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The online grocery market size is projected to reach a value of USD 740.88 billion with a CAGR of 13.14% between 2022 and 2027. The market growth and trends depend on several factors, including the increased grocery purchases popularity and adoption of e-commerce platforms, the rapid growth in e-commerce, and the growing popularity of fast grocery delivery services. It offers the convenience of shopping from home and having the groceries delivered to the customer's doorstep. Online platforms often provide a wide selection of products and convenience in shopping including fresh produce, pantry staples, and even prepared meals, stored at warehouses with safety.
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The rapid growth in e-commerce is the key factor driving the growth of the global market. Apart from the growth in online web-based retail services, the global market has also witnessed an increase in the adoption of mobile-based (or app-based) services or m-commerce. This growth in m-commerce is mostly due to the increased penetration of smartphones globally.
The intensifying competition within the global online grocery market has spurred innovative approaches to offer expedited delivery services, particularly for fresh produce, pantry staples, breakfast choices, and shopping cart essentials. From bustling cities to suburban neighborhoods, deliveries of various brands and product types, including breakfast essentials, redefine accessibility. Online platforms offer a wider selection of products, including specialty items, fresh fruits, organic produce, and international brands, catering to a diverse number of consumers variety. Additionally, deals prompt increased purchases, driving higher sales volumes as customers explore additional items or categories due to the attractive incentives. These are fresh and direct add-to-the-shopping cart and checkout features that drive the growth of the market.
Although the penetration of e-commerce is high in developed regions, such as North American and European countries, due to the high adoption and use of laptops and desktops, developing regions such as Asia also offer a high growth opportunity to online retailers due to increasing demand for and use of m-commerce. In developing regions, people solely rely on their smartphones for Internet access due to increased mobile subscriptions, especially in developing countries such as the BRICS nations.
The demand for functional food and beverages is growing rapidly number among consumers worldwide due to health benefits such as enhanced immunity, improved mental strength, improved heart rate, improved digestive health, hydration and electrolyte-replenishing benefits, and better intestinal flora and gut function. Further, a number of consumers are spending more on non-traditional fitness activities, such as yoga and aerobics, and thus, prefer to consume functional food and beverages as a healthy source of nutrition.
This growing need and aspiration of customers regarding functional food are further propelling its demand across the globe. As all these functional food and beverage products are not readily available at brick-and-mortar retail stores, supermarket and hypermarket consumers must buy them online. Vendors of functional food and beverages are also marketing their products with the help of effective labeling and product formulation. The stores and grocery delivery service providers are showcasing and offering these products to widen their product portfolios to capture more share in of the market.
The huge competition from offline retail stores is a major challenge to the growth of the global market. Offline grocers and brick-and-mortar stores, especially unorganized nearby grocery retailers, are major competitors of online grocery delivery service providers. In developing countries, such as India, unorganized nearby grocery retailers offer various offers, services, and discounts to their customers. The services include the exchange of products that do not meet customer expectations and free delivery at doorsteps. The online delivery service players find it difficult to compete with brick-and-mortar grocery sellers as, in developing countries, a number of consumers are price-sensitive and are very concerned about the way goods are delivered to them.
Another major reason is ensuring the freshness and quality of perishable items like fruits, vegetables, and meats throughout the supply chain. Managing the short shelf life of fresh products demands meticulous pantry control while meeting the demand and order of several consumers.
The market share growth by the food products segment will be significant during the forecast period. The grocery food product segment contributes substantially to the revenue generated from the retail sales of groceries through both offline and online channels. Commonly available fresh produce items in stores encompass a wide array of fruits such as apples, bananas, oranges, and berries, alongside vegetables like tomatoes, lettuce, carrots, and bell peppers. Additionally, root vegetables like beets and sweet potatoes, as well as exotic produce like kiwi and papaya, are commonly offered. The products included in the food product segment are consumed regularly, and they have shorter shelf lives as compared to the non-food product segment. Such factors will increase the market growth during the forecast period.
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The food products segment was valued at USD 251.68 billion in 2017 and continue to grow by 2021. In this segment, the presence of various leading global packaged foods and beverages products, such as Nestle, Danone, PepsiCo, Mars, Coca-Cola, Kraft-Heinz, Abbott, and Mondelez, in the online retail channels through their own websites as well as through third-party online retailers encourage a number of consumers to shop grocery food item online.
The market witnesses a substantial growth rate, driven by diverse options and a commitment to elevating the customer experience. From bustling cities to suburban neighborhoods, deliveries of various brands and product types, including breakfast essentials, redefine accessibility. Competitive prices and a wide array of options further amplify the allure, transforming the way shoppers procure their daily necessities and enhancing the overall convenience of the modern shopping experience and customer experience.
