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The Growing Importance of E-Commerce
Jan 30, 2018


The growing clout of e-commerce is slowly turning it into a formidable distribution channel that's hard for companies to ignore. This is reflected in the sales growth clocked in various distribution channels as per Euromonitor.

The growing clout of e-commerce is slowly turning it into a formidable distribution channel that's hard for companies to ignore. This is reflected in the sales growth clocked in various distribution channels as per Euromonitor.

While e-commerce functions on a smaller base and is not directly comparable with modern or traditional retailing, FMCG companies can't ignore the rapid rise in its distribution power. Modern retail and internet retail will continue to outgrow the traditional distribution channel over the next five years, according to Euromonitor. Moreover, e-commerce, being less capital-intensive compared to modern retail, is expected to sustain higher growth over the long run.

Therefore, it is hardly surprising that established FMCG companies such as Hindustan Unilever swear by the growing importance of e-commerce. No wonder, Patanjali Ayurved Ltd, a rapidly growing and relatively new player in the FMCG market, has tied up with e-commerce companies to quickly scale up its ante against well-entrenched players.

Modern retail and internet retail are less fragmented and enjoy better pricing power than traditional retail. Therefore, the growing dominance of these formats carry the inherent risk of the bargaining power tilting in favour of the customer. But given their strong emergence, companies cannot afford to ignore them anymore.

Data Source: Livemint, Euromonitor International

This Chart Of The Day was published in The 5 Minute WrapUp - Is India's Real Estate Sector Going 'Lollapalooza'?

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