Global e-commerce grocery market grows 30%

Online FMCG sales reach 0.5% share in Vietnam, recorded a significant uplift of 69% versus last year

Online FMCG sales reach 0.5% share in Vietnam, recorded a significant uplift of 69% in comparison to last year

• E-commerce growth outpaces the overall FMCG market in the 12 months to March 2017
• Online sales now contribute 36% of global grocery growth
• In 2025 e-commerce will represent 10% of all FMCG spend
• South Korea and China will continue to lead the way of FMCG E-commerce growth
• Vietnam e-commerce, though small in size, is among top growing e-commerce markets globally

Sales of groceries through e-commerce platforms grew by 30% in the 12 months to March 2017, according to the report “The Future of E-commerce in FMCG” by Kantar Worldpanel, published today.

The study shows that e-commerce now accounts for 4.6% of all FMCG sales globally. Whilst the e-commerce channel is growing, the FMCG market as a whole is sluggish, increasing just 1.3% during the same period. E-commerce now contributes to a record 36% of global FMCG growth and will continue to outpace growth in offline FMCG retail. “Our projections show that in 2025, online FMCG will be a USD 170 billion-dollar business and hold a 10% market share” says Stéphane Roger, Global Shopper and Retail Director at Kantar Worldpanel.

Global hotspots
In terms of absolute value growth, the top six contributors are all leading power economies, led by China and the US. The other top performing countries are South Korea, the UK, Japan and France. Last year, value increased by 52% in China, 41% in South Korea, 8% in the UK, 7% in France and 5% in Japan and in the US.
However, the online grocery sector is also expanding into new markets. There has been significant value growth, for example, in Thailand (+104%), Malaysia (+88%) and Vietnam (+69%) where e-commerce is in early stages.

Table 1
E-commerce % of FMCG online value share per markets (excluding fresh produce)

In Vietnam, e-commerce channel has evolved thanks to booming internet usage and smartphone ownership along with massive investment of key retail players, and now takes 0.5% of the FMCG market in 4 key urban cities of Vietnam. The percentage of e-commerce shoppers grew from 5.4% to 8.8% of urban 4 cities population in the last year alone, and an online trip size is at triple value of an offline basket.

David Anjoubault - General Manager of Kantar Worldpanel Vietnam commented: “Although the size of Vietnam e-commerce market is still small compared to other formats, it holds a strong potential because the value growth of e-commerce within FMCG is up to 69%, which makes Vietnam become one of the countries with the highest e-commerce growth rate in the world.

It’s now the critical time for investors to enter this promising market, while current retail giants should gradually move their offer online & take advantage of their brand equity with omni-channels strategy, to be successful and to defend their current position. On the whole, consumer trust and high logistics cost for delivery model are major challenges that need to be addressed by businesses in order to move Vietnam e-commerce forward”.

2025 Forecast
Kantar Worldpanel projections show that by 2025, online FMCG will be a USD 170 billion-dollar business, and hold a 10% total market share. The big global uplift will come from the USA, predicted to rise from a 1.5% e-commerce share in 2017 to 8% in 2025. This can be attributed to the successful rollout of click and collect, delivery and subscription models, and the acceleration of disruptive models.
South Korea and China will continue to lead the way and Asia in general remains at the cutting edge of online adoption. Vietnam e-commerce specifically, is expected to expand from 0.5% to 2.2% share in 2025 coupled with the rise of digitization.

Other findings of the report include:

Megacities
Megacities have become natural breeding grounds for e-commerce. For example, in London, Beijing and Shanghai, e-commerce accounts for 10% of the FMCG market.

Pure players vs. bricks and mortar retailers with online offer
“We know that e-commerce is still cannibalizing offline purchases. However, there is growing evidence that online formats – in isolation – are no longer the best option for winning share.
It´s about how online and offline work together to create a better shopper experience.” says Stéphane Roger.

Categories
Personal care and baby care products continue to dominate the online basket. Young and time-strapped families are increasingly seeking convenience when it comes to repeat purchases of everyday households’ essentials.

Focus on Amazon and Alibaba
The perception of E-commerce has changed dramatically after Amazon’s acquisition of Whole Foods and Alibaba’s alliance with Bailian Group. Amazon and Alibaba’s strategies compared and an Interview with Kurt Li, Head of business intelligence at Alibaba show some clues.

Mobile and Social Commerce
Today’s digitally adept consumers are always connected, browsing products on the move and comparing prices. It’s in this space that FMCG brands now need to position themselves.

Technology as a major accelerator
Advancements in technologies such as voice commerce and the Internet-of-things have enabled e-commerce to become a more streamlined and consumer-centric industry.

(*): Vietnam Urban includes 4 key cities: Ho Chi Minh, Ha Noi, Da Nang and Can Tho.

* Follow links on the right side of this page to download Global E-commerce report and press releases in both English and Vietnamese.