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E-Commerce Moves Front for Food Industry Business Strategies

Although the packaged food industry remains one of the fmcg industries with the smallest penetration of e-commerce, the channel skyrocketed during 2020. This fact, combined with incredibly tech-savvy millennials and Generation Z consumers, has reinforced the need to prioritise online strategies to succeed in an increasingly digital world for food brands and retailers alike; both need to find ways to meet this demand.

Online shopping disrupts the industry and is here to stay

E-commerce represents a small distribution channel within packaged food, accounting for less than 5% of total retail sales. Store-based retailing remains the main distribution channel, with grocery retailers accounting for 87% of all packaged food sales. There are a number of reasons for this including food being a very tangible product with many consumers preferring to browse the shelves and buy perishable food on site. In addition, categories such as snacks heavily rely on impulse consumption, which was not feasible through online channels until more recently.

Internet Sales Across Selected fmcg Industries Globally (2010-2020)

Source: Euromonitor International

However, e-commerce accelerated at an all-time record pace in 2020 as it enabled consumers to access packaged food from the safety and convenience of their homes amid the pandemic, a first for many consumers trying this channel. This resulted in unprecedented global growth of 54% in 2020, which makes it undeniable that a key strategy to gain share within grocery retailing is through online channels.

Industry professionals also believe that this is a permanent change. According to Euromonitor International’s Voice of the Industry Survey (April 2021), online shopping’s increase was considered a permanent change by 73% of industry professionals, up 13 percentage points compared to responses from the previous year. This reinforces the need to place e-commerce at the forefront of business strategies to succeed in an increasingly digital world.

Source: Euromonitor International Voice of the Industry Survey, April 2021 N= 1,527; October/April/July 2020. October N=2,803; July N=1,452; April N=2,922 

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