India Online Grocery Market Size, Share & Trends Analysis Report By Product Type (Staples & Cooking Essentials, Breakfast & Dairy), By Payment Method, By Region, And Segment Forecasts, 2021 - 2028

Report Overview

The India online grocery market size was valued at USD 2.9 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 37.1% from 2021 to 2028. The market has gained immense traction over the past months on account of the changing lifestyle of the consumers, growing urbanization, and the tech-savvy generation who prefers buying products online. With the growth in disposable incomes and busier lifestyles, people are increasingly seeking out customizable and convenient online platforms for grocery shopping instead of walking down to the neighborhood vendors. The preference for online delivery of grocery products became more visible following the COVID-19 outbreak. With the social distancing standards, consumers are turning their focus to online grocery shopping, which is not only convenient but is a safer option.  

The market is projected to witness significant growth in the years to come. Initiatives such as no contact delivery and online payment have attracted consumers toward buying their regular grocery from several online platforms, like Amazon, BigBasket, Grofers, and many more. With the safety concerns encircling coronavirus and a large section of the citizens working from home, the dependence of consumers on the online platform has increased significantly. This, in turn, has provided several growth avenues to the market.

The establishment of the new normal in India has pushed every sector to adapt and embrace ways that prove effective on hygiene as well as safety factors. People need to follow social distancing at public places and even at retail grocery stores, which takes a lot of their time. On the contrary, consumers realized that online grocery shopping, along with contactless delivery, not only saves time but is also safe. Moreover, individuals working from home are trying their best to balance their work and life and are finding it convenient to order their groceries online with a few clicks from their handheld devices.

The market is also expected to be supported by the declining data tariffs and availability of cheaper smartphones. Increased internet penetration and the boom of digital payment have acted as additional factors driving the market. The online grocery market in India is being propelled by the ever-increasing internet penetration in the country, along with an upsurge in digital awareness. With the growing access to smartphones and low data costs, consumers now prefer an omnichannel shopping experience.

With the government promoting the digital economy framework and digital literacy, the online grocery market in India is likely to witness a further impetus in its growth. The industry is expected to be driven by the consumers who stay in Tier-I cities, such as Bangalore, Chennai, Mumbai, and Delhi, who are more adaptable to online shopping due to the availability of high-speed internet, better adaptability to mobile devices, and the logistical simplicity. The government is unlocking things in a stepwise manner; hence the concerns related to the supply chain and workforce are improving to a greater extent. Thus, factors like convenience, smart shopping, and hygiene concerns are making online grocery shopping the better choice for consumers.

Product Type Insights

The staples and cooking essentials segment dominated the market with a share of 33.9% in 2020. This significant share is attributed to the constant shopping of staples that include flours, food grains, and cooking essentials like refined oil that are basic requirements of many. In Indian households, lentils (dal), pulses, and rice are considered staples. Amidst the pandemic, consumers feared that they could face lockdown regulations at any point in time, therefore they have been stocking up on these essentials.

The breakfast and dairy segment is expected to expand at a growth rate of 37.6% over the forecast period. This is attributed to the growing demand for dairy products, such as yogurt, milk, and curd. These products are a daily necessity for people and have a short lifespan as compared to other products. Furthermore, these products cannot be stockpiled for a longer period and need to be consumed within a specific time.             

Payment Method Insights

The online segment dominated the market with a share of 63.8% in 2020 and is expected to expand at the highest CAGR during the forecast period. The growth of this segment is attributed to the growing preference for online payments. According to a report by PPRO, as of January 2020, online purchases in India were paid by card. Payments made through cash and bank transfer were less popular among Indian online consumers. Moreover, in the wake of COVID-19, people are avoiding physical contact to a greater extent. The growing adherence to the social distancing practices to prevent the spread of disease is instigating consumers to make payments through online payment mediums, such as net banking, debit/credit cards, and Unified Payment Interface (UPI).

Cash still accounts for a substantial share in India’s online grocery payment market. This is mainly due to the enduring popularity of cash-on-delivery methods, which allow e-commerce merchants to reach rural and unbanked customers and decrease the issues of payment losses owing to non-payment - if the recipient does not pay, the product is simply returned to the merchant. Some consumers in the Tier-II and Tier-III cities of India still opt for cash on delivery (COD) or offline payment method owing to the security and confidentiality issues associated with online payments. Nevertheless, in light of the nationwide response to the coronavirus pandemic, there has been a great shift in consumers’ shopping habits, which is also providing a boost to the market growth. Key vendors operating in the online grocery market are focusing on offering contactless deliveries of essential products and are diligently insisting the customers to opt for digital payment methods to minimize the spread of the disease.         

Regional Insights

In 2020, South India held the largest share of 34.6% in terms of revenue. The region is expected to maintain its lead over the forecast period. The regional growth is attributed to the presence of several prominent players, such as Supermarket Grocery Supplies Pvt. Ltd. (BigBasket), Grofers India Pvt. Ltd., and Amazon India Pvt. Ltd., in the region and the highest number of online consumers located in Bengaluru and Chennai. Big Basket is the most preferred online grocery in the South Indian cities, such as Hyderabad and Bangalore. Changing consumer landscape and consumers becoming more accustomed to online shopping have been the key factors for the growth of online grocery in these markets.

West India is projected to be the second fastest-growing region with a CAGR of 37.3% during the forecast period. This upsurge is due to the growing adoption of online grocery platforms by technically advanced millennials and working women. Cities such as Pune and Mumbai in West India consist of a large number of working professionals who prefer buying groceries online owing to the convenience and comfort it offers. These factors are expected to provide growth avenues to the West India online grocery market in the near future.

Key Companies & Market Share Insights

The market is fragmented and characterized by extreme competition amongst the players. Key players are focusing on growing their market presence by implementing various strategies, such as partnerships, mergers & acquisitions, and geographical expansion. These strategies help the market players expand their businesses geographically and enhance their offerings across the national and international markets.

For instance, in November 2020, Amazon India Pvt. Ltd. commenced the operations of its online grocery store Amazon Fresh in 4 more cities, namely Pune, Ahmedabad, Kolkata, and Chennai. The company stated that the service has been initiated in these cities through the expansion of its specialized geographical network that facilitates ultra-fast delivery services of groceries and daily essentials under the Amazon Fresh Store on Amazon.in. Some prominent players in the Indian online grocery market include:

• Amazon India Pvt. Ltd.           

• Godrej Nature's Basket Ltd.  

• Grofers India Pvt. Ltd.

• Paytm E-Commerce Pvt. Ltd. (Paytm Mall)

• Reliance Retail Ltd. (Reliance Fresh)          

• Spencer's Retail

• Supermarket Grocery Supplies Pvt. Ltd. (BigBasket)       

• UrDoorstep eRetail Pvt. Ltd. 

India Online Grocery Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at the country level and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2017 to 2028. For the purpose of this study, Grand View Research has segmented the India online grocery market report based on product type, payment method, and region:

• Product Type Outlook (Revenue, USD Million, 2017 - 2028)

  • Fresh Produce

  • Breakfast & Dairy

  • Snacks & Beverages

  • Meat & Seafood

  • Staples & Cooking Essentials

  • Others

• Payment Method Outlook (Revenue, USD Million, 2017 - 2028)

  • Online

  • Offline (Cash on Delivery)

• Regional Outlook (Revenue, USD Million, 2017 - 2028)

  • South India

  • North India

  • West India

  • East India