Indians drive into online grocery shops to buy everything from mithai to masalas


Indian consumers have been increasingly buying grocery online in a trend that is now being dubbed irreversible since the coronavirus pandemic piloted the country’s first lockdown last year, shuttering supermarket and neighbourhood mom-and-pop stores.

The convenience of a few clicks on laptops or smartphones from the safety of home that gets groceries delivered to the doorstep is quickly replacing the earlier trend of filling up carts at store aisles with a visible array of products with online browsing.

A recent report by the United States Department of Agriculture points to the coronavirus lockdown as the catalyst for the change in Indian consumer’s digital buying habits.

“India’s online grocery market grew by 80 percent to $2.66 billion in 2020. The sector is expected to grow exponentially over the next few years thanks to expanding internet connectivity and rising consumer demand for convenience, value, safety/hygiene, ease of payment, and product variety,” said the report COVID-19 Accelerates the Growth of India’s Online Grocery Market.

The overall market

As such India’s grocery retail sector has always been enormous, the third-largest in the world. It had recorded sales of $410 billion in 2020, according to Euromonitor International.

Dominated mostly by traditional and unorganized retail shops, specifically hawkers and neighbourhood shops which represent 90 percent of the grocery market in sales, only 10 percent have been available to modern grocery retailers such as supermarkets, hypermarkets, and e-commerce.

In the last one year, with the resistance to online shopping for groceries shrinking rapidly, this nascent segment, less than one percent of total grocery sales in India, is poised for tremendous growth in the next decade.

According to home-grown RedSeer consultancy, India’s online grocery market is poised to reach $24 billion by 2025, accounting for 3 percent of the overall grocery sector.

Tapping into the opportunity  

With greater numbers buying food and essentials online and more frequently, the prospects are huge for online grocers who are either queuing up to enter the space or consolidating their operations to better their performance and beat competition.

Today there is a fair number of players in this segment. Over the last year, BigBasket, Grofers (the bigger ones), then Easyday, and DMart the initial online grocers were followed by big-ticket players Amazon India, Flipkart, and Jio Mart.

Adding to the milieu, big stores like Foodhall, Nature’s Basket, Spencer Retail and StarQuick among others also joined the fray delivering groceries, vegetables, fruits, chicken, fish, meat, and organic products using their digital platform.

Strategic overhaul

With competition heating up, to stand out and meet the growing demand, companies are re-evaluating their digital offerings and continuing on their digital transformation.

BigBasket, one of the biggest online grocery retailers in India, saw an 80 percent rise in new customers and a customer retention rate of up to 50 percent in 2020.  Currently, the company has a 35 percent market share and fulfills around 15 million orders per month in 30 cities across India. It has also reached the milestone of $1 billion in annual revenue.

Nonetheless, to cater to its increasing user base it has scaled up partnerships, automated processes, and community selling, among other things. It spent much of 2020 increasing capacity and building infrastructure.

Another major ramp-up is on the cards with Tata Digital, the youngest Tata group company acquiring a controlling stake in BigBasket recently.

Close industry watchers expect that the deep pockets and expertise of the Tata Group will aid the company and strengthen its position in offering discounts and deals that make profitability and retention more competitive than it has been.

“We are excited about our future as part of Tata Group. We would be able to build stronger consumer connect and accelerate our journey,” said Hari Menon, BigBasket’s co-founder and chief executive officer.

For the Tata’s, it is cementing its foray into the profitable online grocery market. “Grocery is one of the largest components of an individual’s consumption basket in India, and BigBasket fits in perfectly with our vision of creating a large consumer digital ecosystem,” noted Pratik Pal, CEO, Tata Digital.

Industry analyst also say that this deal will enable the Tata group to compete with Reliance Industries Limited (RIL), Amazon and Walmart in the fresh fruits and vegetables as well as daily needs products space.

Inventory-led online retailer Grofers, which operates in over 33 cities and manages a network of over 5,000 partner stores to ensure fast deliveries, is also bumping up its capabilities.

“We have hired more people to ensure availability and access of critical goods. We are also working with more manufacturing partners to scale the supply and have developed our own line of private label brands (eight total), that account for 40 percent of its revenues,” said Grofers, co-founder and CEO, Albinder Dhindsa.

The company is also planning to go public by the end of 2021.

The new entrants in the space

In the past year, the US online retailing giant Amazon India’s overall customer base and first-time buyers doubled on Amazon Pantry and Fresh post-covid with more than 60 percent share of new customers from smaller cities.

Amazon, in February 2021, integrated its pantry service (dry grocery) with instant grocery service Fresh in 10 cities to create an integrated online store with express delivery. In the remaining 290 cities and towns that do not have the Fresh service currently, Pantry will continue to provide dry groceries.

Given the huge growth potential in online grocery, Amazon India plans to scale its grocery offering this year by expanding its reach with dry grocery and doubling down on the top 50 cities with the entire range of fresh and dry groceries.

“Customers trust to safely home deliver products that they need and value. There is a significant surge in demand for groceries and we continue to work hard to serve customers while following stringent safety measures and Government guidelines,” said a spokesperson for Amazon India.

Walmart-owned Flipkart too is adding thrust to its effort of selling groceries online in more Indian cities to compete better with Amazon and Reliance in an e-commerce market.

Flipkart has already expanded online grocery sales to more than 50 Indian cities and intends to reach over 70 locations in the next six months. Already its grocery service had grown exponentially in the past year and continues to be one of the fastest-growing categories.

Finally, there is Reliance Retail’s eCommerce platform JioMart, which launched in May 2020 and thereafter accelerated its rollout in the pandemic to snag a share of the e-grocery pie.

Shampa Bahadur has been a business journalist for more than two decades. She has written for Business India, PTI Media TransAsia and India Infrastructure Publication Ltd among others. She has also written coffee table books. She can be reached at

Leave a Reply

Your email address will not be published.