May 28, 2020
The report titled “UAE Online Grocery Delivery Market Outlook to 2025- Driven by Increasing Working Population, Introduction of Express Delivery and Regional Expansion“ provides a comprehensive analysis of Online Grocery Delivery Market in UAE. The report covers various aspects including the current online grocery delivery scenario in UAE, need & opportunities describing the target addressable market, addressable the gap in the market, and possible solutions.
It also covers current supply and demand in the region, detailed working of marketplace, Omnichannel and pureplay operating model, trends, developments, challenges, seasonality trends, current & upcoming technologies facilitating online grocery delivery industry, revenue streams and marketing strategies driving the industry. It gives a detailed explanation of competitive scenario including cross-comparison between major players, SWOT, and detailed company profiles of major players and concluding with future scope and analyst recommendations.
Market Overview and Demand- Supply Scenario
Gaps in offline grocery shopping such as the inconvenience of commute, long payment queues, and cost of impulse buying led to the introduction of e-grocery delivery in UAE. Population aged between 25 and 44, is considered an influential customer base for online grocery shopping. The industry is currently positioned in a growth stage registering a double-digit growth rate close to 38% between 2016 and 2019. High internet penetration, rising working population and an increasing number of single families has led to the growth of e-grocery services in UAE. The number of companies offering grocery delivery services in the UAE has increased over the years. Companies have expanded their product portfolios from food & beverages to household supplies, baby food, fresh food, fish & meat, and other product categories.
Demand by Product Category (Food & Beverages, Household Supplies, Beauty and Health, Baby & Kids and Fresh Food)
Food & Beverages mapped as the most demanded product category. This was followed by household supplies, beauty & health, baby & kids, and fresh food. Carrefour, Lulu Hypermarket, Bawiq, El Grocer, Talabat specializes are major players in the food & beverage category.
Demand by Region (Dubai, Abu Dhabi & Other Emirates)
Dubai and Abu Dhabi mapped as major cities based on demand and supply of online grocery services. This is mainly due to the concentration of the population in these regions. Working professionals, who are the major end-users of online grocery delivery services, are concentrated in Dubai and Abu Dhabi.
Demand by Mode of Payment (Pre-Delivery Online Payment, Card on Delivery and Cash on Delivery)
The demand is still dominated by pre-delivery online payment followed by card on delivery and cash on delivery. People who order online are usually not present to collect delivery and therefore pre-payment is preferred. In Dubai and Abu Dhabi majority of household chores are taken care of by house helps and they usually collect the order delivery therefore customer prefers online mode of payment.
The industry is fragmented with the presence of more than 25 players operating across the marketplace, pureplay and omnichannel model. Delivery Cost, Delivery Time, App Interface, Discounts & Offers, Return Policy, Ease of Payment have been major factors influencing customer behavior. The major players include Carrefour, Instashop, Lulu Hypermarket, El Grocer, Kibsons, Bulkwhiz, and Bawiq. Companies with large product assortment, wide regional presence, and express delivery are identified as clear leaders in the industry.
Service providers have been following marketplace, Pureplay and Omnichannel model to deliver customer orders in UAE. Instashop, Bawiq, El Grocer has been following marketplace model in UAE. Kibsons, Bawiq, Noon, Amazon follows the pureplay model. Whereas Carrefour, Lulu Hypermarket, Aswaaq, Choithrams follows the Omnichannel model.
Impact of COVID-19
Online grocery sales in the region have surged recently, as more people are avoiding crowded places and turning to online shopping owing to the corona pandemic. The average basket size of online order has increased to 15-20 times during the corona pandemic. Average delivery time for Omnichannel companies during the pandemic increased to 8-10 days. On the other hand, pureplay and marketplace companies were offering grocery delivery within 2-4 days and one day respectively.
Future Outlook and Projection
The demand is expected to grow with a CAGR of 34% on the basis of GMV between 2019 and 2025. Companies are anticipated to focus on expanding tie-ups with suppliers & grocery stores to fulfill customer orders. The demand is expected to be driven by upcoming technologies such as Drone Delivery, Warehouse Automation, Voice Ordering, and others. Market consolidation is expected in the future as players with the heavy financial backing and better brand value will acquire small players.