Online grocery sales in Asia are to increase by US$176 billion, or 194 percent, in the next five years, which would make it the fastest-growing channel in Asia, international research organization IGD said in a report on Wednesday last week.
The research — the first by IGD to focus on online groceries in the region — said that the segment would account for 6.9 percent of overall grocery sales in Asia by 2022, more than doubling its current market share of 3.2 percent.
IGD expects e-commerce sales of grocery items to reach US$267 billion annually from US$91 billion currently across Asia’s top 12 grocery markets, including Taiwan.
That figure represents an annual growth rate of 24.1 percent to 2022, compared with 6.4 percent growth for overall grocery retail over the same period, the report said, adding that penetration rates, size and growth of online grocery sales vary from country to country.
South Korea, China and Japan lead the way in online grocery shopping and will see the highest sales contribution from e-commerce, the report said.
Taiwan and Singapore will also have well-developed online grocery channels by 2022, benefiting from existing infrastructure and retailer investment, it said, adding that in Southeast Asian markets, grocery e-commerce is still in its infancy, although growing rapidly.
Logistics and payment will be key barriers to overcome for India and most Southeast Asian countries, it said.
IGD said ASEAN markets are expected to have the fastest growth, but the market share of online grocery shopping will remain small.
China will improve its position as the region’s largest online grocery market, with sales to reach US$185 billion annually, although South Korea is to record a higher market share in 2022, it said.
In Taiwan, brick-and-mortar retailers used to run online operations through shopping platforms operated by Yahoo Taiwan Holding Ltd (雅虎), PChome Online Inc (網路家庭) and the Taiwan unit of Japan’s Rakuten Inc for logistical support and as a means to manage costs, IGD said, adding that retailers are well-placed to launch their own e-commerce solutions.
However, the introduction of mobile payment services has been slow, despite a high smartphone penetration rate, it said.
Consumers in Taiwan prefer to purchase online and collect and pay in cash at convenience stores, bypassing concerns over online payment security, it said.
Alternatives to cash, such as digital currencies, might help eliminate this barrier, IGD said.
With a solid foundation of online grocery retail already established, Taiwan and Singapore will remain important markets to watch, it said.
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