Saudi Arabia's e-grocery market grew substantially in 2020, as government measures to curb the spread of the coronavirus prompted more people to do their grocery shopping online, according to consultancy Redseer.
The kingdom's online grocery market grew to 1.3 per cent in 2020, from 0.3 per cent in 2019, the fastest expansion in the past two years as more consumers pivoted to the internet for their shopping needs amid the Covid-19 pandemic, according to the study by the Indian research company. The growth in Saudi Arabia's e-grocery market dwarfs the 0.5 per cent share of India, which is set to overtake China as the world’s most populated country by 2027, according to the UN. The market share of online grocery in the US reached 4.8 per cent, while the UAE leads at 5.3 per cent.
"The grocery industry is managing a massive, perhaps once-in-a-lifetime, surge to online shopping and diversification of channels such as quick-commerce, omnichannel [and] e-tailing," the report said.
About 77 per cent of consumers in Saudi Arabia, the Arab world’s biggest economy, are shopping online more frequently now than they were before the pandemic, according to a survey by Mastercard. The percentage of online shoppers in the kingdom outstripped the average for the Middle East and Africa region of 73 per cent, Mastercard said in its e-commerce consumer study.
Compared to pre-Covid times, customers in Saudi Arabia are turning to online channels for grocery shopping and this behaviour has "remained sticky till now" with more than 80 per cent of online shoppers making grocery purchases, Redseer said.
The e-grocery segment is expected to be the fastest-growing online retail sector in Saudi Arabia, the consultancy said.
"E-grocery struggled against other online sectors prior to 2020. But the recent growth of more than 250 per cent in 2020 shows that e-grocery is here to stay," Redseer said.
With consumers shopping online even after the height of the Covid-19 pandemic last year, e-grocery growth will outpace the rest of the online retail sectors, it said.
Quick-commerce players such as food and grocery online delivery platforms Nana and Hungerstation have captured the majority of growth in that segment in Saudi Arabia, according to the research.
Pure play online retailers are driving the e-grocery sector because of the value proposition of quick delivery and convenience, it said. Omnichannel players already have consumer trust because of the longer relationship with them.
Pure play online retailers have captured 60 per cent of the online grocery market, while omnichannels hold the rest of the market share, Redseer said.
Nearly 73 per cent of those polled by Mastercard in the kingdom said they shopped online for clothing, almost 68 per cent for groceries and over 65 per cent of respondents said they purchased medicines online.
In the wider Middle East and Africa region, more than 70 per cent of respondents said they shopped online for data top-ups, 63 per cent for clothing and 52 per cent for groceries.