The status quo of CPG/FMCG products in India has been comprehensively highlighted in recent study conducted by www.aaramshop.com, a hybrid retail platform which enables sales and marketing of national as well as regional FMCG/CPG brands. The report is termed as SOG (State of online grocery) in India and it is exclusively available with iamwire . The report focuses on and highlights specific trends around the Indian shoppers’ behaviour when they shop for groceries and daily essential online, SOG report is based on the actual purchase data captured on aaramshop .Report is based on purchase pattern of CPG/FMCG brands that are freely listed on aaramshop in 27 different product categories.
Aaramshop is a hybrid retail platform which facilitates CPG/FMCG brands to a busy urban consumer, by leveraging the strength of the independent, neighbourhood retailers to have a web based store front to better connect with their existing and potential consumers within their catchment area. Data used to create the SOGS report: India is based on actual shoppers brand purchase captured on aaramshop. Shoppers and their purchase pattern used to create the SOG report has been captured from 15th July 2011 to 31st August 2011 and based on actual online shopping done with 100 retailer partners across the NCR (including New Delhi, Gurgaon, Noida Greater Noida, Faridabad and Gaziabad).
The study observed some very interesting differences in the buying behavior of male and female buyers on aaramshop. The male seem to be more inclined to shop for groceries online with women contributing to only 37% of the buyers. However, in both sexes, people from 22 to 45 years of age constitute over 85 percent of online grocery buyers. Further, it has been interesting to note that within the female shoppers, it is the 36 to 45 years old who contributes the largest buyer segment, while within males; it is the 22 to 35 years old.
In terms of spending online on groceries, female shoppers come out on the top. While females form a lower percentage of overall buyers, they are the largest spenders online. The buyers across the NCR region, with the largest percentage of buyers coming from south Delhi district, closely followed by those from the west Delhi district.
Meanwhile 87 percent of total online shopping for grocery on aaramshop is happening after 1200 hrs, and over 80 percent of the orders placed have a request for the same day delivery. Aaramshop has seen the transaction in 26 categories during the period of report. The categories that have been transacted represents the entire baskets of goods that a typical household buys in a month whether offline or online.
The top 5 categories make up 54.98 percent of the total value of the products ordered online. Further, the top 6 categories make up 59.52 of total volume of products ordered online. The top 20 brands make up 60.03 percent of the total value of the products sold, and 46. 48 percent of the total volume of the products sold.
Unlike most other web shopping across other product categories, the purchase pattern is indicative of the fact that grocery buying is not a ‘youth’ activity and it is rather restrictcal to the working professionals and mature family environment.
While female shoppers form a lower percentage of overall buyers when it comes to online grocery, they are the largest online spenders – not in terms of value of the products but also the volume of the products they purchase.
Women between 36 to 45 years of age are the largest offer segment for online grocery, not just in terms of average spenders, but also in terms of number of branded products that they put in their virtual shopping bag.
Resident from across NCR region are shopping online grocery and daily essentials, however the largest percentage of buyers come from south Delhi district , closely followed by west Delhi district. However, the current ranking could also be on account of gradual adoption of aaramshop across NCR during the 45 days period for which the data being analyzed.
87 percent of online shopping for grocery on aaramshop happens after 1200 hrs and over 80percent of the order placed have a request for same day delivery. Most of the orders come in late evening (after 2000 hrs) are for the next day delivery.
Most women tend to do their online grocery shopping throughout the day; however men prefer to shop between 1600 hrs to 2000 hrs.
At aaramshop, we have 29 categories of which 26 categories have seen transaction during the period of report. The top 5 categories in terms of value have been aata, rice, lentils & dals.
Online CPG/FMCG goods have been fascinating the media from quite some time and it is picking up its pace gradually. We have witnessed some of the innovative business models around this, however the experts opined that concept would take some time to evolve. While the concept is shaping up fairly, at the same time there are lot of challenges that hover around online grocery and FMCG products.
- Cost of Logistics – FMCG / CPG business scenario is very different from segments like books, durables etc, as the margins available are in single digits (and at times low single digits). This is complicated further by the average product price – which is also low. Therefore the additional costs of warehousing, processing and distribution (which can not be charged to the consumer), brings down the net realization.
- The variable order value – Due to the above reason, most online web-stores find it unavailable to manage low value orders, however the consumers today are used to low order values and are unlikely to change that in a hurry.
- Ubiquitous retail presence – FMCG brands & products are very well distributed across the country, with a retail store with 100 meters of most urban homes. This has also lead to the “just in time” mind set. And the sheer competition among the retailers has meant that the independent neighborhood retailers extend superb services to the consumer – these include free delivery at your doorstep within the shortest time for almost any order size.
- Lack of deep discounts – The online stores cannot depend on deep-discounts to drive traffic to their website (unless they partner & create their own private labels). Deep discounting is not a FMCG / CPG industry phenomenon.
Looking at the SOG: India Report, it seems that the concept of online FMCG/CPG would certainly take off, however it requires a lots of strenuous efforts from entrepreneurs to believe in this phenomenon.