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China e-commerce growth leads the world in FMCG sales

Jason Yu

Greater China General Manager

Shoppers 21.10.2016 / 11:12

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Last year, FMCG sold through e-commerce channels in China grows 47% in value over a year ago, which is the fastest among major economies.

Sales of groceries through e-commerce platforms reached US$48 billion in the 12 months to June 2016, according to a new report by Kantar Worldpanel. In China online FMCG has grown by 47% and we expect this trend to continue. In 2025, online FMCG will grow to become a US$36 billion business with a market share of 15%.

The third annual Future of E-commerce in FMCG study shows that e-commerce now accounts for 4.4% of all FMCG sales. Whilst the e-commerce channel is growing, the FMCG market as a whole is flat, increasing just 1.6% during the same period. In China, the trend has been very similar. While e-commerce has grown by 47%, the overall FMCG market evolution has been 3%.

Stéphane Roger, Global Shopper and Retail Director at Kantar Worldpanel, comments: “FMCG growth is slowing, but our data shows that people are looking for more convenience, which can be met by shopping online.

“Grocery e-commerce, although currently small, with only one in four people shopping online, is growing fast. We forecast it will grow to 9% of the market and be worth US$150bn by 2025. With new entrants such as Amazon expanding rapidly, the industry is facing a shake-up.”

Stéphane continued: “Although online sales have the potential to cannibalise in-store sales, it is vital that retailers act quickly to develop a strong e-commerce presence. The retailer that goes online first in each market can enjoy a far higher market share - this can be a difference of at least 40% in France and up to three times more in the UK. In this report we’ve looked at how retailers and brands are finding ways to work across all channels.”

300 Px -e -commerce Share And Growth

Key Numbers

  • 3% China overall FMCG sales growth
  • 47% China FMCG e-commerce sales growth

Source: Kantar Worldpanel & Europanel

Other key findings from the report include:

* Global hotspots: a puzzle of performance

E-commerce growth is not equal around the world and is not explained by connectivity.  It might not be surprising that digitally developed South Korea is the world’s largest online FMCG market by value share (16.6%). In the USA however, only 1.4% of groceries are bought online. China is the major market which saw the biggest growth in the last 12 months, 47% – to a value share of 4.2%, only Denmark (80%) and Belgium (57%) were faster than China, but from much smaller bases. 

Europe has a relatively low adoption of e-commerce in all countries except the UK with 6.9% of the market and France which has 5.3%. France is a relatively unique e-commerce market as their success is with the Drive model whereby the online shop is collected from the store. Adoption across Latin America is currently very low with the exception of Argentina at 1%.

* Online generates more loyalty

Once shoppers have begun shopping online they are more likely to continue doing so. Among this group in China, 7.5% of all spend is through e-commerce, resulting in fewer trips to physical stores.

* Impulse needs encouraging

Comparative research across the UK, France and China has shown that one year after starting to shop online, shoppers in the UK and France spent less overall (-2.4% and -1.4% respectively), this is because there is less impulse shopping.  Brands need to work on driving impulse purchase online – for example by making suggestions for complementary products. In China, 50% of FMCG’s online sales is beauty, it is seen as a prestige occasion and they actually had an increase in sales after one year (+8.1%).

* Online shopping baskets are usually bigger

Shoppers generally spend more per trip online than they do offline, so potentially this could be a lucrative group to win.  In the China for example, the average shop online is US$20 compared to US$15 in-store.

* Brands that make it onto online shopping lists are more likely to stay there

Kantar Worldpanel data shows that globally, 55% of online shoppers use the same shopping list from one purchase to the next.  Brands need to focus their efforts on getting onto that list.

 

Source: Kantar Worldpanel

Editor's notes

* To access the full report, click here;

* To reach the author, or to know more information, data and analysis of FMCG market, please contact us.

* Please subscribe to our newsletter to receive news alerts.

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