Online Grocery Delivery Market in India 2020-2025

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    ONLINE GROCERY DELIVERY MARKET IN INDIA

    INTRODUCTION

    Shopping in India is slowly shifting towards the digital platform and the grocery and home essentials shopping is no exception to that. Although the grocery segment is late into the online sector compared to the electronics and the fashion wear, the pioneers in this field.

     

     

    Doorstep delivery and the hectic schedule of the working people have been the major drivers of the market. Ever since the COVID-19 broke out online grocery vendors are inevitably been the go-to option for the shopping of home essentials, as the public is in lockdown and retail stores are closed, the need for online shopping has increased significantly.

    infographic: Online Grocery Delivery Market in India, indian online grocery market

     

    As the COVID-19 crisis enlarged and more restrictions were put in place, completely locking down cities and countries, the online food delivery portals like Zomato and Swiggy flourished from 55 million to 215 million deliveries during the first half of the year 2020 for Zomato alone. The food delivery portal supplied its services in approximately 500 cities in India employing over 200,000 delivery agents. Swiggy recorded a number high with more than 1.5 million orders per day to Zomato’s 1.3 million orders per day.

     

    The number of food orders and essential grocery delivery services have ramped up quite significantly during the first lockdown as people were in a nervous surge. As the food delivery orders touched millions, the grocery giants like BigBasket, Grofers and Amazon pantry have themselves started acquiring small delivery start-ups like FoodPanda and Uber Eats in order to maximise their reach and revenue scale. The e-commerce industry for grocery and essentials is expected to rise with a Compound Annual Growth Rate (CAGR) of XX% and reach a whooping amount of $XXX billion by the year 2024.

     

    MARKET SEGMENTATION

     

    By Products Type

    • Grocery & Staples
    • Fresh Produce
    • Packaged Food
    • Household Items
    • Personal Care
    • Others

     

    By Geography

    • North India
    • South India
    • East India
    • West India
    • Central India
    • North-Eastern India

     

    MARKET DYNAMICS

    Increase in penetration of internet services and smartphone numbers in the country have been the major contributors for the online grocery market. The online grocery market however is concentrated only in the urban area. 

     

    Amazon and Flipkart the E-commerce giants deliver groceries in more than 100 cities in India. The dedicated online grocery vendors such as BigBasket and Grofers deliver to close to 30 cities across India.

     

    The same day delivery and within an hour delivery features are available for premium customers. This willingness of customers to pay extra for this will boost the market. 

     

    Since the lockdown, BigBasket has seen an increase in 150,000 orders per day and as of April 2nd week they are running at close to 285,000 orders per day. The number of customers using the grocery delivery service rose to a whopping 84% in the month of July. The TATA group is in the process of acquiring a stake of 60% in the company with an investment of $1.3 billion. 

     

    The TATA group has also launched a new venture for food delivery and retail named StarQuik with primary operations in Mumbai, Delhi, Bangalore and Hyderabad. They have over 42 stores under the Star brand operating primarily under 3 holdings; daily, hyper and market. However, the venture is still in an infant stage with little penetration in the e-commerce market.

     

     Grofers has also witnessed double the number of orders compared to prior lockdown. They are servicing almost 200,000 orders per day. The company grew in revenue by a thriving 78.52% from 1282.3 crore INR in 2019 to 2289.2 crore INR in 2020 amid the lockdown surge in delivery.

     

    The surge in the demand for online grocery deliveries across the world has seen an unprecedented rise due to the COVID-19 crisis. In lieu of expanding the market size, several small-scale start-ups have come up, for instance, Just Hap has started to deliver across 40 locations in Telangana and 12 locations in Hyderabad. The customers are increasingly relying on small-scale companies after a surge in booking over BigBasket and Grofers, with an increase in the orders from 250 to 500 per day and 10,000 new customer subscriptions on Just Hap.

     

    After a success in the online retail market, Snapdeal has started a homegrown platform for e-commerce. It has started to deliver in more than 95 cities including smaller cities like Agra, Raipur through the intra-city model of delivery by connecting local vendors and retailers and delivering grocery and essentials.

     

    Several small-scale grocery and essentials delivery start-ups have come up such as BigMart, On Door, ShopClues Grocery, Food Zu, MyMore Store, Daily Rasan and many more to dive into the booming e-commerce sector. These delivery companies are mostly operable only in the metro cities with huge clientele and higher integration.

     

    BY GEOGRAPHY

    South India is home for the most number of urbanised cities and hence the higher urban population accounts for the larger market for online grocery shopping. BigBasket based in Bangalore operates in most of the urban areas in South India making them the leader in the South India region.

     

    The west and north parts of India account for more industrialised centres than the southern part. Hence the population of the urban areas in this region is less and penetration of online markets is limited to few cities. The upcoming vendors from the west and north India region like Nature’s Basket, Country Delight, Easyday will boost the market in the region. Grofers based in Gurugram holds the major share in this region and 20 out of its 28 cities of operation are North Indian cities.

     

    The Eastern part of India is currently lagging in this sector and has the lowest penetration of online vendors. Spencers based in Kolkata is one such vendor that has a larger reach in this region than any other region.

     

    Several hyperlocal delivery markets have come up in metro cities to support local vendors and make them easily accessible. For instance, in Mumbai WeFast, SARAL, Grab are some of these hyperlocal delivery systems. SARAL is one such hyperlocal that delivers in more than 29000 pin codes in India as well as more than 220 countries worldwide. Grab now operating in 235 cities across South East Asia has reached the number of 2.5 billion deliveries in the last year alone.

