By 2023, South Korea, China and Japan will be the main online grocery markets in Asia
Asia's online grocery market is expected to grow by 198% in the next 4 years as the channel is developing at a fast pace thanks to the wider use of technology and investment in logistics and infrastructure.
The reports issued by IGD Asia forecasts that online will account for 7.6% of total grocery retail sales in Asia by 2023, more than doubling its current market share.
"The penetration, size and growth of online grocery varies greatly by country. 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. Markets in Southeast Asia will see some of the fastest growth, but the market share of online grocery here will remain small. Markets such as India and Indonesia will also become increasingly important due to their scale,", says Shirley Zhou, Programme Director at IGD Asia.
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. Nevertheless, China will strengthen its position as Asia's largest online grocery market, with sales set to reach US$205bn. 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.
Japan is to witness a slow peace of growth in this market, according to the report, while Singapore is going to be the most advanced online grocery market in Southeast Asia, marked by fierce competition between retailers and advanced technologies used for long-term growth.
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. Major players such as Amazon, Walmart and Alibaba continue to drive online growth here through strategic partnerships.
"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 prioritizing 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 bricks 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,", concluded Shirley Zhou.
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