Online Grocery Market in India 2023-2028

Improved digital literacy and widespread internet access across the country have been key drivers of recent market growth. The Covid-19 pandemic, marked by movement restrictions and the closure of physical retail spaces, significantly expanded the customer base for online grocery markets. The rising demand for online groceries in Tier 1 and 2 cities, fuelled by evolving lifestyles and a shift in purchasing behaviours from traditional to online platforms, is expected to contribute significantly to the projected market growth. Kirana stores nationwide are increasingly embracing online delivery services through various smartphone applications. Noteworthy market players include Spencer’s Retail Limited, Grofers India Private Limited, Supermarket Grocery Supplies Private Limited (BigBasket), and Amazon India Limited.

Market insights:

Online platforms offer the convenience of shopping from anywhere at any time, eliminating the need for physical visits to stores. Increasing smartphone penetration and internet connectivity have facilitated widespread digital adoption, making online grocery shopping accessible to a larger population. Evolving consumer lifestyles, busy schedules, and a preference for time-saving solutions have led to an increased demand for convenient online grocery options. The online grocery market in India was valued at INR 534.62 Bn in 2022 and is expected to reach INR 1,834.66 Bn by 2028, expanding at a CAGR of ~19.55% during the forecast period (2023 - 2028).

Market Influencers:

Drivers

The Indian online grocery market is flourishing due to the strategic placement of dark stores in urban areas, enhancing the shopping experience with quicker delivery and efficient inventory management. The rise in demand, especially from tier-2, tier-3, and smaller cities, is driven by accessibility to high-quality, competitively priced household goods and food. The increasing internet penetration, propelled by low-cost smartphones, has significantly contributed to the market's growth. With flexible payment options, including digital wallets, and the convenience of online shopping, consumers, particularly in busy urban areas, are increasingly opting for online grocery services, fostering market expansion.

Challenges

The Indian online grocery market faces challenges due to the dominance of around 2 million local grocery stores, preferred by customers for the tactile experience and personal touch. Local shops thrive with easy access, offering free delivery and credit facilities. Prices at physical stores are sometimes lower due to minimal storage costs. Perishable items demand costly infrastructure for online sellers, impacting profit margins. Quality concerns, late deliveries, and mishandling lead to customer dissatisfaction. Intense competition, frequent switching, and a slow acceptance of online grocery shopping pose hurdles in retaining a loyal customer base.