Online food and grocery retail, which currently accounts for just 0.2% of the overall market, is expected to touch $10.5 billion or 1.2% of the overall market by 2023, driven by an increased assortment of products and efforts like express delivery operations, according to a report released by consulting firm Redseer on Friday.
As of now, online platforms including Bigbasket and Grofers have been the most prominent players in the industry. Bigbasket currently has over 100,000 orders a day, while Grofers manages more than 40,000 orders day.
Apart from this, food delivery platform Swiggy also recently ventured into grocery, medicine, and other product deliveries through its Swiggy Stores feature. Other competitors in the space include names like Dunzo, Swiggy-owned SuprDaily, Milkbasket, among others.
The Redseer report also mentioned that the average retail shopper has a household income of more than ₹12 lakh per annum and falls under the age category of anywhere between 30 to 40.
The report also estimates that a retail shopper buys online at least once a month with an average online transaction value of ₹900-1200.
Around 35-40% of the shopper’s retails spends from online channels, another 30% to 40% of the retail spends are across local kirana stores, while the rest 20% to 30% of the spends is registered across modern retail formats such as organized brand stores, chain stores, and hypermarkets.
Currently India’s modern retail penetration is at 10% or $82 billion of India’s overall retail sector which is currently estimated at $805 billion as of 2018, according to RedSeer. This organized share is expected to grow at 20% over the next few years to achieve a penetration of 11.8% or $118 billion by 2020 and 14.7% or $204 billon by 2023.
However, online retail still held a minor 3% market share in 2018 and is expected to touch 4.6% share by 2020, and 7% by 2023, according to Redseer data. Increased customer comfort and trust in e-tailing, especially across segments such as electronics and fashion coupled with a strong push by e-grocery players are expected to drive the growth in online retail.
Although though India’s modern retail segment has considerable ground to cover, it is still growing at a slower pace compared to other geographies, Redseer added in its report.