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IGD: Online grocery sales in India to grow by 87% CAGR from 2017-2022

The study forecasts that the online channel will account for 6.9% of total grocery retail sales in Asia by 2022, more than doubling its current market share of 3.2%

Online grocery sale in India is expected to increase by $5billion between 2017 and 2022 at an 87% CAGR, as per new figures from international research organisation IGD. The share of India’s online grocery market in Asia currently stands at 0.05% and is expected to touch 0.6% by 2022.

Shirley Zhu, Programme Director at IGD, said, “With millions of internet users and growing smartphone penetration, ecommerce shows tremendous growth potential and major players are ramping up their online grocery plans. Amazon sells groceries via Amazon Pantry, and this year introduced Amazon Prime alongside plans to invest in a wholly-owned grocery subsidiary. Walmart recently bought 77% of Flipkart, India’s leading marketplace, with plans to strengthen its grocery offering. Alibaba has invested in BigBasket, a key online grocer. Major retailers as well as pureplay operators like Grofers are also increasing investment in the channel.”

The same study that deep dives into the Asia’s online channel from IGD forecasts that the online channel will account for 6.9% of total grocery retail sales in Asia by 2022, more than doubling its current market share of 3.2%. Asia’s online grocery channel is set to grow by $176billion (194%) to 2022, making it the fastest-growing channel in Asia.

The new research anticipates grocery ecommerce sales across Asia’s top 12 grocery markets will grow to $267 billion from the current value of $91 billion. This represents an annual growth rate of 24.1% to 2022, compared to the overall grocery retail market annual growth rate of 6.4% over the same period.

Zhu added, “The penetration, size and growth of online grocery vary greatly by country. South Korea, China and Japan are leading the way in online grocery shopping and will see the highest sales contribution from grocery ecommerce while continuing to lead the development in the region. Singapore and Taiwan will have well developed online grocery channels by 2022, benefiting from existing infrastructure and retailer investment while in Southeast Asian markets, grocery e-commerce, although growing rapidly, is still in its infancy. Logistics and payment will be the key barriers to overcome for India and most Southeast Asian countries. Although these markets are expected to have the fastest growth, the market share of online grocery will remain small.”

Despite South Korea maintaining a higher online grocery market share in 2022, China will strengthen its position as Asia’s largest online grocery market, with sales set to reach $185 billion. With well-developed online grocery operations already, Japan and South Korea will see online grocery market shares increase but growth will be relatively slow compared to other markets in the region. From a very low base, online grocery sales in India and Indonesia are forecast to grow rapidly over the next five years due to a combination of retailer investment, a large population and improving infrastructure.

With a solid foundation of online grocery retail already established, Taiwan and Singapore will remain important markets to watch. Across Southeast Asia, IGD’s research anticipates a rapid growth over the next five years, although the market share of online grocery will remain <2% in all markets. The Philippines and Vietnam are expected to have the fastest growth, with retailers starting to experiment.

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