Online Grocery: A Market with Huge Growth Potential in Future
Online Grocery: A Market with Huge Growth Potential in Future

The world around us is constantly changing and technology forms a greater part of this change.

A few decades ago, we wouldn’t have imagined that we would become reliant to this extent on technology even for our most basic day-to-day activities. It has become an inseparable part of our lives and we can’t picture our existence without it. The purpose of technology has been to assist humans by making our lives better and simpler, thereby improving the overall quality of life.

Digitalization has increased a sense of convenience. For example, the ability to purchase items with just a click/tap and having them delivered to the home, rather than picking them at stores is more feasible. This has created a trend where more consumers are seeking the benefits of online retailing. Consumer expenditure on online businesses stands at around $100 billion so far in 2020-21 as compared to $65 billion in 2019-20. This trend which includes online grocery, food, Edtech, and e-healthcare, is expected to grow to $250 billion by 2024-2025 worldwide, according to RedSeer.

Nevertheless, COVID-19 has a huge impact on altering consumer behaviors. It changed the ways we socialize, our hobbies, the way we work, and even how we spend our leisure time. This pandemic has accelerated growth for the consumer internet sector, which is now expected to grow 4 times over FY20–FY25. It also modified the priorities of consumers about shopping and fresh food. Stress-related to their safety has been a major driving force to steer consumers away from traditional stores. Consumers adopted more contemporary methods to help fulfill their requirements of perishable items. Before this pandemic, convenience was about saving time and effort but now the demands are less about time and more about stress-free availability.

The economic potential of e-commerce was already recognized. According to data from Red Seer consulting, in 2019 online retailers raked in nearly $4 billion during the festive season, accounting for about 14 percent of annual e-commerce and groceries was only 3 percent during in season. However, the pandemic amplified the requirement of buying groceries online as well. The Indian online grocery market alone reached a value of more than US$ 2.9 billion in 2020. This sequence of events triggered multiple consumer trends and opportunities in this segment, making the online grocery market one of the largest and most lucrative prospects for players looking to either start a new business or expand their existing array of services.

In a survey on Indian online shopping behavior conducted by Rakuten Insight in May 2020, the majority of respondents said that they purchased dry food items online during the pandemic. The most commonly purchased items were food and groceries, personal hygiene products, and household cleaning products.

The projected growth in this sector can be attributed to the following consumer trends and advantages that are responsible for evolving online marketplaces:

Consumers’ Behavior

The purchasing pattern of consumers has been the most prominent deciding factor in the growth of online groceries in the e-commerce landscape. Consumers are more prone to purchasing online from the comfort of their homes, with the added benefit of getting the purchases delivered to them. Moreover, the anxiety and fear created by the pandemic resulted in consumers becoming more concerned about their safety and the hygiene of food they consume. They resorted to the brands that they trust for safer delivery through sanitary methods and their trustworthy brands responded by options like contact-less delivery, sealed food, safe handling, and packaging, etc.


Busy schedules and exhausting lifestyles beckon for more convenient ways. This is where online purchasing comes into the picture, offering hassle-free purchasing from anywhere and at any time. On the other hand, if items of daily use are not available in close vicinity of a consumer, this creates another scenario for the convenience of home-delivery with specific delivery time in order to confirm the availability of the customer at the time of delivery, which enhances a consumer’s experience. This convenience factor also motivated people to adopt online grocery shopping during the pandemic.

Competition and Infiltration

The nature of the online business creates competition from offline players aiming to infiltrate this market. We already see many giant organizations and well-reputed names in the offline store market extending their operations from traditional supermarkets to online trade websites. This signifies that the scale of opportunities is in the online retail industry.

Internet Saturation

Low-priced internet providers have disrupted the accessibility of the internet, reducing the cost of its usage drastically. This behavior has increased the dependency on the Internet even for basic day-to-day activities, leading to an increased number of e-commerce markets. Thereby creating a larger customer base for online-based businesses.

Economical Establishment

A conventional offline store required a wide array of variables for the establishment, which includes a suitable location, rent, construction, staff salary, maintenance, etc. Most of these costs are excluded while starting an online business.

Geographical Hurdles

An offline grocery outlet required a physical location limiting the area of its service to a particular location; however, an online store does not conform to these limitations. Although, a strong supply chain is mandatory to increase the reach.

These are some of the major trends contributing to the growth potential of online groceries. One of the added benefits includes 24x7 operations of these markets which offer a plethora of services that are ideal for any type of lifestyle a consumer might be leading. These unique qualities and features increase the growth potential of online-based grocery markets. The competition in this sector is in the opening phase which leaves a huge market potential to be tapped and utilized.

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