The Cost of Convenience : How online FMCG is Trasforming Traditional Markets

BY Harshita Dubey/ JUNE 28, 2025
DESIGNED BY Riddhi Jain

Instant access to goods just by a simple click. Sounds familiar? The era of digital trasformation catering to our convenience has a complex story of transformation and adaptation that brings about equal levels of opportunities and inconveniences to the vendors of the traditional marketplaces.

it back, relax, scroll through, order and get what you want in the least time possible. But, what’s the cost of this comfort and who actually suffers? The emergence of the online marketplaces has drastically transformed the approach of the FMCG’s market functioning as a whole. Market dynamics have changed rapidly, buisnesses have transformed overnight to stay ahead, but there are many struggling to keep up and risk being left behind.

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Fast Moving Consumer Goods, often referred to as ‘FMCGs’ are products that are designed to meet everyday consumer needs with speed and convenience.Known to be fast paced and low cost, these goods move rapidy through the supply chain that involves producers, dealers, wholesalers and retails, before reaching to the consumers in the end. The traditional market which relied on physical distribution networks has now undergone rapid transformation due to advanced technological advancement. Advancements in digital platforms and logistics have given rise to the Online FMCG, which has reshaped how these products are marketed, sold and delivered to consumers.

The rise of online FMCG was accelerated by platforms like Amazon, Blinkit, Swiggy Instamart, which used advanced technology to closely track and respond to consumer demands. The advent of the Covid-19 pandemic further faciliated their rise, which increased the need for fast, contactless delivery of essential goods.

Pictured: Unkown illustration via pinterest

unkown illustration via pinterest 2_edited.jpg

During the Covid-19 pandemic with safety being the top priority, the demand for home-delivered goods surged. This significantly led to growth of companies that could meet those needs, with Amazon’s profits increasing by 200% during the pandemic (ResearchFDI, 2024). There was an unexpected surge in demand for essential commodities such as food, pharmacy and durable goods during this time. This sudden spike put immense pressure on the traditional retail supply chain, leading to delays, shortages, and a breakdown in trust between buyers and sellers. The long-standing interpersonal relationship between the two that once strengthened offline transactions began to weaken, prompting many consumers to shift towards online marketplaces that promised greater reliability and safety.

In contrast, spending on non-essestial commodities such as jewlery, aparell, furniture and other goods declined, impacting demand and leaving workers in these industries facing high supply and low demand,resulting in significant losses (International Monetary Fund, 2020). This shift in consumer habits during the pandemic has continued to influence present-day demand patterns. After Covid, a new norm was established: convenience became the priority and it was met consistently. Consumer shopping habits shifted drastically from vendor-based shopping to online purchases. Convenience, speed, and perceived safety have remained major priorities for buyers, even after restrictions eased. As a result, many consumers have permanently moved away from traditional markets in favor of online platforms. The personal, trust-based relationships that once defined local shopping have largely been replaced by digital interactions, discount-driven loyalty, and algorithm-based recommendations—reshaping not just what consumers buy, but how and where they choose to buy it.

With an eye on these opportunities, FMCG companies made everyday life easier and smoother for people yet in doing so, they also made life difficult for others.

This resulted in vast marketing opportunities and created new avenues for business growth for companies. .With an eye on these opportunities, FMCG companies made everyday life easier and smoother for people yet in doing so, they also made life difficult for others.These companies provide goods at low prices by eliminating both the middlemen and the traditional market. It operates in a D2C (Direct-to-Consumer) marketing method rather than B2C (Business-to Consumer) model, where intermediaries like wholesalers and retailers are involved. A market operating in the B2C model, middlemen earned commissions, and the Indian retail market benefited from the circulation of money across various levels. The rise of online markplaces made D2C more appealing, as it allowed the producers to retain more profit. The D2C approach bypasses the middlemen and the retailers, serving directly to the consumers and offering greater convenience and more control over the shopping experience.

This innovation certainly has brought ease to many people, but that ease remains limited to only a certain segment of the population. Consumers with the technical know-how of cashless payments and search engines were best positioned to fully utilise what these online FMCG companies offered, largely because they could trust the process. Socio-economic factors such as digital divide, financial inclusion, and logistical reach affected the dynamics of the traditional market.

