What is Fast-Moving Consumer Goods (FMCG)
Fast-moving consumer goods are products that sell quickly at relatively low cost – items such as milk, gum, fruit and vegetables, toilet paper, soda, beer and over-the-counter drugs like aspirin.
BREAKING DOWN Fast-Moving Consumer Goods (FMCG)
Nearly everyone in the developed and developing world uses fast-moving consumer goods (FMCG) every day. They are the small-scale consumer purchases we make at the produce stand, grocery store, supermarket and warehouse outlet. FMCG have short shelf lives, so, while the profit margin on individual FMGG sales is low, the volume of sales makes up for it. The market for $3.99 orange juice is a lot larger than the market for $399 juicing machines.
The FMCG marketplace is huge and includes some of the largest companies in the world, such as Dole Foods Co., The Coca-Cola Co. Unilever, and General Mills, Inc.. As investments, FMCG stocks are a generally low-growth, but safe bets with predictable margins, stable returns and regular dividends.
FMCG accounts for more than half of all consumer spending, but they tend to be low-involvement purchases. Consumers are more likely to show off a durable good such as a new car or beautifully designed smartphone, than wax poetic about a new energy drink they picked up for $2.50 at the convenience store.
Packaging is very important for FMCGs. The logistics and distribution systems often require secondary and tertiary packaging to maximize efficiency. The unit pack or primary package is critical for product protection and shelf life and also provides information and sales incentives to consumers.
Fast-Moving Consumer Goods and E-Commerce
Across the globe, shoppers are increasingly buying things they need online because it offers certain conveniences—from delivering your order right to your door to broad selection and low prices—that brick-and-mortar stores can't.
The most popular e-commerce categories, not surprisingly, are non-consumable—durables and entertainment-related products. In an online global survey, almost half of all respondents intended to purchase clothing or make airline or hotel reservations using an online device in the next six months. The online market for buying groceries and other consumable products is growing as companies redefine the efficiency of delivery logistics, which shorten delivery times. While non-consumable categories may continue to lead consumable products in sheer volume, gains in logistics efficiency increasing the use of e-commerce channels for acquiring FMCGs.
When shopping for non-consumable goods where consumers typically have something in mind, there is mostly a one-to-one correlation between online searching and shopping. Consumable products have lower online browse/buy intention than non-consumable ones, but they do boast just as strong browse-to-buy correlations, which may be a factor in their increasing online sales.