It's e-commerce first for FMCG firms in new launches

Taking a cue from their counterparts in mobile handset and consumer electronics industry, fast moving consumer goods (FMCG) companies in India are warming up to the idea of taking the limited period, e-commerce exclusive approach to launch some of their products. Aerated beverage players viz. Coca-Cola and PepsiCo had experimented with this strategy in some of the international markets four years ago. In fact, Coke Zero was a limited period online exclusive offering when introduced in India back in 2014.

Just last week, the branded packaged food division of diversified conglomerate ITC launched a limited period e-commerce exclusive noodle range in partnership with BigBasket. Accordingly, the Yippee! My range noodles are being exclusively sold across the country on bigbasket.com for a period of one week and will be available across retail stores nationwide thereafter.

The unique go-to-market strategy of using an e-commerce platform, according to Hemant Malik, divisional chief executive foods division, ITC Ltd, is an effective tool to strengthen the brand’s visibility and build consumer franchise. “We believe a lot in the e-commerce space as it is growing over 120% for us in the last couple of years. It’s a very crucial part of our portfolio and this channel can deliver much more for certain categories. We will be frequently tapping this limited period e-commerce exclusive strategy going forward,” Malik said.

The one-off cases of the past are set to become mainstream with online shopping for food and grocery items fast gaining acceptability among Indian consumers. Also, players like Amazon and Walmart-backed Flipkart joining the likes of BigBasket and Grofers has boosted the consumer confidence in terms of online shopping for food and grocery items in the recent past. This coupled with a huge improvement in internet speeds, logistics infrastructure and road connectivity across the country, presents a huge opportunity for FMCG companies to adopt this strategy for their new product launches in the coming years.

According to Abhishek Ahluwalia, head of eCommerce, Mondelez India, advancements in technology are disrupting how consumers all around the world live, eat and shop thus fuelling explosive growth in e-commerce. “That’s why we’re building an industry-leading e-commerce snacks business, targeting at least $1 billion in revenue by 2020. To be the best snacking company in the world, we know we need to sell our brands whenever and wherever consumers shop. And our e-commerce platform will play a critical role in this ambition,” said Ahluwalia.

Online food and grocery supermarket BigBasket said that a lot of focus is going to come from segments that are new/ innovative and digital platforms will be the best route for such products to hit the market. “That’s because one can get instant initial feedback on how consumers are responding to such offerings and we have triggered a lot of those through our internal systems or digital engine fire as we call it. The ability to get it quickly across 25 cities overnight is one good thing that can happen with us,” said Hari Menon, co-founder and chief executive officer, BigBasket.

Alibaba-backed BigBasket is very optimistic about the possibilities of FMCG players like Hindustan Unilever, Britannia, Marico, Dabur, Emami etc. pursuing the limited period e-commerce exclusive product strategy. “I think so they will (pursue this strategy). That’s because they’ll see its success and hopefully we will be able to share numbers to back it up in terms of what’s really done well. In fact, we are constantly looking for opportunities to do this more frequently and definitely see this as a trend that’s soon going to be popular go-to-market strategy. And, since we meet all of them regularly, discussions on these lines are very likely to happen with FMCG companies,” said Menon.

Ahluwalia said that e-commerce business is one of the key growth drivers for the makers of Cadbury Dairy Milk, 5 Star, Bournvita, Lickables, etc. In fact, the company is now looking to accelerate gifting by expanding the assortment to access more occasions.

“Apart from launching our product innovations first exclusively on e-commerce, we have also rolled-out special packs only for e-commerce targeted at special occasions. Personalisation in gifting has been one of our key success drivers. We are enabling this by elevating the consumer experience beyond buying, through augmented reality. We rolled out an AR-enabled Amazon Exclusive Cadbury Dairy Milk Silk Gift Box around Valentine’s Day and Diwali. We are now focusing our investments strategically on associations that help us develop best in class sales and distribution proficiencies with strong go-to-market capabilities,” said Ahluwalia.

The owner of Kisses, Jolly Rancher and Sofit brands, Hershey India doesn't have an e-commerce exclusive offering as yet. However, Herjit S Bhalla, managing director, Hershey India, sees potential in this strategy going forward. As the market opens up to this idea, he doesn’t rule out the possibilities of an e-commerce exclusive product from Hershey in the future. “A product sold exclusively online in partnership with e-commerce platform(s) can certainly be explored,” said Bhalla on the sidelines of launching Sofit Protein Cookies last week.

CLICKING IT RIGHT 

• ITC's branded packaged food division launched a limited period e-commerce exclusive noodle range in partnership with BigBasket
   
• Coke Zero was a limited period online exclusive offering when introduced in India back in 2014.