(Source: Inside Retail Asia | 27 April 2017)
Online grocery in China could more than double in growth between now and 2020, according to international grocery research organization IGD.
Online grocery’s current 3.1 percent share of the country’s total grocery market is forecast to leap to 6.6 percent over the next three years.
Driven by the spread of the internet, increased smartphone use, more focused investment from retailers and shifting demographics, the online grocery segment is expected to grow by 31.8 percent year-on-year by 2020.
“Set against our forecast CAGR of 5.9 percent for China’s total grocery market over the same time frame, the opportunity for retailers looking to trade online is clear,” says IGD Asia program director Shirley Zhu.
“China already has the world’s largest online grocery market in terms of value, and this certainly shows no signs of slowing down.”
Among the factors driving this growth is the changing demographics, with a rising population of young, middle-class shoppers who lead busier lives. “In turn, this is creating an aspirational class of shoppers who want access to groceries at the click of a button, and who are also increasingly looking for international goods,” says Zhu.
IGD says China’s online grocery segment is a combination of “marketplaces” and brick-and-mortar retailers. Two of China’s largest online retailers, Alibaba’s JD.com and Tmall, also have a strong position in online grocery.
“These platforms also enable international retailers to enter the Chinese market,” says Zhu.
Other key online grocery retailers in China include Walmart via JD.com and Sun Art Retail, which sells via multiple platforms. New arrivals include Bee Quick, which focusses on fresh products with delivery within an hour in 14 cities, while Carrefour launched 12 months ago and is extending its service to more cities.
As China’s online grocery channel continues to grow, more partnerships are expected between retailers and manufacturers. Innovations such as voice-activated technology, virtual reality and smart devices are also expected to become more common.