Google News
spot_img

Value-first e-grocery segment projected to grow at 53% CAGR in 5 years

Must Read

According to a latest report ‘Indian E-grocery – A Promising
Opportunity Led By Value-First Users’ released by one of the largest homegrown consulting firms, RedSeer Consulting, the ‘value-first’ e-grocery segment is projected to grow at 53% CAGR over the next 5 years – faster than the e-grocery market, which is itself forecasted to grow at 48% CAGR.

The value-first segment refers to the households in India, for whom affordability is the key pain point and hence buying low priced grocery is of the utmost importance.

The report sets the context by elaborating on the huge grocery opportunity that is still untapped by the eGrocery platforms, which penetrate less than 1% of the grocery space in India (despite the significant COVID boost that the sector received last year). As per RedSeer’s estimates, more than 50% of the ~$570 billion grocery retail space in India is addressable by eGrocery platforms – of this, value-first households account for a significant 61% portion, with metro and tier 1 markets covering more than 40% of this value-first opportunity.

The study shows that the value-first households have unique grocery purchase priorities and behaviour – they stock-up most of their groceries, are focused on the basic categories like staples and fresh and are quite content with a simple & hygienic assortment, as long as the products are affordable.

“Accounting for almost 2/3rd of the 130 Mn eGrocery addressable households, value-first households account for a large opportunity in the grocery space, but are quite different in the way they go about purchasing groceries. Recently, as a result of COVID, hygiene has become a second consideration driver after affordability for these households – such differentiated purchase behaviour, would require e-grocery platforms to serve this opportunity through specific tailored offerings,” said Kushal Bhatnagar, Engagement Manager RedSeer.

The report further concludes that as a result of the simple and basic requirements of these valuefirst households, the potential unit economics of serving them online would be quite favourable.

“As the market leader in the value-first segment, we at Grofers, are on a mission to improve the quality of life of our customers through our everyday low prices proposition. To achieve this, we use our in-house technology platform to manage a lean supply chain through a robust network of over 800 MSMEs. We have created a strong ecosystem that directly connects these MSMEs
with the customers and enables us to deliver quality products at the lowest prices”, commented Manas Gupta, Head of Investor Relations at Grofers As per RedSeer’s estimates, riding on the huge and profitable value-first opportunity, the overall e-grocery market is projected to touch ~$24 billion GMV by 2025, of which 55% will be contributed by the value-first households.

On the other hand, Sourjyendu Medda, Founder, CBO & CFO of Dealshare.in cited that, “e-grocery growth, henceforth, will be driven by value first consumers. It is important for all e- commerce players to understand the needs, motivators and barriers for this consumer segment and develop unique propositions to attract and retain them. With low per capita income and expenditure in the country, the best way to create a profitable, scalable and massive ecommerce play is to create a business model suited to the regular needs of value first consumers, for example, grocery. We, at DealShare, have considered this consumer segment as the core target group since the beginning and feel fortunate to be the pioneers in this space. We believe that we have solved some key portions of the puzzle, while there is a lot more to do.”

Latest News

Smartsters opens shop-in-shop store at Crossword in Pune

Currently, the company plans to open over 10 shop-in-shop locations pan India Bengaluru: Kids’ furniture brand Smartsters has launched its...