How Unilever’s digital transformation is boosting online business

Unilever, the multinational FMCG company, has revealed that its digital commerce revenue accounted for 15 percent of its total revenue of €60.1 billion in 2022.
Unilever digital transformationConny Braams, Unilever’s Chief Digital & Commercial Officer, is one of the key professionals to drive its digital transformation investments. Unilever does not reveal its IT spending.

Unilever’s CEO, Alan Jope, expressed satisfaction with the company’s channel strategy, stating, “Under our channel strategy, we are capturing more than our share of the explosion in digital commerce, which now represents 15 percent of Unilever’s business and grew last year by 23 percent.”

Hein Schumacher has taken over as the new CEO of Unilever, starting from July 1, 2023.

Financial Performance and Growth

During the fiscal year 2022, Unilever has achieved a turnover of €60.1 billion, with an operating profit of €10.8 billion, net profit of €8.3 billion, and free cash flow of €5.3 billion.

Unilever’s one billion euro plus brands, which account for 53 percent of the company’s turnover, experienced sales growth of 10.9 percent. The digital commerce sales footprint of Unilever expanded and now represents 15 percent of overall sales. Notably, the United States and India, two crucial growth markets for the company, saw sales growth of 8 percent and 15.6 percent respectively. However, Unilever experienced a decline of 1.3 percent in China due to pandemic-related restrictions.

Prestige Beauty and Digital Commerce

Unilever’s Prestige Beauty brands contributed €1.2 billion in turnover in 2022. The skincare and color cosmetics portfolio of Unilever’s Prestige Beauty brands in the United States have been growing at double the market rate. Digital commerce played a vital role, accounting for approximately half of all Prestige Beauty portfolio sales.

Market Performance and Digital Commerce

Unilever witnessed single-digit growth in developed markets, with North America leading the way due to the premium portfolio and digital commerce. Sales through digital commerce increased by 21.7 percent and accounted for 12.6 percent of Personal Care turnover. In terms of digital commerce, China emerged as the largest market, with 52 percent of sales occurring through digital commerce platforms and video-sharing apps. This growth was driven by a focus on premium Skin Cleansing brands such as Dove and Lux.

Digital Channels and Initiatives

Unilever has been leveraging digital channels to enhance its brand reach and engagement. For instance, Lifebuoy provides consumers in Asia with access to free consultations with doctors and health advice through digital telehealth apps on their smartphones. Additionally, Dove has utilized digital platforms to expand its outreach and launched the Real Virtual Beauty Coalition, aiming to foster healthier and more diverse representations of women and girls in video games.

Digital Commerce in Various Sectors

Digital commerce continues to be a growing channel for Unilever, representing 17 percent of Home Care sales. It plays a key role in driving sales of premium products, such as fragrance boosters and laundry capsules, particularly in countries with high digital penetration like China, the United States, and the United Kingdom. In the Nutrition sector, digital commerce accounts for 10 percent of sales, with business-to-business digital commerce serving as a significant growth driver in 2022, notably in Unilever Food Solutions.

In an effort to equip its workforce with future-fit skills, Unilever took significant strides in 2022, reskilling or upskilling 15 percent of its employees. Recognizing the importance of digital skills, the company launched its pioneering Digital Upskilling Programme, an extensive initiative encompassing various courses and external certifications focused on digital capabilities for office-based staff.

Unilever also prioritized the development of tailored learning pathways for employees working in factories, warehouses, and distribution centers. These pathways were designed to empower them with the necessary expertise in emerging manufacturing technologies, such as robotics and artificial intelligence (AI).

Moreover, Unilever made significant progress in digitizing its production processes by introducing a tool that facilitated the acquisition of digital skills by factory workers. This tool has been successfully implemented in approximately 110 factories to date, with plans for further expansion in the coming year.

Unilever Annual Report 2022 indicated that it remains committed to supporting the growth of small and medium-sized enterprises (SMEs). With a goal to assist five million SMEs in expanding their businesses by 2025, the company has provided digital platforms that enable 1.8 million small retailers to conveniently purchase Unilever products. This access to digital platforms has proven instrumental in driving the growth of these retailers and, subsequently, their businesses.

Rajani Baburajan

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