The traditional offline market, along with those involved in the physical distribution of FMCG products, suffered extensively.Both the buyers

illustration via pinterest by jingyao guo.jpg

Pictured: illustration by Jingyao Guo via pinterest

and the sellers had to face a sudden shift of demand and supply patterns due to the rapid rise of the online FMCG market. As e-commerce platforms experienced a surge, local vendors, especially in metropolitan areas saw a significant drop in daily footfall. The expansion of online markets also contributed to loss of jobs and unemployment. As a consequence of which, people losing jobs opted for working at lower wages. People working on low wages increased from 43% to 52% seeing a 9% of displaced workforce during the pandemic (Ross, M., & Bateman, N, 2021).

This digital transition not only altered how goods and services were bought and sold but also reshaped the overall market dynamics. Online platforms, having recognized the change in consumer behavior early on, gained a first-mover advantage. By offering attractive incentives like discounts, greater convenience, and transparency, they were able to build trust and loyalty—further sidelining traditional shops, which struggled to keep up with this fast-paced transformation.

A study by Natalie Rose, Francisco Rowe, and Les Dolega on the change in consumer behavior after Covid-19 examined the footfall trend in Walmart stores across the United States, alongside the growing engagement of the consumers with Walmart's online shopping app. It also brings to picture the fall and rise of the revenue in both online and offline markets of Walmart. The study revealed a major shift of consumer behaviour to the online market and an increased response to the activities and incentives being provided online. Walmart stimulated its sales by providing discounts to its customers shopping online. Walmart is one such worldwide example, Indian stores have also witnessed a major market shift, one of the biggest examples being Reliance Fresh.

Indian stores such as Reliance Fresh saw a 17% decline in overall revenues due to Covid-19, in spite of having operated online too (FE Bureau, 2020). Later, upon understanding the change in consumer behaviour, they changed their operational strategy. They launched JioMart as a response to evolving shopping preferences of the consumers. It helped Reliance retain its customers and also acquire new customers. JioMart by Reliance is a smart integration of online and offline stores. With the launch they also gave heavy discounts and goods at lower prices than the MRP (Maximum Retail Price), intensifying competition with local vendor shops. The customers shifted towards them from the vendor shops to opting for JioMart stores.

Factors influencing the shift of the customers from offline markets to the online market.(Varma & A. V, 2020)

Like JioMart other online FMCG companies, with the introduction of unique and quick distribution channels, further transformed consumer behavior. Factors such as the time span between the order placement and the delivery began to determine the consumption patterns of the consumers. This has further empowered the marketers to have control over the customer needs. People's deliberate response to incentives and ease has given these companies an upper hand in making the market shift towards them.

This shift of the market online has brought about a drastic changet in the demand for different goods and services too.Consumer E-commerce shopping of FMCG, a research paper done by Dr. Jayprakash Lamoria shows how convenience in different aspects of FMCG shopping made consumer behaviour change with the emergence of online

Pictured: Illustration by Audria Nicole via pinterest

illustration via pinterest by audria nic

Different Demographical and Geographical factors are influencing the upsurge of different e-commerce platforms. While platforms like Flipkart and Amazon are more popular amongst men, Meesho and Myntra have a strong following amongst women. People from tier 3 cities show more engagement with E-commerce than tier 1 and 2 because of their higher spending levels and purchasing powers. Income level groups from 3 Lakh and above show similar consumer preferences in choosing these platforms (Staff & E, 2024).

These online platforms use sophisticated algorithms to nudge different consumer consciousness and biases. Algorithm bias runs as one of major contributors in creating these customer wants by working in favour of the marketers. It collects data through online surveys, interactions of the customers and the response to the SEO (Search Engine Optimization) functioning helps them to ideate better on the purchase being made. These nudges—such as highlighting “limited-time offers,” showing scarcity cues (“Only 2 left!”), or offering social proof (“Most popular in your area”)—play a key role in shaping consumer behaviour without their conscious awareness.

facilities.The paper states the demographic variables such as age, income,etc impacting the various choices made by the consumers that led to a rise in E-commerce shopping. The consumer consciousness about ethical and sustainable consumerism was another important factor that gave FMCG e-commerce platforms immense growth (Lamoria, Dr. J., Bathvar, V., & Parul University, 2025) .

As a result, the idea of a customer making a purchase independently has been brought down to an illusion because the pricing and the placement has been strategically designed so that a specific product gets marketed and favours specific outcomes. This targeted influence has inculcated an over-purchasing pattern in the consumers, driven by incentives such as free home-delivery upon a certain amount of purchase made, buy one get one offers, cashbacks and rebates. Ultimately, these behavioural tactics place significant control in the hands of merchants, shifting consumer autonomy toward a curated and profit-oriented digital marketplace.

