Asia ‘leading the way’ in e-commerce: Four of the top ten global online grocery markets in 2023 will hail from APAC
Taken all together, the top 10 markets are expected to grow by US$227bn in value by 2023.
“China, Japan and South Korea are the Asian markets leading the way in online grocery shopping, and we’re seeing significant market share penetration in these three countries,” said IGD Asia Programme Director Shirley Zhu.
“Physical retailers in China, having recognised the importance of the online and digital channel, are collaborating with eCommerce and delivery partners to offer more targeted ranges, promotions and expanding their omnichannel presence.”
“It’s for this reason China comes out on top globally [in this list].”
China’s online grocery is expected to reach US$196.3bn in the next five years, outstripping its closest rival, the United States (estimated at US$599.5bn in 2023), by over three times.
This would give it a CAGR of a whopping 31% (US$145.4bn) from its current US$50.9bn and bring it up to 11.2% of global online grocery channel share, as opposed to its current 3.8%.
“[To put this into perspective], the Chinese online grocery market will grow by the same size as the entire combined market of all ten countries in 2018,” said IGD via its official press release.
The second highest ranking country on the list is Japan, coming in at third place with an estimated US$46.5bn value by 2023 which would bring its online grocery channel share up to a respectable 9.9%.
South Korea comes in at fifth place overall with US$21.3bn worth by 2023, but is expected to lead the entire global list in terms of online grocery channel share at 14.2% (as compared to the current 8.3%), overtaking even China.
“With well developed online grocery operations already, Japan and South Korea will see online grocery market shares increase, but growth will be relatively slow compared to other markets in the region,” said IGD.
According to Zhu, “South Korea has the highest online grocery penetration in Asia due to the rising number of smaller households, widespread high-speed internet access and high consumer confidence in making online payments.”
The predictions for seventh-placed Australia are relatively modest by comparison, expected to reach just US$4.2bn by 2023 which is over four times less than France, coming in before it at US$17.2bn.
Other countries also on the list were the United Kingdom (fourth, US$22.1bn), Germany (eighth, US$3.8bn), Canada (ninth, US$2.1bn) and Spain (tenth, US$2.0bn).
E-commerce in other parts of Asia
Earlier this year, IGD also released figures pertaining to online growth in other countries in the Asian region.
“The online channel will account for 6.9% of total grocery retail sales in Asia by 2022, more than doubling its current market share of 3.2%,” said IGD.
In Asia, behind China, Japan and South Korea is India, expected to experience 87% CAGR to reach US$5.0bn value by 2022.
Indonesia ‘s growth is estimated at 85% to reach US$4.5bn, Taiwan will grow 14.9% to reach US$1.7bn, and Singapore will grow 29% to reach US$0.4bn.
“From a very low base, online grocery sales in India and Indonesia are forecast to grow rapidly over the next five years due to a combination of retailer investment, a large population and improving infrastructure,” IGD added.
According to Zhu, “Singapore and Taiwan will also have well developed online grocery channels by 2022, benefiting from existing infrastructure and retailer investment, while in Southeast Asian markets grocery ecommerce, although growing rapidly, is still in its infancy.”
She also expects that logistics and payment will be the key barriers to overcome for India and most Southeast Asian countries.
“Although these markets are expected to have the fastest growth, the market share of online grocery will remain small [in comparison to China, Japan and South Korea].”
Comparison with other research
Tetra Pak also released a report earlier this year pertaining to online grocery sales, the Tetra Pak Index 2018.
While offering a differing perspective by classifying the growth of countries’ online grocery sales into four categories, the majority of findings corresponded to IGD’s analyses.
Tetra Pak classified Shanghai, China as a ‘Leap-frogging pioneer’, showing fast growth in online grocery driven by demand and infrastructure, which matches China’s top spot within the IGD list.
South Korea and Japan were classified as ‘Pioneer’ and ‘Laggard’ respectively, where much faster growth is expected in the former, though it will not surpass that of a ‘Leap-frogging pioneer’.
These findings correspond with IGD’s data predicting slower growth in Japan (7.8%) as opposed to South Korea (16.5%), both of which fall far behind China (31%).
Japan’s growth is expected to be much slower due to the ‘popularity and widespread convenience of convenience stores posing challenges to online grocery growth,’ according to Tetra Pak.