Online Grocery Market Demand, Trend, Industry Size and Forecast

The conventional grocery retailers are adopting e-commerce models to easily gratify the grocery needs of time-crunched and tech-savvy consumers, at their door step. The convenience and advantages associated with online grocery retail such as omni-channel experience, price advantages, in addition with faster delivery is fueling the growth of the global online grocery market. The online grocery market is having higher penetration in western countries. However, the market penetration is significantly low in some of the major grocery markets such as, India, China, and Brazil. With incredibly large consumer base, besides increasing penetration of internet and smart phones, the online grocery market is witnessing lucrative growth in the developing countries. The high growth in this region has led to emergence of many regional and small players.

The busier lifestyle, growing disposable income, increasing internet penetration, along with customer driven mechanism are driving the global online grocery market in terms of demand. From supply perspective, the multiple distribution channels, flexible delivery options, along with increasing e-payment services are driving the online grocery retail market.

The faster and effective logistics operations, along with the concern over cost-effectiveness of downstream supply chain are the major hindrances within the growth of global online grocery retail market. Moreover, the unorganized grocery retail market in developing countries are acting as  barrier for the entry of multinational grocery retail companies in the developing markets of Asia-Pacific. 

Based on type, the global online grocery market can be segmented as home delivery, and click-and- collect. On the basis of store model, the global online grocery retail market can be segmented as in-store fulfillment, and warehouse fulfillment. Based on technology, the online grocery retail market can be segmented as multichannel retailing and Omni-channel retailing.  Based on type, home delivery accounted for the largest market share in 2014.

Europe was the largest market for online grocery in 2014. The growing population of baby boomers, along with higher internet penetration in European countries has led to their market dominance. Asia-Pacific is the fastest growing market for online grocery retail. In Asia-Pacific, buying groceries online is the most favored option, especially in China. However, the online grocery market in other Asian countries such as India, and South Korea are still at their nascent stage. The online grocery providers who enter early in these markets are likely to reap advantage. Globally, India is the fastest growing online grocery market. The country’s online grocery market is witnessing double digit growth rate since last few years. The Indian online grocery market is expected to witness even higher growth during the forecast period, owing to busy lifestyle of the consumers, along with growing internet penetration in the country.  Country wise, the U.S., Canada, the U.K., France, Italy, Japan, China, and Brazil, are the major markets for the global online grocery retail market.

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Recently, Amazon India (Indian subsidiary of Amazon) has declared its plans to launch faster delivery platform (Kirana Now), in association with conventional mom-and-pop stores in India. Snapdeal (Indian e-commerce players) has also announced its partnership with gourmet food retailer Godrej Nature’s Basket in January 2015. Some of the competitors in the online grocery market are Ocado Group PLC, J Sainsbury PLC, Tesco PLC, Wal-Mart Stores Inc., and Amazon.

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