Online is still the strongest performing channel globally, with 4 in 10 households globally now using the channel for their FMCG purchasing. But what does the future look like? And which brand is best-in-class?
As shown in 10 Years of Consumer Choices, the FMCG industry has grown by 33% in the last decade. The industry has demonstrated incredible resilience and consistency year after year, alongside a changeable consumer landscape.
While this industry growth is impressive, it does not show the meteoric rise of the Online channel specifically, and its part in FMCG growth. In fact, the Online channel grew 18 times faster than the industry baseline gaining 6% value share of the whole industry over that time (7.2% in 2021 vs 1.3% in 2012).
And the Online channel is not set to slow anytime soon. We expect to see Online continuing its trajectory, growing faster than other channels and gaining share. We forecast that it will gain +0.5% share per annum and reach 7.7% share by the end of this year. In the next four years, we predict that its share will reach over 9%.
This rapid expansion is mirrored at a brand level too. All 20 of the most-chosen brands online saw growth in the channel, with 18 seeing double-digit growth. This growth was also stronger than offline performance across all the brands.
Some brands managed growth across both Online and Offline; for these brands ecommerce represented 43% of brand growth – punching well above its weight.
From the Top 20 most chosen brands Online, the average amount of total CRPs coming from the channel is 7%. However, there are four brands which get over 10% of their CRPs from the Online channel, and leading the way is L’Oréal Paris with over 18% of CRPs occurring Online.
Since 2015, the brand has seen its Online CRPs increase three-fold, growing from nine million to 32 million in 2021. At the same time the proportion of brand choices made Online has increased from 6.7% to 18.4%.
The fact L’Oréal Paris is leading the way is no surprise. Parent manufacturer, L’Oréal has been targeting the channel for the past few years, and the beauty manufacturer expects 50% of its sales to come from ecommerce by 2023.
A big part of this success is due to the brand’s performance in Mainland China, which represents 82% of all its Online CRPs.
In this market, L’Oréal Paris has seen success with digital try-ons: they have the dual benefit of helping customers from an education perspective (i.e. helping customers find the right product) and also in terms of personalisation, creating informed customer journeys and personalised product recommendations.
The brand has also built up a solid ecosystem of advocates and social sellers, jumping onto trending topics such as clean beauty and simplified skincare. Their perceived relevance increases further when we consider their use of influencers: they frequently create co-branded campaigns, relying on the popularity of celebrities to drive brand recognition and popularity.
These marketing efforts are also supported by their product offering. Their products take consumer segmentation into account, meaning they offer multiple products targeted to different age groups. This means they can appeal to the whole market, which is bolstered by their commitment to innovation and R&D from an investment perspective, leaving them in a strong position to appeal to all customers.
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