Online Grocery Market size is projected to be over USD 1 trillion by 2026.

Advancements in internet infrastructure coupled with the penetration of affordable network connectivity across emerging economies have led to a significant shift in consumer shopping behavior. High-income earners and millennials have significantly increased online shopping, positively impacting the online grocery industry growth. To capitalize on this rapidly changing behavior, companies are expanding their reach across various countries to process a large number of orders per day.

The emergence of card-based and digital wallet payment methods with a significant increase in smartphone users globally is driving the online grocery market demand. In 2019, the number of Apple Pay users reached 30 million in the U.S., representing around 48% of all mobile payment users. With the increased popularity of contactless payments among consumers, market leaders are focusing on providing a wide range of payment options to users.

The ongoing coronavirus (COVID-19) pandemic has positively impacted the online grocery market due to the shutdown of physical retail stores in several countries globally. The pandemic has led to an increase in the number of consumers buying groceries online to limit social interaction and prevent the spread of the virus. The increasing frequency of grocery orders on online channels from active households is projected to expand the market growth.

The meat & seafood segment is likely to expand at around 35% CAGR in the coming years. The demand for fresh meat & seafood continues to grow with the global production of meat estimated to reach 465 million metric tonnes by 2050. Consumers prefer online stores for purchasing perishable goods due to the benefits offered including a wide range of products, convenience, and low prices. In the wake of the COVID-19 pandemic, consumers are increasingly shifting to buy meat & fish online. Uncertainties over hygiene and large crowds in conventional meat & fish markets have resulted in driving the trend of online grocery market.

The one-time payment model enables consumers to purchase groceries at a low-cost compared to a subscription-based model. Market players charge a high subscription fee and require consumers to place a minimum order to access the service. The financial risks and less flexibility to switch to other retailers in subscription services will also encourage consumers to opt for the one-time purchase model. The model is mainly beneficial for consumers, who are not frequent in purchasing groceries online.

The demand for saving costs and convenience will drive the adoption of home delivery services in the market. The services allow consumers to order online and manage the account from the comfort of their homes. Several online retail chains rely on delivery partners to strengthen their product supply capability. For instance, in August 2020, Walmart, Inc. partnered with Instacart, a grocery delivery and pick-up service provider in the U.S., to offer same-day delivery across Oklahoma and California states in the U.S.

Distributors are facing unique challenges to serve the growing needs of different customers owing to the COVID-19 crisis. This has encouraged them to purchase bulk items from online stores to maintain stock and quickly deliver a wide range of products to customers. In addition, distributors are signing agreements and partnerships with grocery retailers to increase their product offerings.

The MEA online grocery market is estimated to grow at 20% CAGR during 2020 to 2026 driven by the flourishing e-commerce sector. Improving economic conditions and a rise in disposable incomes are primary growth drivers of the regional retail market. According to PayFort, an online payment gateway, the MEA e-commerce market will reach USD 69 billion by the end of 2020.

Market players are increasingly adopting automated technologies to reduce the delivery time of orders and serve customers quickly. Increasing investments by market players in the region will positively impact the industry expansion.

Key companies operating in the online grocery market include Safeway, Inc., ShopFoodEx, LLC, Alibaba Group, mySupermarket Limited, Koninklijke Ahold Delhaize N.V, Tesco PLC, The Kroger Company, NetGrocer.com, Inc., Schwan Food Company, BigBasket, My Brands Inc., AmazonFresh, LLC, Walmart Stores, Inc., Carrefour S.A., and Honestbee. These players are adopting various strategic initiatives, such as mergers, acquisitions, and collaborations, to accelerate their market position.

More about this report >>