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Online Grocery the ‘Next Biggest Prize’ in Retail

By Jared Hodge

Grocery is the next key target for online retailers across Asia Pacific, according to the latest annual e-commerce forecast from global research firm Forrester.

In its latest report, Forrester says with over $5 trillion in sales at stake in the global grocery category, both offline and online retailers are fighting for their share of the biggest prize in retail.

The global online grocery market is expected to double from $150 billion in 2017 to $334 billion by 2022, powered by increased investment by retailers in the online channel.

According to Forrester senior forecast analyst Satish Meena, Australia is a more mature online market than overseas, with more favorable conditions including a high online population, high broadband and smartphone penetration, plus higher disposable incomes leading to larger online spend per buyer.

“Online buyers in Australia are spending $2,267 per capita, more than two times the amount of their Chinese counterparts, who are the next-highest online spenders in the region today,” Meena told IRW.

“Australia also has the highest disposable income per household in the region, averaging US$33,138 a year, which puts it below the US average of $41,071 but above the UK average of $26,687 per year.”

Meena said cross-border e-commerce flourishes in Australia with 74 per cent of online shoppers in Australia having purchased an item from a website outside of their home market, compared with 41 per cent in both China and South Korea. Entry of Amazon and Alibaba is also going to increase the focus on online channel in coming years.

In metropolitan areas in Australia – with a population over one million including Sydney, Melbourne, Brisbane, Perth and Adelaide – Meena said geographical constraints are not an issue for the uptake of online grocery delivery.

“High urbanisation along with high disposable income is going to benefit the online grocery adoption,” he said.

“Retail chains are already offering a large number of SKUs online – Woolworths and Coles offer more than 20,000 SKUs online and free delivery for orders above $100.

“With the entry of Amazon we expect retail chains to increase the number of SKUs offered online and also work with partners to improve the last mile delivery and investment in click and collect points.

“Amazon’s entry will certainly impact the competition and retailers have to invest a lot on continuously improving the customer experience. Customers are already buying other categories on Amazon and will easily add one more category. However Amazon will need some time before offering large number of SKUs as compared to the existing retail chains.”

While online marketplaces are the preferred destination for buying in categories other than grocery, Meena said Australian buyers prefer single retailers for buying groceries.

Forrester’s report also found the number of online buyers in China will reach 631 million by 2022, growing at a compound annual growth rate (CAGR) of 4.6 per cent from the current 502 million.

China accounts for nearly 83 per cent of online retail sales in Asia Pacific, while Forrester expects Indian e-commerce revenue to overtake Australia in 2019.

Source:  Insideretail.com.au

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