Online grocery in Asia to grow by 198% in 2023

Photo from Burst

Online grocery in Asia is developing at a rapid pace, with the market set to grow from its current value of US$99 billion to $295 billion by 2023, according to latest findings of international researcher IGD Asia.

“The penetration, size and growth of online grocery varies greatly by country,” revealed Shirley Zhu, programme director at IGD Asia. “South Korea, China and Japan will be the most established online grocery markets in terms of both market share and scale, while Singapore and Taiwan will also have well-developed online grocery channels by 2023, benefiting from existing infrastructure and retailer investment.” 

Zhu added that while markets in South-east Asia will see some of the fastest growth, the market share of online grocery in this region will remain small. However, markets such as India and Indonesia will also become increasingly important due to their scale.

Growing online markets

“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,” said Zhu who also pointed out that the country’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.

“However, despite South Korea maintaining a higher online grocery market share in 2023, China will strengthen its position as Asia’s largest online grocery market, with sales set to reach $205 billion,” she said. “E-commerce in China is aided by 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.”

Meanwhile, Japan will also see online grocery sales strengthen further but, as with South Korea, growth will be relatively slow compared to other markets in the region, Zhu said. “Retailers in Japan are seeking better ways to integrate their physical store networks with online operations.”

Meanwhile, Singapore will firmly establish itself as the most advanced online grocery market in Southeast Asia, and despite market share of online grocery remaining less than 3% in all Southeast Asian markets (excluding Singapore), Indonesia and Thailand will see some of Asia’s most rapid growth over the next five years, albeit from a low base, IGD reported. 

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, IGD said. 

On the other hand, online is the fastest-growing channel in Taiwan’s grocery retail market and the trend is expected to continue, and that e-commerce players such as PChome, Shopee and Momo have been improving the online shopping experience by offering generous return policies, rapid delivery and easier payment options.

Zhu concluded: “Asia’s online grocery channel clearly provides huge opportunities for suppliers over the next few years, but there are a number of things they need 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 brick 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.”