Online Grocery Market Overview

Online Grocery Market Size was valued at USD 11.5 Billion in 2022. The Online Grocery market industry is projected to grow from USD 12.95 Billion in 2023 to USD 33.49 Billion by 2032, exhibiting a compound annual growth rate (CAGR) of 12.61% during the forecast period (2023 - 2032). A rising preference for online shopping portals and the rising popularity of contactless payment systems are the key market drivers enhancing market growth.

The US Department of Agriculture claims that over 25 million US citizens have no access to grocery stores within their vicinity. As a result, they lack access to healthy and nutritious food and have to be dependent on packaged items for nutritional requirements. This has given way online grocery or to e-grocery, with the popularity mostly visible among millennials that prefer using their smart phones for shopping. Various types of products available online are food products; cosmetics; beverages; baby care products; personal care, household goods, stationery items, and many more.

The growing significance of e-commerce platforms, especially online grocery, due to appealing benefits such as huge discounts as well as cash-on-delivery features present lucrative opportunities to large organizations that aim to boost their reach among more consumers. Also, with the provision of fast speed and the same-day delivery option, online grocery players are able to offer enhanced consumer experience and in turn, give a boost to the market growth.

Future Market Growth Factors:

The online grocery market has been gaining significant traction worldwide thanks to the evolving lifestyles of people, rising urbanization, and the growth in the tech-savvy customer base that prefers online shopping. With the surge in disposable incomes along with the prevalence of hectic lifestyles, customers are progressively exploring convenient and customizable online channels for grocery shopping instead of visiting retail stores. Online grocery’s popularity has been further catapulted by the COVID-19 outbreak and the subsequent lockdown. The pandemic has resulted in consumers gaining interest in online shopping, especially online grocery, as this is viewed as a safer option. 

The future prospects for the market seem quite promising, especially since the novel coronavirus has boosted the popularity of no contact delivery as well as online payment among consumers. More and more consumers are now opting to shop for groceries from online platforms such as Amazon, Grofers, and more. Rising investments in infrastructure development by vertical firms to expand their warehouses as well as delivery infrastructure to facilitate better customer experience also benefits the online grocery market. Besides, the striking penetration of smartphones and other electronic devices could see the global market making remarkable progress in the following years.

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Key Companies invest in R&D to Secure Long-Term Returns:

The global industry online grocery is extremely fragmented and is brimming with intense competition between the top vendors. The players are highly focused on boosting their regional presence by following a number of strategies, such as mergers, partnerships, and acquisitions. These strategies assist the companies in fostering their offerings and business across the world.

Key Players Profiled in report are:

• Walmart Inc. (US),
• ALDI (Germany),
• Albertsons Companies, Inc. (US),
• Auchan SA (France),
• Royal Ahold Delhaize NV (Netherlands),
• Amazon.com Inc. (US), ASDA (UK),
• The Kroger Co. (US),
• TESCO PLC (UK),
• Fresh Direct, LLC. (US)

To cite a reference, in November 2020, Amazon India Pvt. Ltd. kickstarted its online grocery stores’ operations across 4 new cities in India, namely Ahmedabad, Pune, Chennai and Kolkata. The company has started these services across the stated cities via the expansion of its specialized network, facilitating extra fast delivery of groceries as well as daily essentials.

Market Segmentation:

The online grocery market can be considered by type.

Types listed in the MRFR market study are processed food & beverages, packaged, personal care & hygiene products, fruits & vegetables, baby care products, household cleaning products, and others.

The packaged, processed food & beverages segment had taken the lead in 2019, while the personal care & hygiene products segment is touted to secure the fastest growth rate of 12.97% over the review timeframe. Discounts and numerous offers offered by the companies attract a large customer base, which raises the sales of personal care products on online channels. Moreover, availability of a variety of hygiene products via online channels pulls a lot of consumers, which helps foster the segment’s growth.

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Regional Status:

The online grocery industry can be regionally categorized as Europe, Asia Pacific/APAC, North America, and RoW/rest of the world.

Asia Pacific has remained the market leader since 2019 and will also procure the highest growth rate of 14.01% in the coming years. The APAC market is strong backed by the shrinking data tariffs along with the introduction of cheaper priced smartphones. High internet usage combined with the boom in digitization also act as key growth inducers. The Indian online grocery market has been performing tremendously, in view of the surging internet penetration coupled with the escalating interest in online payment instead of cash. The market growth in the country is further bolstered by the government’s efforts to promote digital economy as well as digital literacy. 

Europe has been the second most lucrative market for online grocery since the year 2019, thanks to the mounting popularity of the e-commerce industry, with experts chalking down online channels’ success to convenience and comfort. Lately, online grocery has been gaining higher momentum in the region due to the SARS-CoV-2 outbreak, with customers opting for these channels in light of the lockdown. The IoT-supported tracking systems are increasingly being adopted by the regional players to reduce losses and bolster operational efficiency, which should further favor the online grocery market in Europe over the ensuing years.

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Latest Developments:

In January 2021, Ahold Delhaize and Centerbridge Partners together acquired FreshDirect, an online grocery supplier. FreshDirect is an established brand that has a huge and loyal customer base and can help both the companies gain more customers in New York while also fostering their omnichannel network. The acquisition is in line with Ahold Delhaize’s aim to accelerate its e-commerce expansion, driven by the rising number of consumers shopping for groceries online following the novel coronavirus outbreak.

In October 2020, Dunnes Stores forayed into the home delivery segment by entering into a partnership with Buymie, with the new deal allowing customers to online shop for grocery products from 24 stores in Cork city and the greater Dublin area, with the same day delivery option. The partnership is primarily restricted to groceries and will let customers choose delivery slots as per their convenience. Moreover, customers will now be able to download Buymie’s mobile app and can choose to shop for groceries from Dunnes’s online grocery store.