China’s two e-commerce giants are driving the most growth in Asia’s online grocery market according to a new report from international researcher IGD.
JD and Alibaba now boast a combined grocery-sales growth which in value terms is outstripping that of the overall market.
Asia’s online grocery market has a current value of US$99 billion, according to IGD, which projects expects it to achieve a compound annual growth rate (CAGR) of 24.4 percent to reach US$295 billion by 2023.
IGD’s forecasts show that JD.com’s grocery sales will grow 28.8 percent by 2023 to reach $9.8 billion and Alibaba’s grocery sales will grow to $9.5 billion, with a CAGR of 25.6 percent.
Alongside pure e-commerce retailers, Asia’s online grocery market consists of brick-and-mortar retailers that are developing their online capability, as well as forming alliances and partnerships to accelerate growth.
Nick Miles, head of Asia Pacific research at IGD, says the growth of online grocery in Asia will continue to be led by online marketplaces, especially JD.com and Alibaba, with food and grocery products helping to drive up the number of times shoppers use these retailers’ platforms.
“Other pureplay retailers including Rakuten, Amazon and Coupang are also strengthening their online grocery operations and will increasingly play a more prominent role in the channel,” he said.
“Brick-and-mortar retailers are scaling up their online operations and building partnerships with online players, delivery partners, technology companies and payment solution providers. These partnerships are vital for retailers to compete successfully with online marketplaces and online specialists.”
Miles says there are several ways suppliers can capitalise on growth in online retailing, including developing long-term partnerships with retailers in areas such as marketing campaigns and tailored promotions.
“Collaborating across the full chain is also important and suppliers should integrate their systems with retailers’ systems, to access real-time data on stock levels and ensure product availability for shoppers.
“Finally, suppliers can really engage in the mobile space by making sure they stay up-to-date with new apps and social media platforms and other programs that are enhancing experiences for shoppers.”