Online grocery to drive e-commerce growth
The Reliance Industries, which has been winning top-level investments from the United States-based tech leaders, is expected to take as much as 50% of the projected e-commerce business in India which is projected to have a 27% compound annual growth rate (CAGR) through to 2024.
The market projection came from Goldman Sachs report “Global Internet: e-commerce’s steepening curve”, saying “We forecast India’s e-commerce will reach US$99 billion by 2024, growing at a 27% CAGR over 2019-24, with grocery and fashion and apparel likely to be the key drivers of incremental growth in our view.”
The report said the COVID-19 pandemic has driven a doubling of penetration of e-commerce globally with categories such as consumer packaged goods driving as much as three years of penetration growth in three months.
Online penetration of retail is expected to reach 10.7% by 2024, versus 4.7% in 2019.
#Reliance is India’s largest market-cap company with presence across sectors such as energy, telecom, and retail. Its #Jio Platform is rated as the fastest-growing network in the country in which #Facebook has taken a 9.99% stake. Related #JioMart is set to use Facebook’s #WhatsApp to connect to local grocery stores with a reach to the consumers.
“The biggest near-term theme in India internet, in our view, is the foray of Reliance Industries into e-commerce, and the company’s tie-up with WhatsApp for online grocery,” the Press Trust of India reported citing the report.
“We believe RIL’s partnership with Facebook could result in the company becoming a market leader in the online grocery space, with more than 50% share by 2024,” it said.
“Having said that, we do see grocery as a large category for two or more players to co-exist over time.” Growth in India’s e-commerce, the brokerage said, is likely to come from better penetration into categories such as grocery/FMCG, improving payment ecosystem and ease of shopping through #WhatsApp, etc.
“We expect non-grocery e-commerce penetration to see a sharp increase of 500 basis points over the next two years to reach 16.1% by 2021,” Goldman Sachs said adding the last 500 basis points of the increase took four years.
While online penetration in categories such as consumer electronics is fairly high at about 40% as of 2019, there exists significant growth in categories like apparel, appliances, health and personal care, where online penetration in India remains materially lower when compared with peers such as China.
“As far as incremental growth in e-commerce is concerned, we expect grocery to be the biggest driver with 40% contribution to incremental e-commerce GMV (gross merchandise volume) between 2019 and 2024,” it said.
India’s grocery segment accounted for US$380 billion in 2019 or 60% of the total retail market.
India’s online grocery market is projected to grow 20x by 2024 to US$29 billion in value. #Google #Microsoft #Alibab #Retail #Food #Agri #FMCG #Apparel /fiinews.com