     

    The city of Bengaluru has many local vendors who also provide grocery and essentials delivery such as Chopznow Grocery and Farm fresh, Krishi Direct, Grocery factory, Asda and many more. These local vendors have started to deliver in the nearby areas in hope to compete with the ever-growing market of e-commerce. Most of the local vendors that provide delivery services are located in the metro cities and sometimes offer intra-state delivery as well for prominent clients at slightly higher prices.

     

    Brown basket and Jag’s mart are similar concepts that deliver grocery and essentials offering discounts operable in Delhi, Bangalore, Hyderabad and Mumbai with the option of delivering farm fresh, organic as well as exotic products.

     

    MARKET SIZE AND FORECAST

    Amid lockdown, cab service provider Uber is planning to start delivery service options called Uber Direct and Uber Connect. This will help the online grocery vendors to increase the supply and spend less on transportation. 

     

    BigBasket has invested more than 60 million USD in the current situation to meet the surging demand from the public.

     

    Amazon is partnering with the local grocery stores to sell the goods through their company’s platform and is investing 1.3 million USD. This will boost Amazon’s penetration in Indian grocery market. 

     

    RECENT MARKET TREND

    • Swiggy food delivery platform has started grocery and household essential delivery in 125 cities after partnering with leading retailers known as Swiggy Instamart.
    • Swiggy has sanctioned an IPO deal worth $800 million from a clutch of new investors and has started the door-to-door essential and personal commodity delivery service named Swiggy Genie.
    • Zomato, another food delivery partner, has started grocery delivery in over 80 cities. Grofers is working with Zomato to expand its delivery fleet. The company has invested approximately $120 million to acquire a stake of 9.3% in Grofers.
    • Zomato and Swiggy with the start of a new fiscal year are already over the $1 billion mark and are actively trying to uplift the business.
    • Zomato has started to divulge into B2B (Business to Business) activities with the restaurants. On July 14th 2021, the company launched a 3-day public offering, the first by food tech company in India. It is valued at $8 Billion and has already bagged in equity financing of $250 million.
    • The new hyperlocal food and essential delivery start-up Dunzo has also raised in financing worth $150 million from new investors.
    • BigBasket has completed the acquisition of Bengaluru based startup DailyNinja. This will help BigBasket to expand its fleet to milk delivery platform.
    • In April 1st week, cab aggregator Uber has partnered with Flipkart to deliver essentials to doorstep in 3 cities viz. New Delhi, Mumbai and Bengaluru.
    • BigBasket has partnered with Uber and two wheeler mobility firm Rapido to deliver the essential to doorstep in selected cities.
    • Walmart owned Flipkart has increased the delivery of groceries to 400 cities during the lockdown.
    • Shopclues has launched the delivery of home essentials such as grocery in Delhi and Gurgaon region.
    • The Facebook’s investment in Reliance Industries has initiated the e-commerce platform JioMart distinctively for grocery and as of April 27th it is currently available in selected areas of Mumbai.
    • Nature’s Basket has been acquired by Spencer’s Retail Ltd. from the Godrej Group in 2019 at 300 crore INR for complementing the presence of the delivery and retail store chain in Western India. The company has been delighted with the first positive EBITDA within the year of acquisition due to the surge in regards to the pandemic. 
    • The multibillion-dollar TATA group has acquired the grocery and delivery Gurgaon based GrocerMax under StarQuik to expand its horizon.
    • Grab has undertaken Uber to assist in making deliveries.

     

    COMPETITIVE LANDSCAPE

    The 2 big online vendors are BigBasket and Grofers. Amazon and Flipkart with their online services Amazon Pantry and Flipkart Supermart are able to penetrate higher number of cities due to their E-commerce background.

    Some of the other players who started the online channel along with the running retail outlets are Reliance Smart, DMart Ready and Easyday (Future group). These online stores deliver in less than 10 cities.

     

    COMPANY PROFILE

    1. Grofers
    2. BigBasket
    3. Amazon
    4. Flipkart
    5. Reliance
    6. Easyday
    7. DMart
    8. Nature’s Basket
    9. Spencers
    Sl no Topic
    1 Market Segmentation
    2 Scope of the report
    3 Abbreviations
    4 Research Methodology
    5 Executive Summary
    6 Introduction
    7 Insights from Industry stakeholders
    8 Cost breakdown of Product by sub-components and average profit margin
    9 Disruptive innovation in the Industry
    10 Technology trends in the Industry
    11 Consumer trends in the industry
    12 Recent Production Milestones
    13 Component Manufacturing in US, EU and China
    14 COVID-19 impact on overall market
    15 COVID-19 impact on Production of components
    16 COVID-19 impact on Point of sale
    17 Market Segmentation, Dynamics and Forecast by Geography, 2020-2025
    18 Market Segmentation, Dynamics and Forecast by Product Type, 2020-2025
    19 Market Segmentation, Dynamics and Forecast by Application, 2020-2025
    20 Market Segmentation, Dynamics and Forecast by End use, 2020-2025
    21 Product installation rate by OEM, 2020
    22 Incline/Decline in Average B-2-B selling price in past 5 years
    23 Competition from substitute products
    24 Gross margin and average profitability of suppliers
    25 New product development in past 12 months
    26 M&A in past 12 months
    27 Growth strategy of leading players
    28 Market share of vendors, 2020
    29 Company Profiles
    30 Unmet needs and opportunity for new suppliers
    31 Conclusion
    32 Appendix

     

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