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Last Updated : Sep 26, 2020 01:11 PM IST | Source: Moneycontrol.com

Heydays ahead for online grocery, market size to zoom to $18 billion by 2024

A report presented by Redseer with BigBasket estimates a 57 percent CAGR for online grocery, followed by organised retail which will grow at 16 percent, traditional retail will grow the slowest, but continue to be more than 90 percent of the overall food and beverages industry.

Representative image
Representative image

The online grocery delivery market is set to become $18.2 billion in size by 2024, from around $1.9billion in 2019, found a report by Redseer and BigBasket released today. The share of online out of the total food and beverages industry is set to grow to 2.3 percent from 0.3 percent in the next four years, the report titled ‘Online Grocery: What Brands Need to Know’ has predicted. The overall industry will grow to $790 billion in size from $603 billion in 2019.

The massive food and beverage industry of the country is dominated by roadside kirana stores, local grocery shops supported by a massive supply chain which ensures even the smallest shampoo sachet reaches the corners of the country. Over the last few years, digitisation in every aspect of the consumer life has made players like BigBasket, Grofers and others make inroads in this sector. Still they form a miniscule portion of this massive space.

This report highlights that growth will be slow for traditional retailers and aided by Covid and its effects on digitisation online grocery will grow rapidly and eat out a small chunk from the total retail business.

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While online will grow at a compound annual growth rate of 57 percent, the organised retail segment which includes the likes of Reliance Fresh, Spencer’s, DMart and More will grow at a CAGR of 16 percent. Traditional retail will see the slowest growth at 5 percent, thereby ceding market share to modern trade.

The guideline around allowing 100 percent foreign direct investment in the sector has given a massive boost to online and retail food and beverages business, the report added. Other factors around investment in the supply chain, realignment of business models and expansion into smaller cities will help this sector grow rapidly.

The online grocery space in India, saw heightened activity since 2011 with the first set of players BigBasket, Grofers, followed by new players like Milkbasket, Amazon, Flipkart in this sector and recently others like Zomato, Swiggy and Reliance Jio.

“Jio’s intentions to expand and capture the eGrocery space is clear. Not to be left behind, large online players like Flipkart, Amazon, Swiggy, Zomato, Dunzo etc. have all offered eGrocery services,” said the report.

The rapid growth in the coming years will be driven by multiple factors, the report said. These include changing consumer preference towards online services because of Covid19, entry of large players like Reliance, push from the likes of Amazon, Flipkart and also ensuring availability of localised products in large metros.

The report talks about few specific consumer segments who find value in online grocery, which include working couples who use these services to save time and for comfort. Then there are bachelors who live in shared accommodation who use the services for ease of use. Further working urban mothers prefer online shopping because of time constraints and tier two consumers who go online for the varied choices.

Covid19 has been a watershed moment for online commerce and e-grocery has reaped the benefits. The gross merchandise volume on e-grocer platforms rose 72 percent to $311 million in June, compared to $179.9 million in January. The maximum jump came from fresh food categories which saw a 144 percent jump between June and January. Market estimates suggest the GMV will jump to $3 billion by the end of 2020 from $1.9 billion in 2019.

BigBasket, the co-author of the report said while comfort food dominated their sales through the lockdown months, Dettol rose to become one of the top selling brands driven by demand for its handwash and sanitisation products. Among fruits, citrus fruits known for their vitamin C content also were bought the most as consumers were trying to stay safe from Covid19.

In terms of growth recorded in different cities, metros which included Mumbai and Delhi NCR grew 85 percent during the Covid months followed by mini metros which include Bengaluru, Kolkata, Chennai and Hyderabad at 73 percent. Fastest growth was observed in the other large cities of the country like Ahmedabad where business jumped 94 percent.

Disclosure: [Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.]
First Published on Sep 25, 2020 07:23 am

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