The COVID-19 pandemic has accelerated the growth of many internet-focused businesses: whether that’s streaming services like YouTube and Netflix or food delivery services like Grab and Foodpanda. One of the big surprises and success stories to come out from the pandemic is the rapid rise and growth of online grocery services.
According to Statista, Thailand’s grocery market was worth an estimated 30 billion USD (900 billion Thai baht) in 2019. However, the online grocery segment has been lagging for years when compared to other categories of eCommerce. As of now, it has finally taken off, becoming one of the fastest-growing categories for eCommerce in the country. Before the COVID-19 pandemic, compared to 2019, the year-over-year growth of online grocery shopping was expected to grow a staggering 26%, that’s more than any other product category.
One might wonder what the cause of the sudden rise in online grocery shopping is. As mentioned earlier in this article, one may be convinced to say that the only contributing factor is, of course, the ongoing COVID-19 pandemic that has shifted most things to implement social distancing and contactless approach, but that isn’t the case. In early 2020, the Thai government implemented a ban on single-use plastics at major grocery and convenience stores throughout the country, with an aim for a complete ban by 2021. With shops unable to provide consumers with single-use plastic bags to hold their groceries in, they are often dissuaded from shopping if they do not have a vehicle or if they do not have any reusable bags on hand. These factors push consumers to have their groceries delivered to their residences and skip the hassle of transporting groceries from their vehicles to their homes without plastic bags.
Other contributing factors are the recent rise in pollution and harmful air quality (PM 2.5) particles and constant heavy traffic on main roadways in the city where most large grocery chains are. These factors encourage shoppers to do their grocery shopping from home rather than travel through traffic and pollution to go to the stores themselves. Many online grocery outlets also provide free next-day delivery and offer affordable same-day delivery for those who need their items as fast as possible. Free delivery is undoubtedly another contributing factor to the growth we see within this eCommerce sector.
With the growth of the grocery eCommerce business, we’ve seen many players enter the market and heavily push and market their new services. LINE, Foodpanda, Grab, and HappyFresh have launched partnerships with major grocery stores, while Foodpanda has also launched PandaMart: their physical warehouse location only for online grocery shopping. Staple big box stores such as Tesco Lotus, BigC, Villa Market, Tops Supermarket, and Gourmet provide their in-house and partnered services, while convenience store giant 7-Eleven is also pushing their delivery service to compete.
As a user of online grocery services myself, I value its convenience. Although I certainly am unable to speak for all users of the service, the promise of free and timely delivery of groceries gets rid of the tedious task of driving to the store, walking and picking out your items, and unloading your groceries from the car.
The timing of the push for these online grocery delivery services could not have been better. According to Statista’s 2020 Post-COVID Digital Market Outlook on Thailand’s Food & Beverages, estimates say revenue growth will be 74.8% in 2020 compared to 2019; and 32.1% in 2021 compared to 2020. It will be interesting to see where the online grocery eCommerce sector goes next.
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Dakota is Digital Marketing Manager – Content Specialist at MOST 2414. You can find him on LinkedIn!
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