Why Thailand, Indonesia and India are three markets to watch for rapid online grocery growth

By Guan Yu Lim contact

- Last updated on GMT

Thailand, Indonesia and India will account for online grocery market shares of 2.8%, 1.5%, and 1.2% respectively by 2023. ©Getty Images
Thailand, Indonesia and India will account for online grocery market shares of 2.8%, 1.5%, and 1.2% respectively by 2023. ©Getty Images

Related tags: Online grocery, Thailand, Indonesia, India, Igd

Thailand, Indonesia and India will experience rapid growth in the online grocery sector, although they are coming from such a low base that it will only account for market shares of 2.8%, 1.5%, and 1.2% respectively by 2023.

According to the latest forecasts​ by IGD Asia, online grocery sales are forecast to reach US$1.7 billion (Thailand) and US$2.9 billion (Indonesia) in the next four years. India’s online grocery sales are predicted to reach US$10.5 billion by 2023.

Ecommerce is forecast to grow significantly in Indonesia as companies such as Alibaba and JD.com invest further. Thailand is also forecast to see a rapid growth in online grocery sales as key players such as Central Group, JD.com, Tesco Lotus and Villa Market build better infrastructure and more seamless apps for shoppers​,” said Shirley Zhu, programme director at IGD Asia.

For India, factors contributing to the rapid online grocery sales are the large population, retailer investment, better infrastructure, and new payment solutions.

In addition, strategic partnerships by big names such as Amazon, Walmart and Alibaba will drive online growth in India.

South Korea will remain the largest online grocery market in Asia, with a market share of 14.2% and sales of US$22.1 billion by 2023.

Although South Korea occupies the largest share, growth will be relatively slow compared to other markets in South East Asia, where market share is small, but growth is fast.

This is fuelled by the country’s increasing number of single-person households and the steady rise of mobile shopping​,” said Zhu.

South Korea’s three biggest hypermarket chains, Emart, Lotte and Homeplus, have all developed online and mobile shopping applications, while major marketplace retailers Coupang, Gmarket and 11Street are also having an increasing impact on online grocery​.”

China and Japan

Alongside South Korea, China and Japan will be the most established online grocery markets in terms of market share and scale in Asia.

China will hold 11.2% market share and is expected to reach sales of US$205 billion with the aid of a rapidly growing middle class, high smartphone usage 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​,” noted the report.

Japan is expected to own a market share of 9.9% in 2023, with sales of US$47.4 billion. In Japan, retailers are seeking better ways to integrate their physical store networks with online operations.

For instance, “7-Eleven has made its smartphone order and delivery service, Net Convenience Store, available at more than 1,000 stores, and retailers are collaborating to strengthen their online proposition e.g. Seiyu (Walmart) and Rakuten, and Amazon and Life supermarket​.”

Across Asia, online grocery sales is expected to grow 198% from US$99 billion to US$295 billion by 2023, making it the fastest-growing format in the region.

IGD forecasts that online will account for 7.6% of total grocery retail sales in Asia by 2023, more than double its current market share.

With this rapid growth of online grocery in Asia, it provides huge opportunities for suppliers over the next few years. Zhu mentioned three key points for suppliers to consider.

The first is prioritising where to invest – the size and growth of each market varies significantly, so suppliers should be prepared to make choices and have a dedicated strategy for each country​.

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​.”

New innovations around mobile, delivery and payment are also emerging all the time, so suppliers should keep a very close eye on these rapid developments​.”

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