With e-commerce picking up in the country, India’s largest consumer goods company Hindustan Uniliver is looking to build e-commerce capabilities.
In an interview, Nitin Paranjpe, the Chief Executive Officer of HUL said
Almost 10 years ago, we called out modern trade as one of our categories of the future even before anyone could predict that it will become so large. We trained our people, sent them overseas to work with Walmart and Tesco, and we built the depth and understanding of the channel to make it as strong as our traditional channel. Modern trade now contributes close to 15% of our overall revenue. We have now called out e-commerce and feel it will become large in the future. We are building capabilities and benefiting from Unilever’s experience in developed markets. (Mint)
That large players like HUL are coming into the e-commerce business is an affirmation that the $10 bn e-commerce market is slowly becoming mainstream and is ready to accommodate more players. However, it needs to be seen how quickly it expands, for many cash starved e-commerce companies are running out of time quickly.
The good news is that buyers are slowly beginning to shop online for convenience and greater options and not just discounts. Take for instance the case of Domino’s Pizza in India. The company, which recently started taking orders online as well as on the mobile, sold Pizza worth Rs 28 crore during the third quarter of FY2013.
The bad news is that the industry stands a chance of losing consumer trust as cash strapped e-commerce companies such as Timtara shut down without delivering on orders. In this case, consumers have gone to court accusing the promoters of fraud.
There is a large overlap between the goods retailed by new e-commerce players like venture backed BigBasket and what HUL sells. Will this affect their sales? Perhaps. But then, customers might chose to buy everything from under one roof instead of buying HUL products from their site.
Big retailers such as Walmart and Tesco have been playing catchup with Amazon in the e-commerce department.