The online grocery market in India has gained a lot of traction over the past few months with the emergence of a host of first generation start-ups and already established traditional grocery chains expanding to the digital platform. According to a recently released report, India's online grocery market is estimated to grow at a compounded annual growth rate of 62 per cent between 2016-2022. While the market on the online platform is still in its nascent stage, the overall grocery market in the country is already worth over US$ 360 billion (Rs 21,60,000 crore) making India is the sixth largest grocery market in the world and is expected to touch US$ 1 trillion by 2020. The online sales are expected to reach around 2 per cent of the overall grocery market by 2020, creating a potential market size of around US$ 10 billion (Rs 60,000 crore) following the surge in number of players operating in the industry.
In fact, this niche segment is expected to contribute 10-20 per cent of overall e-commerce jobs, with each warehouse of online grocery companies employing around 50 to 100 workers depending on the scale of operations. On one hand, start-ups like BigBasket, ZopNow, Localbanya, Grofers, PepperTap, and Jugnoo are making a dent in the marketplace by introducing a variety of new supply chain networks including hybrid asset light and hyperlocal models, on the other hand, names like Godrej’s Nature Basket has already expanded to the digital platform to catch up with the changing consumer behaviour.
Market watchers expect a lot more creativity in business models in the online grocery business in India in coming days. However, the industry is still far from moving beyond the Tier-I cities as there is still a lot of headroom for growth in metros and scaling up remains a challenge for even the domestic established names in this industry.