Planning to start an online grocery delivery business from an existing supermarket in Lockdown 4.0? Then, you’re in the right place. We help you on how to start an online grocery store in India and become a part of this booming industry.
Currently, in the novel coronavirus lockdown, the growth of online grocery store business is starting to boom all over the world.
Further, this online grocery business also offers many opportunities. From smaller, medium, to individual players who want to set up their own grocery store online.
Well by reading this post, you come to know,
- Online grocery industry stats and players
- E-commerce Grocery Business in the other states like the US, UK, and Canada
- How does an online grocery delivery business operate?
- How does an online grocery store earn money?
- What are the highlights of an online grocery store?
- What are the challenges faced by an online grocery delivery business?
Today, online grocery shopping is on fire. Every user is attracted to it due to impressive discounts, coupons, and so on.
According to a recent Nielson study, it is reported that- developed countries like the US, UK, Japan, etc., already seen one-fourth online shoppers on the internet. The rest of 55% are willing to do it in the near future.
Besides, to satisfy this growing customer base. Online grocers, on the other hand, are also growing at a 3x rate year-over-year. Hence the whole e-commerce sector is growing at an effective annual rate of 13%.
Online Grocery Delivery Business in the US, UK, and Canada During Coronavirus!
We reviewed the current state of the online grocery supermarket business across different countries.
Thus, we concluded a historical background to know key grocery industry trends.
Firstly, in our analysis, the Ecommerce Grocery Business in the US is Just Getting Excited.
According to the recent eMarketer report, the US grocery e-commerce business is growing at a faster pace.
Further, it is identified that the online grocery delivery business in the US is currently lying around $20-$25 billion. By 2021, this number will reach $38.16 billion.
Next, the Online Grocery Delivery Business in the United Kingdom (UK) is becoming the fastest-growing purchase channel.
According to Statista, the UK will soon become the second-largest grocery market after China in 2020. And there is a huge scope of new online grocery websites in the country.
Finally, analyzing the eCommerce Grocery delivery Business in Canada. It is identified that Canada is currently spending around $6.4 billion per year on online grocery shopping.
Furthermore, Grocery delivery systems in Canada are seeing a surge in demand due to coronavirus.
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How Does Online Grocery Delivery Business Operate?
I hope you know the basics, (which are – an online grocery marketplace/store selling grocery online and deliver them to customers’ doorsteps) the important features of an online grocery delivery business are:
- a) Generally, Tie-ups with whole-sellers/local grocery producers, and
- b) Have a strong delivery network to ensure orders reach customers in a timely manner
How Online Grocery Delivery Business Makes Money?
Commission
The commission type revenue model is quite straight forward.
However, to speed up business growth & increase profit margins.
You can do different commission rates for various products. For that, do market research to identify:
- Most popular products
- Growth in the demand for a product
Subscription
The subscription type revenue models don’t include off some charges. It provides discounts or better service to customers over a period of time.
For example, Let’s take Instacart that offers a yearly subscription for free 2-hour or scheduled deliveries.
Another example, Thrive Market that offers a 25-50% discount on all orders with its yearly subscription.
Note that you can also use both the commission & subscription type revenue models at once.
Service Charges
For online grocers who operate their business individually, (notably brick & mortar grocery sellers who are planning to start online) making money from the service charges is the most viable revenue model.
They can also add the subscription type model as an additional revenue stream.
Secondary Revenue Streams
- On-site promotion for retailers/grocery sellers (applicable for marketplaces only)
- Hosting banners ads
- Start a blog and distribute sponsored content on it
- Market useful merchandise such as jars, reusable carry bags, etc. (it will also help you in branding)
- Sell user data to market research firms
Revenue Model & Streams that will bring you maximum benefit depends on many factors, such as:
- Target market
- Business size
- Budget, age, and popularity of the business, etc.
So, examine each of these requirements against your business goals & needs, and choose the ones that best suit.
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Essential Website Aspects for Your Online Grocery Delivery Store
Before establishing your online grocery startup, you must understand business requirements. And according to that implement the right revenue model.
Further, your website plays a major role between you and your customers. Hence, have an eCommerce website that helps you interact with buyers, engage them, and turn them into loyal customers.
For this, your website should be quick to load, easy to use, mobile-friendly, and has the following unique features:
Repeat Orders
There are consumers who purchase the same grocery items at home.
Knowing this common consumer behavior in mind. You can provide your customers the choice to save the order to their profile, which they can re-order. Rather than adding some items to the cart again.
Shareable Cart
Online Grocery shopping is usually a family activity, which includes different members with different demands.
So, it can be quite logical to offer a feature that allows users to share a shopping cart with other registered users.
Moreover, this feature allows them to add additional products, and get them all delivered in one single order.
Recipes & Ingredient List
This would be going the extra mile to fulfill your customers. Here, you can add some recipe ideas on your website and promote them on product pages.