These changes in consumer behaviour and market patterns relate to Joseph Schumpeter’s theory of creative destruction which describes how innovation disrupts and replaces the old market with the new in order to seek new profits. This idea perfectly sets itself here, in this case, the shift from offline to online FMCG retail exemplifies this process—where digital platforms are not only replacing traditional markets but also reshaping the entire supply chain and consumer experience.

It is bringing about new job opportunities in the FMCG industry such as roles in digital marketing, data analytics, supply chain optimisation, and customer relationship management—it has also displaced many traditional intermediaries like small retailers, wholesalers, and local vendors. Resources, capital, and consumer attention have been reallocated to more tech-driven, efficient systems. This shift signals a deeper transformation in the FMCG industry, where consumer trust and loyalty are now maintained through personalised digital interactions rather than face-to-face service. However, it also raises questions about long-term effects, such as widening skill gaps, reduced interpersonal trust in commerce, and increasing dependence on algorithm-driven consumption patterns. Schumpeter’s theory helps us understand that while innovation fuels growth, it also brings uneven outcomes that reshape who wins and who loses in the evolving marketplace.

However, despite this apparent shift, the working conditions for gig workers have remained largely precarious. Many continue to face long hours, inconsistent income, lack of job security, and limited social protection.Today, gig workers across platforms are increasingly voicing their demands for fair wages, benefits, and improved working conditions.Yet, the gig economy has undeniably reshaped how the FMCG sector operates—placing greater emphasis on fast delivery, seamless customer service, and real-time responsiveness. This focus on customer experience has become central to the success of online FMCG platforms, helping to sustain the gig economy’s expansion even amid ongoing debates over labour rights and protections.

With a considerable change in the distribution channels and the altering of customer experiences, during Covid, the gig economy also saw a considerable rise with the e-commerce platforms.

illustration via pinterest by yadnyee shingre.jpg

Pictured: Illustration by Yadnyee Shingre via pinterest

Besides,the rise of online FMCG has been playing a major role in the stagnation of the money flow and an erosion of the same from the people belonging to a lower income level group, whose sole source of income are set in the traditional market. Online FMCG companies have brought about a tough competition to the vendors, not only in the matters of pricing but also advertising. The remaining ones either play negotiable games of pricing where the vendors have to suffer a loss or they check the product offline and make the purchase online.

The vendors don’t only suffer loss because of a decrease in footfalls but factors such as environmental and climatic conditions also drive the loss to an extent (Grain, n.d.). Perishable goods don’t sustain in humid or warm climates, which results in it gotting rotten. Lack of proper storage facilities is yet another component of streer loss. The unrealistic nature of negotiations add onto the loss that they suffer because of selling the goods at a price lower than the cost value.

Another significant rise has been the gig economy. With a considerable change in the distribution channels and the altering of customer experiences, during Covid, the gig economy also saw a considerable rise with the e-commerce platforms. The gig economy opened up new job opportunities for people in logistics, customer research, and customer service. Companies such as Blinkit, Zepto, Zomato, Swiggy and Dunzo created a surge in demand for gig workers. This rise offered alternative employment opportunities, attracting many individuals previously employed in local vendor shops and traditional transportation sectors, with the promise of better pay and flexible work.

Online FMCG’s increased activity results in more packaging, leading to an increase in plastic waste. There was a 73% rise in increased plastic waste in 2021 from 2020 by India's e-commerce industry (Mordor Intelligence, 2022).

Whereas the traditional market suffers because of enviromental and climatic conditions, the online market is causing these conditions to go worse. Online FMCG’s increased activity results in more packaging, leading to an increase in plastic waste. There was a 73% rise in increased plastic waste in 2021 from 2020 by India's e-commerce industry (Mordor Intelligence, 2022). The paper bags are given with each order to the customers bringing about an excessive use of paper. The paper mill Co2 emissions have caused a 70% rise in air pollution and a 50% rise in water pollution (Sodigital, 2025). Thereby imposing enviromental threat. The people not being able to afford the best quality protection against the worsening climatic conditions face the consequences in the form of various diseases such as asthma, heart issues, water infection, etc. the low wage rate further restricts them from being able to afford healthcare for themselves.

