E-Commerce Grocery Market in India

The e-commerce grocery market has been one of those few markets which got a favorable impact from the COVID-19 pandemic, for the apparent reason that people were unable to step out of their homes. Apart from the lockdown measures, the presence of tech-savvy millennials coupled with the growing digitalization has pushed the global population toward online grocery stores. This shift has amplified the speed at which e-commerce grocery has been growing. According to the reports of the Indian Brand Equity Foundation (IBEF), the market of Indian online grocery stores is estimated to reach a value of US$18.2 billion in 2024 which was valued at US$1.9 billion in 2019, growing at a CAGR of 57%. In addition to the shift in customer mindset, there are multiple factors that supported the growth of the e-commerce grocery market. In this article, let us try to understand those contributing factors.

The Arrival of Big Players in the Market

Major e-commerce market players like Flipkart, Amazon, JioMart, and Paytm have entered the online grocery market with attractive discount offers on grocery purchases from their online stores. These money-saving offers and discounts fueled the motivation of customers to try out online grocery shopping. In addition, these e-commerce companies, who already have established their trust in online shopping have been successful in gaining trust in their grocery products with quality and in-time product delivery.

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TATA Digital has acquired a majority stake (64%) of Big Basket at a valuation of $1.3 billion in May 2019. Big Basket is one of the most popular and earliest India-based online grocery stores founded in the year 2011 with more than 12 million registered users. This huge acquisition by one of the Indian industry leaders clearly indicates the future scope of the e-commerce grocery market in India.

Convenience Offered by Technological Innovations

It is not just the compulsion of staying indoors that created a shift of the buyers toward online grocery shopping but also the digital convenience which impacted the mindset. Easy payment options, fastest delivery services, and simple returns accelerated the shift. There are some prominent indirect factors that contributed to the e-commerce grocery market growth such as the increased number of smartphone users, the tech-savvy generation, easy penetration of internet services to remote areas, and affordable internet services.

Startup Boom

Analyzing the scope of the e-commerce grocery market in India, numerous start-ups are emerging in this sector. Dunzo, Licious, ZopNow, and Nature’s Basket are some of the popular start-ups which have gained traction in recent years and are competing with industry players. Dunzo is known for express delivery in 45 minutes. Licious is a popular online marketplace for fresh meat and seafood with lucrative money-saving offers. Dunzo has got a US$200 million investment from Reliance Retail Venture Limited for a stake of 25.8% and has managed to raise an overall US$240 million from other investors such as Lightbox, Light rock 3L capital, and Alteria Capital.

Final Thoughts

Although COVID-19 has brought significant growth in the e-commerce grocery market in a short time, there is wide scope for possible growth for the market in the future years. It cannot be denied that today online grocery service works efficiently in cities and fails in towns and remote villages, necessitating that there is a lot of progress to be made. The market has all the way to grow until it can reach every single person in India.

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