Online Grocery Market Evolution



The Indian Online Grocery Market, which was valued at USD 3.95 billion in 2021, is anticipated to rise at a CAGR of almost 33.00% during the forecast period and will top USD 26.63 billion by 2027.

The market has gained significant traction in recent months as a result of changing consumer lifestyles, increasing urbanization, and a tech-savvy generation that prefers to buy products online.As their disposable incomes rise and their lifestyles become busier, people are turning more and more to customizable and practical online platforms for grocery shopping instead of going down to the local vendors. The preference for online grocery delivery increased in the wake of the COVID-19 outbreak.

Consumers are turning to online grocery shopping as a result of social distancing standards.

Market growth is expected to be rapid in the next few years. Many online grocery platforms, including Amazon, BigBasket, Grofers, and others, now offer no-touch delivery and online payment options for consumers.

 With safety concerns surrounding the coronavirus and a large portion of the population working from home, consumers’ reliance on online platforms has grown significantly. As a result, the market now has several growth opportunities.

The online grocery business in India is anticipated to grow as a result of the government’s promotion of the framework for the digital economy and digital literacy. Customers in Tier-I cities like Bangalore, Chennai, Mumbai, and Delhi are anticipated to drive the sector since they are more accustomed to online shopping due to the availability of high-speed internet, better adapted to mobile devices, and logistical simplicity. Supply chain and labor concerns are becoming less of an issue as a result of the government’s gradual opening up of the system. Customers choose to purchase groceries online due to reasons including convenience, smart shopping, and hygienic concerns.

Information about Product Type

With a market share of 33.9% in 2020, the basics and culinary supplies category dominated. This sizable portion is linked to frequent purchases of basic necessities like flour, cereal grains, and cooking basics like refined oil. Rice, lentils (dal), and other pulses are regarded as staple foods in Indian homes. Consumers have been stockpiling these necessities because they were worried that lockdown measures would be implemented during the pandemic.

Over the course of the projection period, the breakfast and dairy category is anticipated to rise at a rate of 37.6%. The rising popularity of dairy foods like yogurt, milk, and curd is to blame for this.

These products, which are a daily need for individuals, have a shorter shelf life than other products. Additionally, some goods have a limited shelf life and must be consumed right away.

Payment Method Insights

With a market share of 70.8% in 2020-2022, the online sector was the market’s largest segment and is predicted to grow at the greatest CAGR over the forecast period. This market’s expansion is linked to consumers’ increasing preference for online transactions. Online purchases in India were made with cards as of January 2020, according to a PPRO research. Cash and bank transfers were less common among Indian online shoppers.In addition, people are avoiding physical contact more frequently now that COVID-19 has been eradicated. Consumers are being encouraged to use online payment methods including net banking, debit/credit cards, and Unified Payment Interface because of the rising adherence to social isolation measures meant to stop the transmission of disease (UPI).

In India, the industry for online food payments still has a sizable cash component. This is mostly because cash-on-delivery techniques continue to be popular because they help e-commerce companies reach rural and unbanked clients and reduce payment loss difficulties caused by non-payment because In the event that the recipient does not pay, the product is simply returned to the merchant.

Due to the security and privacy concerns with online payments, certain consumers in India’s Tier-II and Tier-III cities continue to use offline payment methods like cash on delivery (COD) or checks. However, there has been a significant change in consumer purchasing behaviour as a result of the country’s response to the coronavirus epidemic, which is also boosting market growth. In order to reduce the spread of the disease, major players in the online grocery sector are concentrating on providing contactless deliveries of necessary goods and are steadfastly urging clients to choose digital payment methods.

Information by Region

With a revenue share of 38.6% in 2021, South India had the greatest portion. Over the predicted term, it is anticipated that the region will keep up its lead. The growth in the region is attributed to the presence of several well-known companies in the area, including Supermarket Grocery Supplies Pvt. Ltd. (BigBasket), Grofers India Pvt. Ltd., and Amazon India Pvt. Ltd., as well as the fact that Bengaluru and Chennai have the highest concentration of online shoppers. South Indian towns like Hyderabad and Bangalore prefer Big Basket above other online grocers. The primary drivers of the rise of online grocery in these markets have been the shifting consumer landscape and customers getting more accustomed to online purchasing.

Key Organizations & Market Share Information

The market is fragmented, and the participants engage in fierce competition. By putting various tactics into practice, such as collaborations, mergers & acquisitions, and geographic expansion, key players are concentrating on increasing their market presence. These tactics assist the market participants in geographically expanding their firms and improving their product offerings on both the domestic and foreign markets.

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