HUL quietly builds force to master e-comm

Priyanka Pani Mumbai | Updated on January 20, 2018

Complete package HUL could emerge the largest online grocery player in a year or two on the on back of its strong network REUTERS

FMCG major has been steadily upgrading its technology and making large investments

Hindustan Unilever Ltd, India’s largest packaged consumer goods company by revenue, is aiming to become the largest e-commerce player in the grocery/FMCG segment soon.

The company in its annual report for 2015-16 says, “We have made significant investments in capacity building of e-commerce and are committed to be the best FMCG player in e-commerce.”

This comes at a time when online grocery as a segment is going through difficult times with several firms closing down or getting acquired in the past 18 months. Well-funded start-ups such as Localbanya, PepperTap and BigZop have shut shops while others such as Bigbasket, AskMe Grocery and Grofers are consolidating their business.

The Mumbai-headquartered consumer goods maker, which launched its e-commerce portal last year, has been steadily upgrading its technology and making large investments on its digital play. The company had also launched its Android and iOS app.

Cautious steps

However, compared with foreign-funded start-ups, HUL is taking cautious steps with expansion. When players such as PepperTap were aggressively expanding and burning cash to offer steep discounts as part of customer-acquisition strategy, HUL was strengthening it’s position in Mumbai alone. Over the last one year, the company has expanded to a few localities in Bengaluru, Mumbai, Delhi and NCR.

It has also put in place a dedicated team to build e-commerce capabilities.  

HUL Chairman Harish Manwani has said that the company is quick to recognise changes in consumer behaviour and preferences, and adapts accordingly. During the announcement of the company’s quarterly results, he had said that in 2016, there would be an increased focus on HUL’s digital strategy — both e-commerce and digital marketing.

However, he had declined to give any insight into how much the e-commerce channel would contribute to HUL’s overall revenues.  According to market experts, besides tying up with local kirana stores for, the Indian arm of Anglo-Dutch consumer major Unilever is also working with several other e-tailers such as Amazon and Flipkart.

Experts say HUL could emerge as the largest online grocery player in a year or two on the on back of its strong network.

“HUL need not pay the kirana stores to onboard them on its platform. They already have a strong relationship with all of them,” said a founder of a leading grocery portal on condition of anonymity.

He further added that many of the grocery portals had to pay huge amounts to convince the stores to come online.

HUL has a surplus cash of ₹5,000 crore to spend on building technology or make small acquisitions that can strengthen its digital foray.

The move could also help tackle rising competition from home-grown players such as Baba Ramdev-backed Patanjali. 

Published on June 06, 2016

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