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Smart Clicks To Win India’s Online Groceries & General Merchandise Basket

Published in Mar, 2019

Executive Summary

India’s digital user base is evolving rapidly and driving the online retail market. India has ~600 Mn internet users out of which ~20% are active online shoppers. E-tailing market in India is expected to grow to $100 Bn by 2023 from $24 Bn in 2018.

Online grocery is a $1.2 Bn market in 2018 and is expected to reach $5 Bn by 2020 driven by favourable demographics, adoption and policy factors.

India’s Food & Grocery (F&G) retail sector has, over the recent years, witnessed substantial momentum across evolution of customer centric business models, supply chain remodelling and efficiencies driving value creation.

Though organized F&G retail has been around for over three decades now, it was marked by constrained growth owing to diluted focus on format, geography, assortment mix, customer segments by business conglomerates eager to leverage the potential.

Modern Retail penetration currently is 10% ($82 Bn) of India’s total retail sector of $805 Bn (CY2018). This organized share is expected to grow at 20% over the next few years to 11.8% ($118 Bn) by CY2020 and 14.7% ($204 Bn) by CY2023. Online retail contributes 3% (CY2018) share and reflecting, expectantly, robust CAGR of 35% will increase to 4.6% and 8.6% penetration in CY2020 and CY2023, respectively.

Of India’s retail basket, F&G category comprising fresh fruits & vegetables, staples, packaged food, beverages, personal care & home care and utilities is a significant 65% ($525 Bn) of the wallet-spend whilst the organized share is marginal, at lowest penetration factor of 3.6% contribution.

The F&G Modern Retail sector, however, will grow at a robust 25% CAGR to an increased 6.7% penetration by 2023. Online penetration at 1.2% by 2023 would reflect a 55% growth rate over next five years.

Attributable to the above, the sector has attracted strategic investments from domestic as well as international retailers, Online and B&M alike. Online grocery sector alone witnessed more than a billion dollars investment over the last two years. Augmenting value creation, incumbent retailers too will continue to build multi-channel models.

Funnelled towards building hybrid constructs, investments by retailers will increasingly address rapidly increasing consumer digitation, channel convergence, hyperlocal delivery, regional assortment.

Against this changing landscape, it would be imperative for consumer brands to leverage multi-channel platforms, garner deep understanding across both, online as well as offline, for achieving scale and sustained relevance.

This report covers sector level insights such as or related to Online Groceries Market Revenue, Heritage DAU, Dmart business model, Doodhwala average order value, Milk Basket ARPU and Licious Total Payment Value, among others.

  • See: Inside the Report

    1. Understanding India's Organized Penetration for Groceries and GM categories
    1.1. Market Size and expected growth rate for next 5 years
    1.2. Channel wise breakup of the market
    1.3. Benchmark organized penetration with global markets
    1.4. Compare growth of online penetration vis-à-vis B&M retail
    1.5. Define key formats comprising B&M Organized Food & Grocery Market
    1.6. Analysis of B&M organized across metrics: store size, productivity, assortment mix: offering and revenue, branded and private label skew

    2. Macro Mapping Analysis of Online Groceries & GM Shopping
    2.1. Number of HHs buying a defined basket of brands across the four categories
    2.2. Penetration of defined brands across consuming HHs
    2.3. Average consumption of HH for a said category

    3. Category Deep Dive
    3.1. Category size and growth
    3.2. Price segmentation, and segment growth
    3.3. Branded and Private Label mix, and growth within customer basket
    3.4. Leading brands and share in the customer basket across categories
    3.5. Market structure of branded share i.e. fragmented or consolidated play
    3.6. Index of price elasticity at category level
    3.7. Near term emergent trends
    3.8. Index of variants introductions within sub-category & adoption for variants

    4. Shopping Basket Analysis
    4.1. City type segmentation of the consumer sets across Metro/Mini Metro and Tier I
    4.2. Basket Size and Value: Number of items and Average Ticket Size
    4.3. Shopping behaviour key consumer segments demonstrate
    4.4. Category and sub-category adjacencies, brands of basket across key segments
    4.5. Customer segment index: mapping response to new variants/new brands

    5. Consumer Research Analysis
    5.1. An infographic purchase cycle from online grocery retailer
    5.2. Frequency of buying online and average spend per purchase
    5.3. Key products preferred for purchasing online
    5.4. Key factors considered for buying online, challenges with online ordering
    5.5. Awareness and popularity of E-grocers
    5.6. Response to new product launches, promotion, new product categories
    5.7. Leading brands in the customer basket by categories
    5.8. Triggers for online purchase vis-à-vis each of the four category/sub-category
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