Indian e-grocery market to witness growth in tier 2, beyond in 2023
e-grocery, which remained a minuscule fraction of the total grocery sales across regions until 2019, experienced a surge in demand due to the pandemic lockdowns
Parul March 27, 2023
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The Indian e -grocery market, primarily dominated by slotted delivery, is set to witness growth in tier 2 and beyond regions, with horizontal players leading the way while the adoption of quick commerce is expected to remain steady, a report has shown.
The significant growth in the Indian e-grocery market between 2019 and 2022 can be attributed to the adoption of quick commerce in cities.
“The expansion of e-grocery is expected to continue in tier 2+ markets, driven by dominant players,” according to RedSeer Strategy Consultants.
e-grocery, which remained a minuscule fraction of the total grocery sales across regions until 2019, experienced a surge in demand due to the pandemic lockdowns.
As a result, while the online penetration in e-grocery was steadily increasing in the Indian market, Indonesia and MENA witnessed skyrocketing trends in adoption.
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“Fast forward two years and the trends remained upward, with MENA and Indonesian regions experiencing over 100 per cent CAGR from 2019 to 2022, while India witnessed a 66 per cent CAGR,” the findings showed.
Consumer preferences driven by multiple factors such as convenience and habit leave much room for unlocking value in the e-grocery space, according to the report.
“Players in the e-grocery space need to work on key principles to unlock values, such as a creative last-mile model, optimised warehousing and supply chain, targeted range construction and merchandising, optimised price positioning, and test and learn approach,” it elaborated.
As quick grocery delivery under the 10-15 minutes time period becomes the new growth arena globally, India’s quick commerce market is all set to witness 15 times growth by 2025, reaching a market size of nearly $5.5 billion.
The total addressable market for quick commerce in India stands at $45 billion, and urban areas are driving this market on the back of mid-high-income households, according to Bengaluru-based market research firm.