Saudi e-grocery market to pass $2bn in 2025

- Arabian Business

From being a laggard among other online sectors pre-2020, growth in the e-grocery segment is also predicted to outpace the rest of the e-tail sectors in the kingdom over the next three years, according to latest market research

Saudi Arabia’s grocery sector is currently witnessing a massive surge in online shopping, fuelled by a multi-channel push and higher customer stickiness, catapulting the country's e-grocery market to cross $2 billion in 2025 - a five-fold jump compared to 2020 – latest research shows.

From being a laggard among other online sectors pre-2020, growth in the e-grocery segment is also predicted to outpace the rest of the e-tail sectors in the kingdom over the next three-years, according to a research report by global consultancy for online services RedSeer Consulting.

Currently, the e-grocery market in Saudi Arabia is relatively underpenetrated, accounting for an estimated 1.3 percent of the overall grocery market in 2020, as against 5.3 percent in the UAE and 4.8 percent in the USA, the report said.

“Compared to pre-Covid times, Saudi customers are turning to online channels for grocery shopping and this behaviour has remained sticky till now with more than 80 percent of online shoppers making repeated grocery purchases,” the market research revealed.

RedSeer said pure play e-tailers were driving the e-grocery sector because of the value proposition of quick delivery and convenience.

“Within pure play e-tailers, quick-commerce – or q-commerce - players such as Nana and Hungerstation have emerged as leaders in this space and captured more than half of the consumer orders,” the report said.

The pure play e-tailers accounted for 60 percent of online grocery sales in 2020 in the Saudi market, while omni-channels accounted for the remaining 40 percent.

The report also said the q-commerce players can further disrupt the market as they already have high order volumes and are building strong relationships with consumers.

Omni-channel players, on the other hand, already have consumer trust because of the longer relationship with consumers, the report added.

“The majority of consumers participating in our market study mentioned that they are buying groceries online. We expect that this latent demand will materialise over the next few years with the improvement of supply landscape,” Sandeep Ganediwalla, Dubai-based managing partner of RedSeer Consulting, told Arabian Business.

Ganediwalla said there were three components to becoming a leader in e-tailing - trust, value proposition and experience.

“These [q-commerce] players will build consumer trust as consumers order from them multiple times. Once they build trust, improve their value proposition - high variety of products at competitive prices - and improve the shopping experience by way of delivery experience, payment and app experience, they will emerge as strong leaders in this space,” Ganediwalla said.

Pointing out that the e-grocery segment in Saudi Arabia struggled against other online sectors prior to 2020, the report said the growth of more than 250 percent in 2020 showed that e-grocery was here to stay.

“As consumers shopped online even after Covid-19, e-grocery growth will outpace the rest of the e-tail sectors over the next three years,” the report said.

 

Source : Arabian Business