Mission accomplished: Saving private labels in Covid season

BENGALURU: At a time when consumers are looking for low-cost options and as products from large FMCG players have become scarce on online platforms, players such as BigBasket, Grofers, Amazon and Flipkart have seen sales of their private labels in essential categories grow strongly.Industry executives and analysts told ET that private brands in categories such as pulses, detergents and personal care have received a boost over the past five weeks as the country went under lockdown to stem the spread of the outbreak. Consumers are preferring to buy lower-cost alternatives to tried and tested brands as spending is hit due to the uncertainty surrounding the economy in the wake of the Covid-19 pandemic, experts said.For instance, Amazon’s Presto brand floor cleaner is 25% cheaper than rival Reckitt Benckiser’s market leading Lizol. A similar product from BigBasket is priced at least 15% lower, while Flipkart’s Supermart-branded floor cleaner is 50% cheaper than Lizol. BigBasket and Grofers said they have been able to directly work with manufacturers to make staples and hygiene products available faster than traditional FMCG channels.75462251This momentum is expected to continue in the mid- to longterm, with India’s largest e-grocer BigBasket expecting the contribution of private labels to overall sales to rise to 45% from 35% in the next six months. “Certain categories like health, bakery, organic milk, ghee, chocolates, snacks will drive this growth,” said Hari Menon, CEO of BigBasket.Rival Grofers is also looking at private labels accounting for 60% of sales, up from 40% in the same timeframe. “We plan to invest $15 million in our owned brands over the next year and are looking to invest $25-50 million in the supply chain and owned brands combined over the next two years,” Albinder Dhindsa, CEO of Grofers told ET.Grofers wants to increase the availability of its private brands from 350 corner stores to 2,000 in the next six months, he added.“Our goal is to provide customers with more choices and we work closely with local manufacturer, brands and sellers to fill selection gaps with products that they are searching for,” an Amazon spokesperson told ET. Flipkart did not respond to ET’s queries seeking comment.Ecommerce firms have also been able to scale up supply of private labels more meaningfully than that of products from thirdparty brands amid the ongoing lockdown. “We were in talks, and continue to be in talks, with all large FMCG brands, but even they have been facing challenges in terms of opening up factories and getting back labour,” said a senior executive at a leading ecommerce marketplace.

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