Driven by the pandemic, Indian e-Grocery market sees exponential growth from 2019-22

• Online grocery market grew by 66% CAGR between 2019-2022.
  
• The Indian eGrocery market has been primarily dominated by slotted deliveries which constituted 48% of deliveries during the same period.
  
• Grocery platforms should focus on creative last-mile models and optimized price positioning to make the most of the boom.

From 2019-22, the online grocery market in India saw an exponential growth of 66% CAGR, according to a study by consulting firm Redseer. The gross merchandise value (GMV), which refers to the total value of goods sold via e-commerce platforms, rose from $1.7 billion in 2019 to $8 billion in 2022, and is expected to reach $19 billion in 2025.

The Indian eGrocery market has been primarily dominated by slotted deliveries. Slotted delivery refers to a system which lets customers decide their own date and time slot to receive a product they have ordered. This reduces the chances of failed or missed deliveries.

The COVID-19 pandemic was a strong catalyst for the growth of online groceries across the developing world. Initially driven by a response to the lockdowns and supply chain disruptions, the market has since evolved to cater to consumer habits, convenience and local drivers. As a result, various business models have emerged successfully to occupy market segments and serve consumer needs. This trend will likely continue even after the pandemic subsides as consumers have become accustomed to the convenience and safety of online grocery shopping.

The study says that consumer preferences driven by multiple factors such as convenience and habit leave much room for unlocking value in the eGrocery space. Players in the eGrocery space need to work on key principles to unlock values, such as a creative last-mile model, optimized warehousing and supply chain, targeted range construction and merchandising, optimized price positioning, and test and learn approach.

Learnings from the study also suggest that this space in the developed markets is driven by several unique models which imbibe the above-mentioned principles to align with consumer habits and circumstances. Moreover, with regional context, these models can be an improvised value-add to existing working models.

However, the significant growth in the market between 2019 and 2022 can be attributed to the adoption of quick commerce in cities. The expansion of eGrocery is expected to continue in Tier 2+ markets, driven by dominant players. In CY2023, the market is expected to witness growth in Tier 2 regions, with horizontal players leading the way, while the adoption of quick commerce is expected to remain steady.

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