Moreover, omnichannel marketing for product displays also enables packaged food and beverage players to attract consumers and increase the sales of grocery food products. In addition, market vendors have witnessed a rise in revenue due to the increasing demand for food items through online retail channels. Such instances are expected to boost segment growth during the forecast period.
Online grocery segment has two types of segments- One-time purchasers and Subscribers.
Over the past two decades, the market has witnessed a surge in demand. One of the driving forces behind this growth rate is the increasing popularity of the one-time purchase segment. This model allows customers to buy groceries without any commitment to subscriptions or recurring orders.
Concurrently, within the purchase type segment, the subscribers' sub-segment is projected to experience the most rapid growth in the foreseeable future. Subscription-based purchases are gaining traction in the market as they allow customers to order groceries on a recurring basis. Subscribers curate a shopping list and receive regular doorstep deliveries, eliminating the need for physical visits to grocery stores. Subscription-based models often offer discounts or exclusive deals to encourage customers to commit to regular purchases, ensuring a steady stream of revenue for the platform. Additionally, subscribers are given coupon and loyalty programs designed based on their shopping choices and direct functions like sale deals, shopping cart deals and fresh deals, and early access to the pantry. Coupons and shopping cart features play an important role in bringing the customer to the brand.
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APAC is estimated to contribute 63% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. Approximately 25% of households in the United States now regularly shop for groceries online.
The demand for food and non-food products in the region is rising with the growing number of young consumers, especially Millennials. In addition, food and non-food manufacturers have built a strong distribution network, which includes not only offline channels such as supermarkets, hypermarkets, and convenience store chains but also pure-play online retailers such as Amazon, Flipkart, Big Basket, and eBay. In supermarkets, customers have immediate access to products, allowing them to physically inspect. Shopping in supermarkets provides a sensory experience, allowing customers to touch, feel, and select fresh produce and groceries according to their preferences. While in digital media is different from supermarkets but has a virtual online connection with fresh groceries and vegetables.
In the market in the United States, convenience takes center stage as shoppers increasingly turn to platforms like Instacart and Amazon Fresh for their grocery shopping needs and grocery delivery services. Shoppers can browse through options of products, add items to their virtual carts, and choose preferred delivery times. Instacart then dispatches a personal shopper to collect the items from the options of stores and brands and delivers them directly to the customer's specified location in Instacart. This service offers convenience and flexibility by allowing users to shop for groceries from multiple stores through a single platform and have multiple delivery options delivered to their doorstep.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Albertsons Companies Inc. - The company offers fresh produce grocery products, meat, seafood, general merchandise, health and beauty care products, households, pharmacy, fuel, and other items and services.
Target Crop: Target Corporation has a robust presence of product types in the grocery market, offering a wide array of food and grocery items across various categories. It includes snacks, seafood, essentials, fresh produce, meal kits, households, cooking essentials, and beauty.
The market analysis and report forecasts detailed analyses of the competitive landscape, bands of the market, and information about 20 market players, including:
The market growth analysis report predicts rapid growth due to urbanization trends, especially notable in cities like San Francisco and Los Angeles. Latin America and South Korea also witness increased digitalization in grocery sales, offering a diverse selection of meals, including seafood, while prioritizing safety in warehouses.
The global online grocery market is witnessing rapid growth, driven by the e-commerce industry and technological advancements. Factors like urbanization and busy lifestyles have fueled the adoption of online grocery shopping, leading to the emergence of various business models including subscription delivery and discounts. Contactless delivery and click-and-collect services offer convenience to consumers, with options for immediate or same-day delivery. Small-scale grocers and third-party service providers play a significant role in fulfilling orders, while food-delivery platforms ensure brand awareness and quality. Product offerings span various segments including staples & cooking essentials and breakfast & dairy, catering to diverse consumer preferences. Doorstep delivery and flexible time slots with transparent service fees enhance the overall shopping experience.
The market forecast growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Online Grocery Market Scope |
|
Report Coverage |
Details |
Page number |
165 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 13.14% |
Market growth 2023-2027 |
USD 740.88 billion |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
15.8 |
Regional analysis |
APAC, Europe, North America, South America, and Middle East and Africa |
Performing market contribution |
APAC at 63% |
Key countries |
US, China, Japan, UK, and France |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
Albertsons Companies Inc., Amazon.com Inc., Blink Commerce Pvt. Ltd., Bundl Technologies Pvt. Ltd., Coles Group Ltd., Costco Wholesale Corp., Flipkart Internet Pvt. Ltd., HOFER KG, Innovative Retail Concepts Pvt. Ltd., Koninklijke Ahold Delhaize NV, Ocado Group Plc, Rakuten Group Inc., Reliance Industries Ltd., Seven and i Holdings Co. Ltd., SPAR International, Target Corp., Tesco Plc, Transform Holdco LLC, Walmart Inc., and Woolworths Group Ltd. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period. |
Customization purview |
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