Southeast Asia’s e-grocery market is set for significant growth, driven by mobile-first consumers and affordable internet, but e-retailers must innovate with omnichannel strategies and sustainability to overcome challenges and maintain momentum.
The e-grocery market in South East Asia is experiencing an unprecedented surge, with growth projected at an impressive rate of 18.06% from 2024 to 2032, according to IMARC.
One of the most significant factors driving the e-grocery boom is the region’s mobile-first consumer base, with nearly 88.9% of internet users accessing services via smartphones.
Digital marketplaces such as Shopee, Lazada, Grab, Tokopedia, and Foodpanda are capitalizing on this trend, enhancing customer engagement and driving sales. The digital transformation of grocery retail is no longer just about convenience but about building a compelling omnichannel value proposition. Integrating online and offline assets to create a seamless shopping experience has become essential, as has leveraging technology to personalize offerings and optimize logistics.
Innovation has become a crucial component of this fast-growing sector, attracting substantial venture capital investment.
Funding for online grocery startups surged from USD26 million in 2020 to USD190 million in 2021, with most deals concentrated in Indonesia. These investments are driving the adoption of advanced technologies like artificial intelligence and machine learning, which are essential for improving supply chain management and enhancing the overall customer experience.
Traditional grocery retailers are also adapting by launching mobile apps and online portals to stay competitive, recognizing that a digital-first strategy is vital for long-term success.
Despite the tremendous potential, the e-grocery sector faces formidable challenges that require strategic adaptation. Pricing pressures, logistical complexities, and the need for hyperlocal adaptation present significant obstacles. With varied demand densities and complex geographies, particularly in a region as diverse as Southeast Asia, optimizing delivery networks and maintaining fresh offerings remain significant challenges.
Companies are investing heavily in hyperlocal logistics, including dark stores and localized delivery networks, to ensure efficient and timely deliveries. Additionally, retailers are focusing on private-label offerings and subscription models to secure recurring revenue and maintain profitability.
Competition in the e-grocery market has intensified with the entry of Chinese e-commerce giants like Alibaba’s Lazada, PDD Holdings’ Temu, and ByteDance’s TikTok Shop. These companies are making aggressive moves to expand in Southeast Asia, leveraging their vast resources and advanced technology to capture a significant share of the market. The growing influence of these giants underscores the immense potential of the region and the pressing need for local players to continuously innovate.
At the same time, consumer awareness around sustainability is increasing, prompting retailers to adopt more responsible practices. Modern shoppers are increasingly drawn to brands that prioritize eco-friendly packaging, sustainable sourcing, and ethical labor practices. As a result, many retailers are integrating environmental and social responsibility into their business models, not just to meet consumer expectations but also to build long-term brand loyalty.
Southeast Asia’s e-grocery revolution is not just a fleeting trend but a fundamental transformation in the way people shop for essentials. The combination of mobile-first consumer behavior, strategic investment, and innovation is driving the market forward. However, only those retailers who can seamlessly integrate technology, convenience, and responsible business practices will successfully navigate the complexities of this dynamic landscape and establish themselves as market leaders.
Despite this remarkable growth, Southeast Asia still lags behind more developed e-grocery markets such as China and South Korea. In 2021, the penetration rate stood at just 1–2%, but it is expected to reach 3–5% by 2026, translating to nearly $17 billion with a compound annual growth rate of 16% from 2022 to 2026. Indonesia is at the forefront of this growth, but other Southeast Asian countries are also set to at least double their markets over the next few years.
