Poised to grow 4x in 4 years?
Indian Online Grocery market grew to reach USD 0.6 Bn in 2016: After a tumultuous last few years which saw significant experimentation with business models along with consolidation and shutdowns, industry has held steady and grown to reach its current level.
Yet the vast potential of this market has barely been scratched: Barely 0.1% of all sales in FMCG/Grocery is derived from online channels in India, compared to >4% in China and 7% in the UK. Considering that the prize is so huge, it is no wonder that players in India are willing to experiment and invest in growing this market.
We believe that the market is on the cusp of an extended growth cycle to potentially reach USD 2-3 bn by 2020, driven by both supply and demand side drivers: On the supply side, players are offering multiple business models (express delivery vs slotted delivery, on-demand vs subscription based models) and continuously growing the ease of shopping (driven by large selection and convenience of app-based shopping). On demand side, growing awareness and comfort with online grocery shopping are likely to drive the growth by ~50% y-o-y over 2016-2020.