help FMCG players reach their desired destination (see Figure 6).
Gear 1: Uncover categories’ digital truths
Companies should begin by asking themselves fundamental questions about their business categories, target
consumers and profit pools, bearing in mind that digital marketing and sales efforts should be made to fit into
existing brand strategies rather than fostering an entirely new digital approach.
Figure 6: Crafting a winning digital strategy
Source: Bain & Company
Uncover categories’
digital truths
Choose where
to focus
Deliver a perfect online
sales experience
Reallocate resources
Deliver and
sustain change
• Impact of digital
• Profit pool shifts
• Segment and
prioritize consumers
and SKU portfolio
• Create a seamless
online and
offline experience
• How digital fits
within the brand’s
strategy (vs. brand’s
digital strategy)
• Create vs. just
tell stories
• Shift media spending;
follow your consumer
• Invest in technology,
IT and analytics
• Invest in
new capabilities
• Build new
ecosystem partnerships
1
2 4
3 5
1 3
2 4
5
1
2 4
3 5 1
2 4
3 5 1
2 4
3 5 1
2 4
3 5
1 3
2 4
5
1 3
2 4
5
1 3
2 4
5
1 3
2 4
5
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Questions to include:
• How are the company’s core categories positioned in terms of digital involvement and digital density—and
how are they likely to evolve?
• How will the company acquire and engage digitally empowered consumers?
• How are the organization’s profit pools changing in the digital world—e.g., which parts of the value chain
are becoming commoditized, and which are starting to command a premium?
Gear 2: Choose where to focus
Next, businesses should acquire a granular perspective on their portfolio, including a nuanced understanding
of category dynamics and consumer behaviors. This more detailed perspective will help identify the most
relevant opportunities from a digital standpoint. Even in digitally nascent categories, for instance, there could
be segments that are ripe for rapid digitization, such as bulk buys in otherwise largely impulse categories
like beverages.
In addition, taking an omnichannel view of the future will be critical. Companies must decide whether to go it
alone on their e-commerce portal or work through a grocery.com, a clickandmortar.com or a multibrand.com
partner. In the process, they must decide whether to integrate their e-commerce approach with their offline
retailing, in each case thinking through the margin structure for intermediaries and channel partners, the
appropriate promotion formats and how best to utilize consumer data and insights.
Gear 3: Deliver a perfect online sales experience
Creating and reinforcing a strong brand image in the minds of digitally savvy consumers will require a seamless
consumer experience across online and offline channels. To engage effectively, companies will need to create
memorable brand stories and use the strengths of a variety of media.
Another crucial success factor is delivering the “perfect” online sales experience. To do so, companies will need
to develop a number of internal and external enablers, including:
• Consumer insights to inform brand, assortment, promotion and other decisions
• An optimized e-commerce supply to ensure product availability and minimize cost to serve
• Account management to ensure strong relationships with more complex online customers
• Favorable trade terms with online retailers to enhance consumers’ online experiences and add value vis-à-
vis offline sales
Gear 4: Reallocate resources
As FMCG companies take their chosen portfolios to market, they will need to evaluate the effectiveness of their
spending across channels and media types. It will be critical to keep a finger on the pulse of consumers’
evolving media-consumption habits, dynamically adjusting advertising spending to match.
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To do so effectively, they will need to develop a rich all-around view of their consumers’ habits as they move
between online and offline media, and use this information to engage their consumers in real time, whether
responding to negative social media commentary or making product offers to match a consumer’s interests. In
the longer term, this effort will require a significant investment in both IT infrastructure and data analytics,
allowing companies to gather millions of data points about consumer behavior, run sophisticated analyses and
generate actionable insights. In the near term, however, companies may take advantage of their legacy systems
to conduct point analyses, getting the answers they need to make early decisions.
Gear 5: Deliver and sustain change
Ongoing investments will be essential if companies are to deliver and sustain the changes just discussed. Looking
at digital capabilities end to end, rather than piecemeal, will help ensure the entire organization is geared to meet
the changing requirements.
In addition, FMCG companies should push the members of their ecosystem to evolve to meet new omnichannel
needs and not hesitate to develop new ecosystem relationships, including linking with online ecosystem partners
such as e-commerce players, social media websites and analytics firms that can provide improved insights into
the digital consumer. Creating new offline partnerships with logistics firms as well as effectively working with
agencies, both creative and media, will also be critical.
