Online grocery growth predicted to double

Online grocery in China could more than double in growth between now and 2020, according to international grocery research organisation IGD.

Online’s current 3.1 per cent share of the country’s total grocery market is forecast to leap to 6.6 per cent over the next three years.

Driven by the spread of the internet, increased smartphone use, more focussed investment from retailers and shifting demographics, the online grocery segment is expected to grow by 31.8 per cent year-on-year by 2020.

“Set against our forecast CAGR of 5.9 per cent 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 are a one-stop shop for all domestic and international brands and categories, as well as offering a nationwide logistics network, rapid delivery, innovative and simple payment systems, plus new technologies such as drones and virtual reality,” says Zhu. “These platforms also enable international retailers to enter the Chinese market.

“We’re also seeing marketplaces like Alibaba and JD investing in brick-and-mortar stores.”

One-hour delivery

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 most people in China access the internet via smartphone, mobile commerce is critical for grocery retailers. “Many retailers are rolling out apps offering exclusive discounts and special features, while other apps allow for easy e-payments,” says Zhu. “Brands and retailers are also advertising and have shops set up on WeChat, China’s biggest social-media network.”


As China’s online grocery channel continues to grow, more partnerships are expected between retailers and manufacturers. “We also expect to see online grocers personalising their offers, using data to understand how and when people shop online, to deliver a better service and even personalised products,” Zhu says.

Innovations such as voice-activated technology, virtual reality and smart devices are also expected to become more common.

IGD is a training and research charity in the food and grocery industry which has experts based in the North America, Singapore and the UK.

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