India | ME | SEA Subscribe to Newsletter  Leadership Index 

Jun, 2022     

Indonesia E-Grocery: Multiple Avenues For Growth

Relatively low online penetration bodes well for Indonesia’s e-grocery. Market likely to reach ~USD 31 Bn by 2026, galloping at ~ 26% CAGR


1. Relatively low online penetration bodes well for Indonesia’s e-grocery. Market likely to reach ~USD 31 Bn by 2026, galloping at ~ 26% CAGR

The high growth potential of the e-grocery category is underpinned by its relatively low, ~4% online penetration. This is lower than the mid-to-high teens penetration levels of overall e-commerce. For reference, we note that e-grocery penetration in China is ~14% and suggests significant headroom for the growth in Indonesia.

2. Horizontal players dominate eGrocery sector. However, sizeable opportunities unfolding for Vertical, Quick and Social Commerce players (1/2)

Currently startups in the market are trying to address the pain points like poor quality, inconvenience, unavailability of desired products etc. Major players can be broadly divided into four operating models wherein these issues are being addressed.

3. Horizontal players dominate eGrocery sector. However, sizeable opportunities unfolding for Vertical, Quick and Social Commerce players (2/2)

 

GMV has increased rapidly across all business models over the past year. Horizontals capture the highest share amongst all the models. During this period, Vertical, Quick and Social commerce have grown by 4-8x.

4. Social commerce platforms have the highest, whereas quick commerce have the lowest AOV

 

Considering that social commerce resellers place bulk orders, their average order value is the highest amongst all models. Similarly, people prefer verticals for planned purchases, hence, the AOV is high for that as well.

Consumers have a strong preference for good quality fresh products, hence vertical and social commerce have higher share from fresh products in category split.

Interestingly, we notice reasonably high (>40%) Net Promoter Score (NPS) for most e-grocery models. Factors aiding the high NPS include, good product quality, and attractive deals and discounts.

5. Fundings in recent years are strengthening the backbone of eGrocery sector

The pace at which startups have been attracting investments show an in interest from investors in the space. Some of the existing and new players have secured fundings in recent years to expand their capacities and scale the operations.