Google & Bain study predicts interesting digital trends

12 Feb,2015

By A Correspondent


A joint report released by Google and Bain & Co. to understand the influence of digital on the FMCG sector revealed that the Internet would influence a third of total sales in the FMCG sector over the next five years. The influence of Internet will impact $35bn worth of FMCG sales in India, as more and more users get online to research for FMCG products.


Projecting the growth of online user population in India, the report revealed that India would have over 650 million Internet users by 2020. Online shopping will continue to see rapid growth and over 250 million users will shop online by 2020. This dramatic rise in the online shopper base in India, will contribute $ 5bn worth of FMCG product sales through online channel, growing 50 times from current level contributing 5 per cent of total sales from current 0.3 per cent share by 2020.


The study notes that Internet influence will be the most for high engagement categories like male grooming, infant care products and beauty products, as more and more users will research online for information related to these products. For male grooming products, 25 to 30 per cent purchases will happen online, 20 to 25 per cent for infant care products and around 8 to 10 per cent of all beauty products will be bought online by 2020.


These findings were derived by studying various factors including research conducted for Bain and Google by Millward Brown by selecting a sample of an evolved 1600 Internet users (male and female) from across 13 cities in India including metros and non-metros – across eight FMCG categories – Skin care, hair care, oral care, home care, infant care, male grooming, beverages and food.


Findings from the study further revealed that 35 per cent men and 22 per cent women are strongly influenced by digital for their purchases. Internet influence differed by category of products, with maximum influence on purchase decisions noticed in male grooming (39 per cent), skin care (26 per cent), infant care products (24 per cent) and hair care (24 per cent) products.


Speaking about the key findings of the report, Vikas Agnihotri, Industry Director, Google India said, “By studying the behavior of the lead consumers from an FMCG standpoint, it is clear that FMCG companies in India need to start thinking of digital as a more strategic medium and chart out a digital growth path for their products. In terms of key target audience from FMCG perspective as made clear in the report, 200 million digital natives will be online, 30 percent of women population in India will be online by 2020 reaching 200 million and 100 million women will shop online. 200 million plus users will be from rural India, whose disposable income will continue to grow. With these three key consumer segments moving to digital and spending more time online, FMCG companies will need to prepare themselves for this digital future.”


Speaking about the current engagement levels of FMCG companies with the digital medium, Nikhil Prasad Ojha, Partner, Bain & Co., said, “Most FMCG companies in India have underestimated the impact of Internet and are struggling to ascertain a clear digital roadmap for their products. Companies need to uncover the digital potential for different categories, and align their growth trajectory with the changing consumer behavior. This report will serve as a useful reference point to start thinking and engaging consumers.”


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