Diversified conglomerate ITC Ltd. now derives a significant portion of its fast-moving consumer goods (FMCG) sales from new distribution channels such as e-commerce and counterfeit stores. ITC, which earns nearly Rs 21,000 crore annually from non-tobacco FMCG sales, is now leveraging e-commerce and modern trade channels at a much faster pace than its peers in the market.
In its latest annual report for FY24, the company said the share of modern trade and e-commerce channels in its FMCG portfolio increased to 31% last year, compared with the industry average of 15-20% and much higher than other leading FMCG players in the country, while 80-85% of its sales came from general trade channels, comprising traditional kirana stores and other brick-and-mortar outlets.
According to ITC management, the surge in internet usage, especially via smartphones, the prevalence of digital payments, a broader product range and faster deliveries continue to drive the growing importance of the e-commerce channel. ITC has partnered with leading e-commerce platforms across all aspects of its operations, including category development, supply chain, consumer products and customer acquisition, which has enabled it to significantly grow sales through this channel.
The growth was driven by development of exclusive pack assortments, channel specific business plans and 'digital first' brands. A joint business plan executed in conjunction with e-commerce platforms coupled with agile supply chain initiatives further strengthened ITC's market position in this channel, the company said. The rapid increase in the contribution of e-commerce and modern trade channels in ITC's FMCG sales is evident from the fact that their combined share was 17% in FY20, four years ago.
Modern trade channels continue to experience robust growth, driven primarily by store expansion in tier 2 and tier 3 cities. Growth fuelled by omnichannel presence in urban markets, and improved operational and execution efficiencies, leveraging shopper marketing insights and agile supply chain capabilities.
To boost its presence in new channels, ITC has focused on its in-house omnichannel network, which comprises its D2C platform, ITC e-Store. ITC's digitally-driven eB2B platform, UNNATI, has expanded rapidly over the last one year to cover around 700,000 stores, with a large number of retailers placing direct orders on the platform, the company further said.
