Growing pie: Ecommerce share on the fast track for FMCG companies

Ecommerce is increasingly turning out to be serious business for fast-moving consumer goods (FMCG) players despite the stress in urban consumption. FMCG majors including Hindustan Unilever, Nestle India and Tata Consumer Products are all witnessing a significant uptick in sales through their ecommerce channels and are targeting an even more robust online business in near term.   

“We are at about 7-8 per cent ecommerce contribution or thereabouts, growing of course faster than the average of our total business and that would go to 15 per cent in the next few years,’’ Rohit Jawa, managing director and chief executive officer at HUL, told analysts during an earnings call after the company’s Q4 results last week. Quick commerce contribution to its revenue stands at about 2 per cent or a third of its ecommerce business. The management pointed out that while the contribution of quick commerce is still in low single digits, it is growing at a rapid pace.

 

Tata Consumer Products too is in the midst of a similar ecommerce rush. Sunil D’Souza, Tata Consumer Products MD and CEO, told Business Standard in a recent interview that there has been substantial channel shifts. “Ecommerce has come to the party, and so has quick commerce. If I add back the modern trade, if I add back all of quick commerce because quick commerce is all urban, and I assume that 50 per cent of ecommerce is urban and 50 per cent is rural, my urban growth is 14.5 per cent,” D’Souza said. 

 

In a post-result analyst call, Tata Consumer Products management gave out a number—that while 14 per cent of its revenue comes from ecommerce, it sees half of its contribution flowing from quick commerce.

 

At Nestlé India, the ecommerce focus is quite clear. In 2016, the e-commerce contribution to its business was just 1 per cent. Some eight years later, at the end of June quarter in 2024, its ecommerce contribution stood at 7.5 per cent. And, at the end of the quarter ended March 2025, the ecommerce pie in its total sales had grown at a fast clip to 8.5 per cent.

 

“To serve our consumers we have an omni-channel approach, and this implies that our brands are available at locations and channels that are most convenient for consumers. One such channel is ecommerce, which continued in its growth trajectory, propelled by the rapid expansion of quick commerce, contributing to 8.5 per cent of domestic sales, in this financial year ended March 31,” Suresh Narayanan, chairman and managing director at Nestle India, was quoted as saying in a company statement after the recent quarterly results.

 

FMCG companies are reflecting the online growth in the way they are doing business. For instance, ecommerce companies are talking about FMCG firms opting for select online launches for some products before taking them to physical stores.

 

According to Seshu Kumar, head merchandising and category management at Bigbasket, an online grocery delivery platform owned by the Tatas, in some cases FMCG players have launched products first on ecommerce or quick commerce platforms and then introduced to other channels. For instance, if a product is urban focussed, or meant for high income group, ecommerce or quick commerce can be the go-to platform, he explained.

 

At the time of launching Knorr’s international flavours, ecommerce was the starting point. “This is more tactical, not permanent. So they may test a product on ecommerce/quick commerce and then launch on other channels,” said Kumar while pointing out that the fastest growing channel is quick commerce.

 

Quick commerce players are not complaining. ‘’Before quick commerce platforms emerged, FMCG players had a monopoly in terms of engagement with the consumer,’’ pointed out an executive at a quick commerce firm. For the first time, FMCG players are having to compete with smaller direct to consumer brands, he said, summing up the shift in shopping from corner stores to mobile phones. 

Growing pie

 

> HUL targets raising ecom’s share of revenue to 15% in the next few years, up from the current 7–8%; qcom currently accounts for 2% of revenue

> Tata Consumer Products derives 14% of its revenue from ecom, with half of that coming from qcom

> Nestlé India has grown its ecom revenue contribution from 7.5% at the end of June 2024 to 8.5% currently