FMCG Giants Embrace Digital Packs, Eyeing Broader Consumer Spectrum with Competitive Pricing
In a strategic pivot, Fast-Moving Consumer Goods (FMCG) companies are increasingly focusing on the mass market by introducing digitally-first products at more accessible price points, leveraging the burgeoning e-commerce domain to thrive. Recognized industry players such as Parle Products, Emami, Dabur, and Hindustan Unilever (HUL) are at the forefront of this transition, aiming to optimize online sales figures and operational efficiency.
This move marks a departure from the prior trend where FMCG firms concentrated on launching premium or niche segment products in the digital arena. With e-commerce emerging as a colossal and swiftly expanding channel, these companies now target volume sales by rolling out products specifically designed for and priced within reach of the mass segment.
Executives from these companies have shed light on the rationale behind this shift. The consensus points to the necessity for increased volumes through digital mediums to ensure sustainable online costs and operational viability. Parle Products, for instance, has revised its pricing strategy for online packs which now range between Rs 70-90, as opposed to its previous pricing above Rs 120. Similarly, Emami and Dabur are venturing into mass market categories like toothpaste and baby care through digital channels at competitive prices, diverging from the higher end of the market spectrum.
HUL, India’s largest FMCG entity, has also indicated a strategic realignment towards embracing the mass segment for its digital-first brands. Statements from HUL’s managing director, Rohit Jawa, illustrate the company’s intentions to apply its insights from premium online-only brands to more broadly accessible categories.
The operational costs associated with servicing online orders have been a critical factor driving this transition. Industry insights suggest that the delivery costs per order can significantly dent profitability, making it imperative for companies to cultivate a diverse product mix that spans premium, mid-segment, and mass-market offerings. Consequently, FMCG giants are scouting for the optimal balance to enhance the bill value and make e-commerce a profitable venture.
The strategic trajectory adopted by these companies is also reflected in their distribution plans. Some firms are contemplating extending their digital-first products to conventional retail outlets, aiming to amplify their market reach and capitalize on the established footfall at these venues. This includes players like Marico and Emami, who are planning to introduce their digital-first offerings, such as Beardo and mass-market toothpaste, respectively, into general trade to escalate their scale and visibility.
Dabur’s CEO, Mohit Malhotra, reflected on the competitive landscape, noting that the company’s mass market positioning shields it from the direct impact of upscale urban and Direct-to-Consumer (D2C) brands. Malhotra elaborated on the inevitable offline transition for many emerging brands, citing the substantial market influence held by traditional retail channels.
As FMCG companies recalibrate their strategies to navigate the digital-first product space, the emphasis on pricing accessibility and market segmentation heralds a new era of consumer engagement through e-commerce platforms. This evolving landscape presents a nuanced battleground where operational efficiency, strategic pricing, and broad-based market appeal become the pillars of success in the digital age.
