Surge in online grocery shopping boosts India’s e-commerce market

Traditional grocers have yet to gain footing in the online space due to large investment needed.

As Indian customers turn to online channels to buy fresh groceries, the country’s e-commerce industry is expected to shoot up to $119b (INR9.33t) at a compound annual growth rate (CAGR) of 23%, a report from GlobalData revealed.

Indian consumers preferred buying fresh groceries from local markets before the pandemic, but quarantine restrictions has led online food & grocery sales to soar 76.7% to INR273.1bn (US$3.8bn) in 2020. The segment is expected to grow at a CAGR of 31.9% in 2025.

Big Bazaar, Reliance Fresh and Amazon emerged as the most popular retailers in the last three months, a survey found. It is then followed by Big Basket and Dmart.

Jio Mart and D-Mart’s ‘Dmart Ready’ have quickly gained substantial share after entering the online grocery market in 2020. Meanwhile, traditional retailers such as Big Bazaar have yet to gain footing in the market as they will need large investment and strategic planning to venture into such a fast-paced thin-margin space, GlobalData’s retail analyst Ankita Roy said.

“The rapid growth of the online channel shows further potential as shoppers are sticking to habits formed during the pandemic,” Roy said.

Clothing & footwear market in India is also expected to show rapid CAGR of 20.8% during the same period. The top 10 most popular clothing & footwear players in the country have an online presence, with Myntra, Nike and Big Bazaar dominating the list.

Although uniform sizing and complicated return policies hold back the appeal of online apparel shopping, these issues have been addressed by initiatives such as Myntra’s locally driven supply chain and ‘Style Exchange’ technology that helps shoppers find an accurate size and fit.

“With a growing demand for the online channel, brands/retailers must ramp up their digital operations to make headway in the market,” Roy said.

Roy also advised health & beauty retailers in India to find their footing in the online channel as social media content creators’ influence on beauty purchase decisions continues to rise. To date, Amazon, Big Bazaar and Nike emerged as the most popular in the segment.

“Other retailers must also undertake similar initiatives as investments, acquisitions and partnerships that will be the defining factors of generating growth in the online market,” Roy added.