The online grocery market in India has witnessed explosive growth this year thanks to the novel coronavirus pandemic, with sales expected to jump to $3 billion from $1.9 billion last year, according to consulting firm RedSeer. The market is expected to sustain this terrific growth in the future as well, with revenue expected to increase sixfold to $18.2 billion by 2024.

This should have ideally been great news for Amazon (NASDAQ:AMZN), as it was one of the top players in this market last year, with third-party estimates giving it a 31.2% share. But the equation may have changed in 2020 with the launch of JioMart, the e-commerce venture of Reliance Retail that already had a huge offline presence in the country. The bad news for Amazon is that JioMart has been scaling up quickly and recently hit a big milestone.

Indian flag represented on a keyboard button alongside the ecommerce button.

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JioMart hits half a million daily orders

Reliance management recently pointed out that JioMart is now averaging about 500,000 orders per day thanks to its partnerships with local mom-and-pop stores, and also by giving users the ability to place orders through popular messaging platform WhatsApp. That's a big jump from the 250,000 daily orders that JioMart was averaging just a few months ago.

This should make Amazon's alarm bells ring, as JioMart has now widened its lead over its American rival's online grocery business in India. Amazon's grocery channel, Amazon Pantry, was reportedly fulfilling an average of 150,000 orders daily in India earlier this year, according to a report. Big Basket, which led the market last year with a share of 35.2%, was doing an average of 220,000 orders daily.

So JioMart's rise has changed the balance of India's lucrative online grocery market. This is not surprising, considering Reliance Retail has been selling groceries physically in India since 2006 and has a footprint of 11,000 stores spread across 7,000 cities. More specifically, the company has 621 Reliance Fresh and Reliance Smart stores across India that sell a range of items including fresh produce, dairy products, bakery items, and home and personal care products.

As a result, Reliance already had the base in place to launch its online grocery business. This is also one of the reasons why JioMart has grown so quickly in a short span of time by rapidly expanding into 200 cities in India.

Additionally, Reliance Retail has grown the selection on the JioMart platform to 50,000 products and promises a discount to the maximum retail price. It is also on track to benefit from the wide reach of WhatsApp users in the country thanks to Facebook, which had purchased a 9.99% stake in the Jio Platforms business earlier this year for $5.7 billion.

Reliance Retail has ambitious plans of connecting 30 million local stores in India with potential customers through WhatsApp, which had more than 400 million users in the country last year. So Amazon now faces a stiff challenge to become the apex player in India's online grocery market.

Amazon also has some advantages

JioMart may have quickly scaled up its presence in India, but it remains behind Amazon as far as reach is concerned. In July of this year, the presence of Amazon's online grocery segment -- Amazon Pantry -- reached 300 cities after the company launched the service in several smaller towns and cities. The service is now available across 10,000 pin codes in India.

Amazon promises the delivery of a wide selection of grocery products across several brands, advertising that customers could save up to 35% on monthly purchases. It is also promising one-day delivery and two-day delivery in select cities. So Amazon is now ahead of JioMart as far as countrywide reach is concerned.

On the other hand, the company has also expanded the reach of Amazon Fresh, through which it sells fresh produce such as fruits and vegetables and frozen items. Amazon Fresh is now available in eight big Indian cities that are served by 25 processing centers to enable fast deliveries of fresh food products and other items. In fact, Amazon has tripled its processing space to meet the spike in demand for groceries in these cities.

The company has also been boosting its network of local mom-and-pop stores through the Local Shops on Amazon program in India. Since its launch in April this year, Amazon has already recruited 20,000 retailers under this program. Meanwhile, the company has built a network of 28,000 neighborhood stores under the I Have Space program in India to boost last-mile connectivity.

Investors need to keep an eye on this long-term play

In all, Amazon is gradually setting itself up for success in India's grocery market, which is still in its early phases of growth. Though the market is expected to hit $18.2 billion in revenue by 2024, the online channel will account for only 2.3% of India's overall grocery sales.

If Amazon can hold on to its existing share, it can earn billions by selling groceries online in India over the next four years as the size of the market expands rapidly. It doesn't have to become the biggest player in this space to make serious money considering that the overall grocery market in India is expected to hit $790 billion in revenue by 2024.

So even though JioMart is making waves in India's e-commerce market and online groceries right now, the playground is big enough to accommodate multiple players. Amazon is making the right moves that could help it maintain its impressive share, and that could lead to billions of dollars in revenue in the long run.