Mastering E-Commerce: Leveraging Category Nuances to Unlock Growth

July 2024

E-commerce growth rates have slowed from historic pandemic-related highs, meaning it is no longer a rising tide for all categories and brands. While vast potential exists, with e-commerce expected to account for half of retail’s growth over the next five years, retailers and brands need to get savvier as they search for new online opportunities. This briefing explores opportunities and challenges across four key areas: beauty and personal care, consumer health, food and soft drinks.

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Key findings

Beauty and personal care e-commerce boosted by the rise of personalisation

Beauty and personal care stands out as having the third highest e-commerce penetration rate among fast-moving consumer goods. Brands that have not yet leveraged a degree of personalisation online or mobile devices risk losing share in this space, since personalisation helps overcome uncertainties in product trial.

Consumer health e-commerce complicated by regulatory environments

While the online market for consumer health continues to benefit from wider development of the e-commerce channel, local regulations still play a significant role in determining industry penetration by country. The markets with looser restrictions on the sale and delivery of health products will continue to lead the global marketplace over the near term.

Food e-commerce benefits from inflationary environment

Consumers remain hyper vigilant for good deals and ways to push their shopping bills back towards the halcyon days of 2019 prices. Online food retail, which offers opportunities to reduce spending on food, will triumph in this pricing environment.

Higher pricing and functional formats fuel e-commerce growth for soft drinks

Although e-commerce represents only a fraction of total soft drinks sales volume, the channel has performed strongly, despite significant cost-of-living challenges. Higher pricing and optimised price-pack architecture have been particularly prominent for online products. Premium categories, like sports and energy drinks, have also thrived with their online-friendly powder mix format.

Why read this report?
Key findings
E-commerce opportunities
Retailers and brands must sharpen their e-commerce strategies to drive growth
Uncovering e-commerce opportunities across categories will require different playbooks
Beauty e-commerce continues to be boosted by personalisation efforts
Mexico-based Perfumerica grows market share through online sales and personalisation
Beauty and personal care should continue to leverage personalisation to grow e-commerce
Consumer health products sold online differ starkly by country, due to regulations
Amazon remains the clear leader in consumer health e-commerce
Naver finds success with popular brand stores, frictionless payment and livestreaming
Raia Drogasil dramatically expands by offering consumers a comprehensive health platform
Regulations will guide e-commerce penetration, but opportunities exist to push growth
Inflation pushes value sales even higher following pandemic-related surge
Staple foods and dairy record the highest sales, with inflation key
US-based Little Spoon builds on DTC success by adding food for 4-7 year-olds
Snacks, and cooking ingredients and meals also grow as prices rise
HelloFresh deal with Cigna increases incentive to turn online
Reputation as a place to save money will continue to boost online channel
Surging global soft drinks e-commerce value sales in 2023, driven by higher US prices
Price rises, package mix and premium category preferences drive value performance
Multipack options online are shrinking in size, further driving RSP per litre
Advanced hydration and powder mix format grow across global drinks e-commerce
Drinks via e-commerce is hard to scale, but format, function and loyalty are key
Recommendations for growth
Evolution of e-commerce
Questions we are asking

Retailing

Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.

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