How Is The Online Grocery Delivery Market Positioned In KSA?
The online grocery industry in Saudi Arabia has been growing rapidly since inception and is currently positioned to be in the growth stage. Major players entered the market between 2016 and 2018 & currently, there are 8-10 companies offering grocery delivery services in KSA. In addition to this, the market value has doubled from 2017 to 2019, suggesting that consumers are starting to get more comfortable ordering essentials food items online.
The demand for online grocery is rising among working professionals & married couples as they have less time to physically visit a store for grocery shopping
Who is the Target Customer?
Smartphone users aged 25-44 are the major target audience for online grocery delivery companies in the Kingdom. The average order frequency is ~ orders per month.
How Is Market Segmented?
By Region: Central and Western Saudi Arabia mapped as major regions based on the demand for online grocery services in the Kingdom. Riyadh, Makkah, Medina mapped as major cities on the basis of demand for online grocery services in Central and Western Region. Dammam, Asir, and Ha’il considered as evolving regions in terms of demand and supply for online grocery services.
By Product Category: Food & Beverages mapped as the most demanded product category among the customers in the Kingdom. Most demanded products have been packaged food, canned food, water, bakery items, cleaning products, and baby food.
By Mode of Payment: Cash is the most preferred mode of payment as customers are skeptical for the security of their financial details. They believe their bank details are not secure if they use online mode of payment. This was followed by pre-delivery online payment and card on delivery. Pre-Delivery Online Payment options include Mada Cards, Apple Pay, Credit Cards, STC Pay, and others.
By Delivery: Customers prefer their orders to be fulfilled within the specific time slot promised by the online grocery service provider. Large order size often takes more preparation time thereby leading to delay in deliveries. Companies charge between SAR 10-20 for delivering groceries to the customer.
Marketplace model of grocery delivery refers to a company providing an e-commerce platform that connects customers and grocery stores for the purpose of buying and selling groceries respectively. Nana, Zad, and Qareeb.com have been following the marketplace model in the KSA. The omnichannel model provides access to groceries from offline and online platforms. Carrefour and Danube have been following the omnichannel model.
The competition in the industry is concentrated on the presence of 8-10 players in the industry. Major players are Nana Direct, Zad, Carrefour, Danube, and Qareeb.com. Companies have been battling against each other to acquire and retain clients, expand geographical presence, expand the product offerings, and improve unit economics to increase margins.
Companies with large product assortment, wide regional presence, and express delivery are identified as clear leaders in the industry. Companies are expected to focus on offering personalized shopping experience to the customer for instance showcasing relevant products based on previous search results, taste & preferences, etc.
Impact Of Covid-19 On KSA Online Grocery Market
Due to COVID-19 Outbreak, people avoided crowded places and turned to online grocery shopping amid escalating fears. Major Product Categories such as water, personal hygiene, home cleaning, fruits & vegetables, health & nutrition, and milk witnessed growth between 25-35% during the pandemic.
It was expected that there will be a drastic increase in the number of orders, average order size, and delivery time across the industry. Companies partnered with third-party delivery companies to manage last-mile logistics. Companies faced logistical challenges to keep up with the increased demand. Service Providers who delivered in one to two days had a waiting period of one to two weeks.
What Is the Future Of KSA Online Grocery Delivery Market?
The online grocery delivery market GMV in KSA is expected to reach ~SAR by the end of 2025, registering a CAGR of 23.4% during the forecast period. In addition to this, the number of orders is expected to increase from ~ Million in 2019 to ~ Million by 2025, registering a CAGR of 21.2% during the forecast period.
It is anticipated that the average order size in the region would decline owing to an increase in frequency of orders placed by the customer. Companies are expected to invest in technological developments such as drones and warehouse automation to enable quicker deliveries and generate greater customer value. Companies would also expand their partnerships with third-party operators such as food delivery companies, logistics companies, and other service providers to enable quicker deliveries.
Key Segments Covered: –
By Product Category
Food & Beverages
Beauty and Health
By Mode of Payment
Cash on Delivery
Pre-Delivery Online Payment
Card on Delivery
In a Specific Time Period (Same Day or Next Day)
Express Delivery (30 minutes-2 hours)
Other (2-3 Days or More)
By Age Group
Key Target Audience
Online Grocery Delivery Companies
Supermarkets & Hypermarkets
Food Delivery Companies
Investors and Venture Capitalists
Government Organization catering to the FMCG Industry
Time Period Captured in the Report: –
Historical Period: 2017–2019
Forecast Period: 2020-2025
Key Topics Covered in the Report: –
Difference between Online & Offline Grocery Shopping. Why Online Grocery is the Way Forward?
Target Addressable Audience
Supply Ecosystem and Competition Parameters
Demand Scenario, Target Customer and Factor Influencing Consumer Behaviour
Process of On-Boarding a Grocery Store
Role & Responsibilities of Company and Partner Grocery Store
Gaps & Possible Solutions for Managing Logistics
Factors Influencing Customer Behaviour
Features of a Grocery Delivery Application
Technologies Facilitating Online Grocery Delivery Industry
Upcoming Technologies in Online Grocery Delivery Industry
Future Market Trends and Way Forward
Industry Best Practices
Covid-19 Impact on KSA Online Grocery Delivery Market
For More Information on the Research Report, refer to below links: –
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Ankur Gupta, Head Marketing & Communications