Ordering groceries online has become prevalent in the past few years, owing to change in lifestyle, rapid urbanization, and increased internet penetration in rural parts of India. The online grocery market grew significantly in 2020 and 2021, when the COVID-19-induced lockdowns and social distancing norms compelled most Indian households to opt for online grocery shopping. Some of the key market players are Spencers Retail Limited, Grofers India Private Limited, Supermarket Grocery Supplies Private Limited (BigBasket), and Amazon India Limited.
The online grocery market is expected to reach INR 1310.93 Bn by 2026, expanding at a CAGR of ~28.99% during the forecast period (2021 2026). In 2020, online grocery sales registered a growth rate of about 60%. One of the key reasons behind this growth is the COVID-19 pandemic. It compelled consumers, especially those in urban areas, to use online platforms for daily grocery shopping in order to follow lockdown-related restrictions and maintain social-distancing. Initiatives such as no contact delivery and the ability to make payments online made it convenient for consumers to buy groceries from online platforms during the pandemic. The online grocery market is dynamic and both, domestic and foreign players compete to expand their market share and presence.
The market is segmented based on the payment methods and type of products delivered through the medium and regions. The online payment segment has grown immensely during the past two years and is expected to grow over the forecast period (2021 2026). This is due to the preference for online payments, high smartphone usage, and deep internet penetration. On the basis of regional segmentation, in 2020, south India held the largest share (34.6%) in terms of revenue and is expected to register the highest CAGR during the forecast period.
COVID-19 impact analysis:
In 2020, the market witnessed remarkable changes owing to COVID-19, resulting in sectorial consolidation and significant sales growth. The social distancing norms made consumers turn their focus toward online grocery shopping, considered convenient and safe amid the pandemic. Also, several exporters and processors plan to increase their presence in the online business during the forecast period as this marketing channel has become more streamlined than offline retail. Multiple surveys were conducted between last year and this year. It was observed that people preferred online shopping because of easy access to products, flexibility, and timeliness. These are expected to be the driving factors even after the pandemic.