“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,” argues Shirley Zhu, Program Director at IGD Asia.[i]

South Korea will remain Asia’s most advanced online grocery market, with its share growing to 14.2% by 2023, fueled by the country’s increasing number of single-person households and the steady rise of mobile shopping.

South Korea’s three biggest hypermarket chains, Emart, Lotte and Homeplus, have all developed online and mobile shopping applications, while major marketplace retailers Coupang, Gmarket and 11Street are also having an increasing impact on online grocery.

China is the main market in Asia

Despite South Korea maintaining a higher online grocery market share in 2023, China will strengthen its position as Asia’s largest online grocery market, with sales set to reach US$205bn.

Ecommerce 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.

Slower growth in Japan

Japan will also see online grocery sales strengthen further but, as with South Korea, growth will be relatively slow compared to other markets in the region.

Retailers in Japan are seeking better ways to integrate their physical store networks with online operations.

For example, 7-Eleven has made its smartphone order and delivery service, Net Convenience Store, available at more than 1,000 stores, and retailers are collaborating to strengthen their online proposition e.g. Seiyu (Walmart), Rakuten, Amazon and Life supermarket.

Singapore most competitive

According to IGD Singapore will firmly establish itself as the most competitive online grocery market in Southeast Asia. Competition here is fierce; retailers are building scale by attracting more customers, while also investing in technology for long-term growth.

RedMart has been migrated onto the Lazada platform, as a move towards expanding online grocery to other countries in Southeast Asia, while FairPrice On is making use of robots and data analytics to improve its service.

From a very low base, 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.

Huge opportunities

Asia’s online grocery channel clearly provides huge opportunities for suppliers over the next few years, but there are several 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,” concludes Shirley Zhu.



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