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Conclusion
The Indian online market is growing rapidly. It will be only a matter of years before it is as large as China’s
online market today. We expect FMCG companies to play a substantial role in this growth, with product categories
such as skin care and men’s grooming becoming disruptive forces. Already, these categories are pioneering
substantial e-commerce transactions and digitally influenced sales. In the meantime, niche and premium players
are setting down stakes.
Those FMCG players who only watch and wait, biding their time, could lose a tremendous opportunity to gain
mind share and wallet share among the rapidly expanding online community in India. We believe that leading
players should look closely at their current and proposed strategies, narrow their portfolio and channel focus,
create an optimal consumer experience, readjust their media spending and investing to sustain the change.
Given the size of the prize, these efforts will be well worthwhile.
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Appendix: Primary research
This report relies on four primary research studies performed among consumers and businesses across India.
In addition, a recent collaboration with Google provided data and insights on female consumers, consumer
search trends such as keywords and videos, and the digital activities of top FMCG companies around the world.
The first of our studies, a quantitative survey, queried 1,600 “lead” consumers across India to understand their
consumption patterns and FMCG buying behavior across eight FMCG categories: hair care, skin care, oral care,
male grooming, home care, infant care, packaged food and nonalcoholic beverages. Lead consumers comprised
Internet users residing in metro, Tier-1 and Tier-2 towns across SEC classifications A, B and C.
Note that only the online respondents’ answers were used as input in our 2020 projections. We used only women
in our category analysis, as they are either the primary decision makers or have a significant say in the FMCG-
related decision making in Indian households. The exception was the male grooming category, in which only male
respondents were considered.
The second of our studies, a consumer ethnographic survey, took an in-depth look at 12 respondents in two leading
consumer categories: women and young consumers ages 18 to 25. The purpose was to add further color to our
quantitative research, understanding specific instances and examples of digital consumption and FMCG
buying behavior.
The third was a corporate survey of 20 leading FMCG companies in India. Our aim was to understand their
current view of the digital world and their response to it, along with their main barriers to digital activity and
their plans up to 2020.
Finally, we held in-depth interviews with nine of the leading FMCG companies and seven leading ecosystem
players, including online FMCG retailers, brick-and-mortar retailers, media agencies and creative agencies. Our
goal was to follow up on the corporate survey and to further understand these businesses’ plans, concerns and
strategies for the digital future.
1 Indian cities are ranked by population size as metro (top eight cities, with populations of more than 4 million), Tier 1 (population of more than 1 million), Tier 2, Tier 3 and Tier 4.
2 Internet Live Stats, “Internet Users by Country (2014),” http://www.internetlivestats.com/internet-users-by-country/
3 Google Online Shopping Growth Trends: Forrester Group-Google Report.
4 The SEC, or socioeconomic classification, is used to categorize consumers’ basis occupation and education of the chief wage earner (or head) of the household. It is used as a way
of understanding market segments and consumer behavior.
5 Note that the data on the following two pages is for lead users, as defined in the Appendix of this report as consumers with Internet access belonging to SEC groups A, B and C, and residing
in top 13 cities.
6 “The Next India: Internet—Opening up New Opportunities,” Morgan Stanley, February 2015.
7 TechNavio, “The Online Retail Market in India, 2014–2018.”
8 Alok Soni, “Taste of Your Childhood Now at Your Doorstep—Paper Boat Goes Online,” YourStory Media http://yourstory.com/2014/08/paper-boat-online-shoppaperboat/
23. Key contacts
Bain
India: Nikhil Ojha (Nikhil.Ojha@Bain.com)
APAC: Sebastien Lamy (Sebastien.Lamy@bain.com) Jason Ding (Jason.Ding@bain.com)
EMEA: Richard Webster (Richard.Webster@bain.com)
America: Suzanne Tager (Suzanne.Tager@bain.com)
Google India
Vikas Agnihotri (vikasagnihotri@google.com)
Bhaskar Ramesh (rameshbhaskar@google.com)
Acknowledgments
This report was prepared by Nikhil Ojha, partner and head of Bain & Company’s India Strategy practice;
Sachin Khandelwal, principal and member of Bain’s Consumer Products practice; and Subhashini Gupta, sr.
industry analyst, Google India.
The authors thank Amit Gupta, Zara Lightowler, Srinivas Bhaskar and Rahil Bharani for their contributions,
and Alice Griffiths and Anjali Mody for their editorial support.
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offices throughout the Americas, Europe and Asia. For more information, visit www.google.com.
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