The paper mill Co2 emissions have caused a 70% rise in air pollution and a 50% rise in water pollution (Sodigital, 2025) .

unkown illustration via pinterest (1)_ed

Pictured: Unkown Illustration via pinterest

Affordability and knowledge as elements of growth is seen to not be of equitable distribution amongst the people of India. This also contributes in keeping the traditional market operators in the back deck while the capitalists take over. Big brands, after securing a substantial online customer base, often open physical stores to enhance customer retention and drive sales. In contrast, local vendors struggle to replicate this strategy due to resource limitations.There is a massive shift in the change in consumer behavior as well. Today, customers tend to trust branded products over similar offerings from smaller, unbranded stores, often prioritizing convenience and perceived quality associated with established labels.

Until 2020, before the rapid digitalization started, the ebb and flow of market fluctuations and market boom helped maintain the appeal of the traditional market.

Although a lot of local vendors have switched to supplying through online FMCG and have tried to bring changes in their business patterns. Many are trying to switch to working with e-commerce platforms and educating themselves about it. Initiatives like Vocal for Local and Aatma Nirbhar Bharat have helped in giving more recognition to local talents in business. Online FMCG has had a major role in giving rise to small brands in India (Online, E, 2025).Small brands such as Paperboat, Kapiva, Wellbeing Nutrition and MCaffeine have gotten recognition and upliftment in business during Covid. Factors such as preference to cheaper goods in order to save money, willingness to experiment, increasing demand of making purchases online by the consumer’s side worked in favor for various small brands. Another significant reason was preferences and attention given to small brands by online FMCG and quick commerce industries.

Despite this rise, the adoption of digitalisation has not been done by a large number of local vendors. They are very hesitant of switching their business online, either in the fear of being scammed or not being able to earn maximum profits because of a lack of knowledge about its use. This reluctance stems from limited awareness and insufficient support in navigating digital tools and marketplaces.As a result, a growing divide has emerged between the offline and online sectors, preventing meaningful integration or collaboration between the two. This widening gap poses a serious threat to the survival of traditional vendors, who risk being left behind in a market increasingly driven by technology, efficiency, and digitally empowered consumer behaviour.

Online FMCG is one the most thriving industries of the country but besides bringing challenges for the Indian retail market it has also imposed multiple complexities onto the people of the country. 97.7% of India's labour is considered unskilled (Ab & M, 2015). In such a case, can a complete digitalization of the market prove to be of help to the people belonging to the category? It further also raises the questions of growth and development planning of India. In the long term, this might have a hand in making the economy stagnate as the money supply will only circulate itself to the elites and let them have the control over the money circulation, while the working class would not receive the justified share for their labour.

unkown illustration via pinterest 7_edit

Pictured: Unkown Illustration via pinterest

Consumer consciousness and an increased focus towards sustainable and personalised commodities give the marketers the liberty to dominate consumer behavior. The consumers no longer have control over what they want instead the choices are of the marketers. In the world of e-commerce, consumer choice has increasingly become an illusion—carefully curated and influenced by algorithm-driven recommendations and discount-based incentives. Stimulus purchases, often triggered by flash sales, cashback offers, and limited-time deals, are strategically designed to nudge consumers into buying more than they need. In contrast, local vendor shopping traditionally maintained a more organic balance between demand and supply, rooted in direct relationships between buyers and sellers. These interactions were shaped by trust, negotiation, and genuine need. However, the growing preference for online shopping has eroded this balance, leading to a decline in vendor-based markets and weakening the interpersonal dynamics that once sustained them.

Keywords

Online FMCG,Digital Transformation,Traditional Market,Direct-to-Consumer (D2C),Covid-19 Pandemic,E-commerce Platforms,Consumer Behaviour,Gig Economy,Algorithm Bias,Digital Divide,Creative Destruction,Local Vendors,Job Displacement,Supply Chain,Cashless Payments,Sustainability,Environmental Impact,Personalised Marketing,Vendor Footfall Decline,Socio-economic Inequality

References

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Jaswal, M. (2023, November 2). Offline sales dominate in India’s retail industry, 10% shoppers prefer shopping in “only online” mode: Report. Mint. https://www.livemint.com/industry/retail/offline-sales-dominate-in-indias-retail-industry-10-shoppers-prefer-shopping-in-only-online-mode-report-11698910565950.html

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Lamoria, Dr. J., Bathvar, V., & Parul University. (2025). CONSUMERS E-COMMMERCE SHOPPING OF FMCG. In International Journal for Research Trends and Innovation (Vol. 10, Issue 3, p. c7) [Journal-article]. https://www.ijrti.org/papers/IJRTI2503202.pdf

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