INDIA – Online food and grocery retail in India is estimated to hit US$10.5 billion or 1.2% of the overall market by 2023, according to a recent report released by consulting firm Redseer.

Redseer forecasts that growth in the sector, which currently accounts for just 0.2% of the overall market, will be driven by an increased assortment of products and efforts like express delivery operations.

Currently, online platforms including Bigbasket and Grofers have been the most prominent players in the industry. Bigbasket currently has over 100,000 orders a day, while Grofers manages more than 40,000 orders day.

In addition, food delivery platform Swiggy also recently ventured into grocery through its Swiggy Stores feature. Other competitors in the space include names like Dunzo, Swiggy-owned SuprDaily, Milkbasket, among others.

Today, grocery ordering and delivery represents the largest food tech category, while meal ordering comprises the greatest number of privately held, venture-backed startups in food tech globally.

India’s online food and grocery retail sector has continued to cement its place in the global market with the country recording some of the biggest deals in the space.

Bigbasket recently closed a US$150 million funding round, helping the seven-year-old startup surpass US$1 billion valuation while its chief rival, Swiggy has raised US$1.26 billion to date, further warming up competition in the market.

Walmart owned Flipkart recently announced that it will be entering the food retail business and has created a new entity called “Flipkart Farmermart Pvt Ltd” and is seeking to invest $258 million in the new venture.

Amazon is also planning to expand its food retail business in the country. The company has already committed to invest about US$500 million in the course of the next five years to build its own private label food products and engage with third-party sellers.

San Francisco-based Uber Technologies is also seeking to beef up its food delivery service Uber Eats in India despite lagging market leaders Zomato and Swiggy. With a market capitalization of more than US$52 billion, Uber said it is investing substantial resources in its grocery delivery business.

Food and grocery are compelling categories for e-commerce businesses as people buy their grocery and perishable supplies much more frequently than they buy office supplies and gadgets but the opportunity is still huge.

According to Redseer data, India’s modern retail penetration currently stands at 10% or US$82 billion of India’s overall retail sector which is currently estimated at US$805 billion as of 2018.

This organized share is expected to grow at 20% over the next few years to achieve a penetration of 11.8% or US$118 billion by 2020 and 14.7% or US$204 billion by 2023. Although though India’s modern retail segment has considerable ground to cover, it is still growing at a slower pace compared to other geographies, Redseer added ​in its report.