Online grocery sales in Asia’s top 12 markets will grow by 198%, to $295 billion (€261.2 billion), by 2023, from $99 billion (€87.7 billion) in 2019, according to the latest projection from IGD Asia.
The figures correspond to a compound annual growth rate (CAGR) of 24.4%, compared with 6.2% for the overall grocery retail market over the same period.
It will make the online channel the fastest-growing format in the region.
IGD has also predicted that the channel will account for 7.6% of the total grocery retail sales on the continent by 2023, which is more than double its present market share.
Regional Leaders
According to the programme director of IGD Asia, Shirley Zhu, South Korea, China and Japan will emerge as leaders in online sales in terms of market share and scale.
Zhu added, “South Korea will remain Asia’s most advanced online grocery market, with its share growing to 14.2% by 2023, fuelled by the country’s increasing number of single-person households and the steady rise of mobile shopping.”
Online sales in China are projected to amount to $205 billion (€181.5 billion), consolidating its position as Asia’s largest online grocery market.
“E-commerce in China is aided by a rapidly growing middle class, high smartphone use, and strong Internet connectivity. Alibaba and JD.com are making big investments in infrastructure, logistics, and last-mile delivery in lower-tier cities, where demand is rising,” Zhu explained.
In Japan, online grocery sales are set to increase, but will remain relatively slow, compared to other markets in the region.
Well-Developed Online Grocery Channels
Singapore and Taiwan will have well-developed online grocery channels by 2023, mainly because of existing infrastructure and retailer investment.
In South-East Asia, the market share of online grocery will remain small, but it is expected to grow at the fastest pace. India and Indonesia will emerge as prominent markets due to their scale.
‘Strategic Partnerships’
Zhu explained, “E-commerce is forecast to grow significantly in Indonesia, as companies such as Alibaba and JD.com invest further.
“From a very low base, online grocery sales in India are forecast to grow rapidly over the next five years due to a combination of retailer investment, better infrastructure, new payment solutions, and a large population. Major players such as Amazon, Walmart and Alibaba continue to drive online growth here through strategic partnerships,” she added.
In Taiwan, online will continue to see the fastest growth in the grocery retail segment, with e-commerce players like PChome, Shopee and Momo improving the online shopping experience by introducing generous return policies, rapid delivery services, and easier payment options.
Huge Opportunities
The online grocery channel in Asia will bring huge opportunities for suppliers in the next few years, but they need to prioritise where to invest.
Zhu added, “Suppliers should also evaluate their products, packaging, and supply chains in each market to make sure they are ready for the opportunity.
“As online retailers expand across the region and form more partnerships with bricks-and-mortar retailers, getting to know these companies will become the key to winning online,” she explained.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.
