Convenience factor drives online sales

Online sales of smartphones crossed the halfway mark of total shipments for the first time in India in the April-June quarter, when a number of consumer goods too witnessed a steep increase in volumes through the ecommerce channel, driven by the convenience factor during the pandemic.The contribution of online to total sales more than doubled for large fast moving consumer goods (FMCG) companies such as Hindustan Unilever (HUL), ITC, Nestle and Parle Products in the past quarter as compared with a year earlier.On a sequential basis, ecommerce contribution surged by 50% from the January-March period, as per the earnings release of these FMCG companies.While the second wave of Covid-19 was a contributor to this surge as consumers largely avoided venturing out and most physical stores were closed, the trend also indicates that many people are no longer viewing online as just a place for discounts. Madhav Sheth, smartphone maker Realme's chief executive for India and Europe, said Covid-19 has impacted consumer buying behaviour with many moving towards purchasing online.Consumers are preferring value-for-money products with a strong focus on price-to-specs ratio and which are readily available and transparent on online platforms, he said, adding that offline stores usually push high-margin products, which together may also have triggered this shift.As per latest figures from mobile phone sales tracker Counterpoint Technology Market Research, the share of online smartphone shipment crossed 50% in the June quarter, surpassing the previous high of nearly 49% in the October-December quarter of 2020.The researcher said brands like Samsung have also pivoted to the online channel whereby its online centric models accounted for 60% of the shipments in the quarter, while Oppo launched an e-store during the period. In fact, according to Counterpoint, offline-centric brands were more affected during the lockdown April and May during the second Covid wave as consumers were buying online. 84912737"The online surge is largely led by the pandemic-driven stay-at-home orders and e-learning. Even in May when offline was impacted the most, online operations were still happening. Going forward, we expect offline to recover a bit but the trend is largely to remain in favour of online channels," said Tarun Pathak, research director at Counterpoint.Industry executives said this shift got accelerated due to the second wave since April when most states shut down malls and stores or restricted shopping hours. However, some states allowed ecommerce and home delivery to function as usual. FMCG companies reported their best ever online sales during the June quarter. For HUL, the contribution of ecommerce rose to 6% of total sales, up from 3% a year back. For ITC, ecommerce accounted for 8% of sales from 5% in the previous quarter, while for Nestle it grew to 6.4% from 3.8% sequentially.

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