This will surely catch buyers’ attention and might even engage them to buy more items from you.
Discount Coupons
To make the most out of seasonal sales. Discount coupons became a common practice among businesses.
So it is important that your eCommerce website has the feature to receive & process these discount coupons.
Friend Referral
Today friend referrals are becoming quite a popular practice among online businesses. It appears like providing free first delivery or x% discount to buyers who invite their friends to buy from you.
This feature not only helps customers to buy more from you but it also helps you keep the customer acquisition cost down.
Shopper Module
Besides, the above features, ensure your online grocery store startup also have these basic critical features & functionalities:
Product Categories: Organize your list in proper categories and subcategories and display it on your website. So it will be easier for customers to find the right product.
Search Tool: If shoppers can’t find the specific product by browsing product categories, they should have the option to search for it.
Therefore, to enhance customer experience, there must be a search tool along with the auto-suggest feature.
Customer Profile: Like other eCommerce stores, your registered customers should also have a Customer account.
This helps to keep a record of their orders, save items to cart, track orders, save repeat orders, etc.
Merchant Module: If you are opening an online grocery marketplace, then you should have a separate section for merchants (grocery sellers).
This allows them to manage their individual inventories, orders, payment, etc.
Social Commerce Features: Have features such as sharing products on social media, social signup, or selling directly on Facebook.
This would help your online grocery delivery business to get a good exposure.
SEO Ready: Make sure that your website has all keys features to get easily crawled by search engine bots and to rank better.
Mobile-Friendly: It is very clear today most of the customers make a purchase with their mobile phones.
Hence ensure to enhance your store’s on-the-go purchase experience. For this, you can make the website responsive, build a separate mobile website or an app.
However, covering all the above-mentioned features on your online grocery supermarket is a challenge. This definitely will take lots of time, effort, and investment.
Therefore, the best approach to overcome this challenge is to build your grocery store with a technology solution (readymade script).
This offers most of these features by default and allows you to easily add unique features.
At Zuan Technologies, we have developed a similar product called Grocery shopping.
This enables eCommerce business owners to instantly launch a feature-rich online grocery store.
Further, it offers everything that a grocery store needs to implement unique functionalities.
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Now, let’s dive into the challenges you will face when running an online grocery delivery business and its possible solutions.
Challenges You Face with Online Grocery Delivery Business
Storage & Delivery Infrastructure
General online stores can tackle instances like delays in delivery, wrong item delivery, returns, etc.
But when it comes to online grocery stores, it will be a more like ‘do or die’ situation.
Therefore, the entire supply chain – from farms/manufacturers to storehouse & then to the customers – should be very robust.
Additionally, since decaying food products need to be stored & delivered in refrigerated chambers. Here, the storage infrastructure would add up the business operations cost marginally.
Therefore, there are certain steps you need to take to fight against these challenges. Some of which are:
- Combine a robust, Just-in-time (JIT) inventory management system API with your grocery store. This automates things to overcome storage cost & wastage
- Associate with a good delivery service provider that can meet your target audience expectations with assurance
- Divide the delivery network into hyper-local networks to handle deliveries better & make it faster
Low-Profit Margins & Quality Assurance
Currently, people shop online not just for convenience. But also because they expect to get better prices with discounts, and coupons.
At the same line, online grocers also face the same challenge of offering competitive pricing.
However, with a large amount of money spent on building & maintaining the storage infrastructure & efficient supply chain. Keeping satisfactory profit margins might become quite difficult.
Furthermore, when it comes to buying vegetables & fruits, most consumers prefer to shop only after physically checking them for their freshness & quality.
But while shopping online, such an option is not possible. So, to convince customers to buy groceries online always remains a persistent challenge.
Steps You Can Take to Overcome these Problems:
- Add more non-decaying categories to your online grocery store. This includes packaged foods, personal care & beauty products, household items, etc. as their storage & delivery cost less
- Join your offline & online grocery delivery business to improve the customer experience. Alternatively, you can also cut down the operation cost as well.
Below we have a breakdown of ways to do it:
- Usually, Customer checks products online for availability & shop them at the store after testing the quality
- Buyer orders online & pick up the order from the store (both a & b will save the delivery cost)
- Customer may visit store & orders online to receive groceries conveniently delivered at home
- Self-checkout at stores by using technologies like iBeacon (reduce operation cost & enhance customer experience)
Online grocery marketplaces that don’t have physical stores can start their offline chains to benefit from the blended online-offline grocery shopping concept.
Conclusion
Grocery consumption is a necessary human need. Today, people are drastically depending on online shopping. So, the online grocery delivery business idea fits perfectly in the current dynamics, despite the above-mentioned challenges.
The important thing for grocery business owners who plan to enter this online sector is to be aware of these challenges.
Furthermore, they should know how to go about them by leveraging the right technology, trends & tactics.
And that’s where this post serves as a valuable resource.
