For entrepreneurs looking to capitalie on India’s new found
digital dividend, fast moving consumer goods (FMCG) is a truly attractive sector. The rise of e-commerce platforms as well as social media marketing has made it possible for new brands to make their case to the Indian consumer, without having to navigate the barriers of brick & mortar sales channels dominated by large conglomerates. Research by the Boston Consulting GroupBCG) and Google, estimates that digitally influenced FMCG purchases could touch INR 45 bn by 2020. Interestingly, ~60% of the digital opportunity is from the top 10% of households, indicating a higher potential for premium offerings.
Incumbents in India are yet to fully capitalie on this opportunity- still treating digital as a way to supplement other channels or in some cases to drive loyalty (e.g. Tide Wash Club, ‘Subscribe & Save’ options on Amazon). Few brands have also used digital mediums to launch premium or differentiated versions of regular products (e.g. Teaveda from Tata Tea). On the other hand, the success of global "online first" brands like the Dollar Shave Club (now owned by Unilever), The Honest Company, Soylent etc. have led to several local clones. Today we have new brands mushrooming each month in categories as diverse as natural baby products, male grooming, organic milk, feminine hygiene, ayurvedic drinks and even idli batter.
Based on experiences from these early entrants, as well as case studies from other markets, here are the 5 most important tips for entrepreneurs looking to make a mark in this space:
#1 Build a winning product: As a new venture with limited resources, the focus is key to designing your product. Global winners have shown that the impact of one great product is better than a wide portfolio (e.g. Casper's mattresses). Also, research shows that digitally influenced consumers are more likely to purchase products which offer a solution to a problem (e.g. hair fall) than search for a generic category (e.g. shampoo). Under-penetrated categories such as baby food, health supplements have found better traction online as compared to well-penetrated ones such as laundry detergent or toothpaste.
#2 “Tech” only what you need: While creating proprietary tech assets could win favor with investors, smartly using third
#3 Enter the consideration set: Loyalty is at an all
#4 Generate maximum return for your digital marketing spend: Given the plentitude of digital media agencies, entrepreneurs tend to outsource the management of their entire social media portfolio. CMOs should find a competent agency which is ready to link a part of their fee to success metrics and lay down very specific before handing over the execution and daily management of the digital strategy. Video as a medium (especially ads on streaming providers) and local language content are the key trends digital marketing content to watch out for.
#5 Avoid death by numbers: Online customers and digital marketing translate to tons of data which often result in complicated KPIs/ dashboards. However, nimble entrepreneurs would be better off driving their sales team with 2-3 priority metrics that are reliable indicators of customer growth and closely linked to business goals. For example, a brand which is counting on word of mouth publicity could track “new customer addition through referrals”, while one whose profitability is linked to subscriptions would track the “% of customers opting for regular subscription.”
 Source: Decoding Digital Impact, A $45 bn opportunity in FMCG, BCG/Google, Sep 2017
 Source: The new battleground for marketing-led growth, by David Court, Dave Elzinga, Bo Finneman, and Jesko Perrey, McKinsey Quarterly, Feb 2017
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