"FMCG records highest orders during festive sales with 35% unit share": Nielsen

Products that cater to the consumer need for convenience, while adapting to the homebody economy, dominated the festive sale period in India this year (October 15 to November 13, 2020), according to leading global measurement company Nielsen.

With the need for communication and increased media consumption, mobile phones and accessories (like earphones, headsets, case covers, etc.) continued to account for over half of e-commerce sales during the festive period.

Electronics (laptops, printers, peripherals) increased its share by 10 per cent, as compared to seven per cent during the festive season last year (September 28 to October 25, 2019), given the increase in remote working and schooling.

Nielsen India’s E-commerce Consumer Panel (E-Analytics Solution) provides a holistic and granular view of the online shopper and helps measure consumer behaviour across more than 30 e-commerce platforms.

It found double digit increase in average spend of online shoppers for electronics and accessories (39 per cent), mobile and accessories (12 per cent), and fashion, including apparel, footwear and accessories (10 per cent). Appliances (TV, WM, refrigerators, etc.) also saw notable shopper spending increase, at nine per cent.

“Consistent with the trends that we are seeing globally, consumers in India are fitting into the homebound behaviour,” observes Kunal Gupta, head, consumer intelligence, Nielsen, South Asia.

“Triggered by the desire to make life and work easier and more convenient at home, we see a significant increase in shopper spend in categories that are perceived to cater to homebody needs on account of the pandemic.”

Geographically, the growth of e-commerce during the festive period is led by ’Bharat’ (<10 lakh population towns). Nielsen reports a 16 per cent increase in orders from smaller cities (<1 lakh population towns) and a 14 per cent rise in shopper spends from >1 lakh population cities. This clearly shows the evolution of the shopper spend journey through urban classes.

Vaughan Ryan, Nielsen’s consumer intelligence managing director in Asia, shares, “Manufacturers and retailers in multiple markets such as China, Koreas and South East Asia have long recognised the affinity of consumers to online shopping during popular festivals.”

“The behaviour of waiting and saving up for the big festival online sales has clearly turned into a consumer habit. It doesn’t come as a surprise that manufacturers and traditional retailers have online sales promotions on their own, or have partnered with online platforms to get products faster to more consumers.”

A fifth of orders placed are returned or cancelled - more pronounced in smaller cities

Interestingly, attractive promotions and discounts also affected the number of order cancellations online. A unique flexibility which e-commerce consumers enjoy and helps build trust towards online shopping.

Nielsen reports that every fifth order is cancelled (returned or replaced) by online shoppers, equating to an average 20 per cent cancellation rate for total e-commerce during the festive period in 2020. This is higher than the 17 per cent cancellation rate last year.

A higher cancellation rate of 27 per cent is seen from smaller cities (<10 lakh population), which is on account of shoppers who are attempting online shopping for the first time.

“The cancellation/returns is a critical metric to track as it directly impacts the retailers GMVs, since reverse logistics is an additional overhead to manage for retailers. While on one end, cancellations offer flexibility to consumers, on the other, they also lead to poor customer satisfaction if the returns experience is broken,” says Gupta.

Strong FMCG performance during the festive sale period at the time of COVID

FMCG continues to record the highest orders during festive sales, with 35 per cent unit share. Looking at FMCG sales over the last 14 months, they were higher during the festive period, versus the pre-COVID period, and matched the same level during Republic Day sale back in January.

New FMCG shoppers have been enticed to shop online for the first time during the festive period. Shopper penetration remained high, at almost 20 per cent. An uptick from 14 per cent in 2019 indicates that more consumers were persuaded to shop online for FMCG.

“We see the gradual recovery of FMCG online from April, when consumers were mostly buying essentials online and there were supply and delivery issues. The Big Day events, which usually happen during festive sales in August and October, helped accelerate the recovery of FMCG,” states Gupta.

Personal care category sees a comeback

... Staples and snacking saw increased growth during COVID, with 35 and 14 per cent value contributions respectively. Personal care grew significantly (54 per cent).

“Post-lockdown in April, we have been seeing staples, impulse and hygiene as consistent gainers from personal care. Festive Big Days altered this behaviour by prompting the consumers to stock up their personal care supplies. Whether this marks the comeback of personal care (versus staples) or not, remains to be seen,” Gupta stated.