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WHAT ARE THE ONLINE OPPORTUNITIES FOR GROCERIES IN THE UK AND CHINA?

23.07.15

THE STATE OF THE GLOBAL GROCERY MARKET

In 2014, food and beverage sales in the UK stood at £177.5 billion, making it by far the largest retail category. This is also true of the US, where the grocery market is worth an estimated$600 billion a year. Interestingly, only an extremely small percentage of all global food and beverage sales currently occur online; meaning ‘groceries’ are the least disrupted ecommerce category.

Although most consumers are still reluctant to do their grocery shopping online, shopping habits are changing quickly and the complicated logistics processes that are required by the FMGC sector continue to advance.

It is no surprise, then, that global online grocery sales are expected to increase dramatically over the next few years, reaching nearly $100 billion by 2019, compared to only $23 billion in 2014. This makes online groceries a fantastic opportunity for retailers who are able to meet the needs of the rapidly evolving multichannel shopper.

Below, we take a look at the opportunities offered by the world’s largest online grocery markets – the UK and China.

THE ONLINE GROCERY OPPORTUNITY IN THE UK

The UK is currently the second largest online grocery market worldwide, valued at £9.57billion a year. The development of innovative sales platforms and delivery services, coupled with the growing use of mobile devices for ecommerce transactions, means the UK’s online food and beverages sector is expected to reach £17.2 billion by 2020.

Convenient ‘click and collect’ services, same-day delivery options and a growing number of pick-up locations, offered by most UK retailers and logistics companies, has resulted in busy shoppers becoming more and more confident when purchasing their groceries online.

This was highlighted in a recent report, which revealed that three out of 10 Brits purchased their groceries online in the past month, while one out of nine online shoppers in the UK already doing most of their grocery shopping online.

Some of the biggest names in e-tail, such as Amazon, eBay and Google, are developing strategies to popularise the online purchasing of groceries in the UK, by increasingly promoting same-day delivery services. Amazon, for example, is planning to launch theirAmazon Fresh online grocery delivery service in London this September.

THE ONLINE GROCERY OPPORTUNITY IN CHINA

The world’s leading online grocery market is China, which currently stands at an estimated$40 billion. This figure is expected to skyrocket nearly five times, over the next few years, reaching almost $180 billion by 2020.

Online grocery sales in the country are soaring, as Chinese shoppers increasingly seek out high quality imported goods, such as baby foods, that are seen as an affordable luxury they cannot purchase at home. Currently, more than 40% of Chinese consumers buy food online.

Mobile is another key driver of the growth in the Chinese online grocery sector, as more than 90% of the population owns a mobile phone, accounting for nearly 1.29 billion mobile users.

Digital marketplaces, such as Tmall and JD.com, are the most popular platforms for online grocery shopping in China, as the scale of these pure-play sites enables them to offer an increasingly large product range.

As China’s population increases and social changes makes shoppers more open to trying new shopping behaviors, the growth in the online grocery sector in China is expected to continue.

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