Everyone loves pizza, but not everyone visits a pizza parlour to get the same. Some of us just take out our smartphones and order one from Eat24 or any food delivery app.
The world is moving towards a similar kind of state with Grocery supplies too. Everyone needs grocery supplies, but not everyone wants to, has time to visit a grocery store; at least not as frequently as we generally need those supplies. Maybe, sometimes you might want to run for the supplies to kill some time, take a walk, or get some fresh air, but most of the time –it’s just that we want the supplies to run right at our doors.
How Big Is The Online Grocery Delivery Market?
Where Instacart, Amazon Pantry, and Fresh Direct are popular names in the US, local businesses such as Big Basket, Gofers, OneCart, Ocado, Shipt are not any lesser-known in their respective local markets around the globe. Entrepreneurs know that this market is full of opportunities and it is waiting for the businesses to tap on it.
Talking in numbers, Entrepreneur states that online grocery selling market is just 3-5% saturated, and based on different innovative ideas, the competition is very low in this segment. Each year, there is a three-five times increase in the number of new businesses joining the league around the planet, which is a clear indicator that the market is still big enough for many new entrants.
How To Start An Online Grocery Delivery Business In 2019?
If you too are intrigued by the numbers and thinking about how to set up a grocery store business in 2019, this article is just for you. Here, we will divide this guide into three sections where we will cover the prerequisites and challenges associated, it’s scope in the years to come, and some useful insights on the aspects such as how to start online grocery store, How to choose a right grocery delivery business software, how to grow up with time, and many more.
Prerequisites And Challenges Of Selling Groceries Online
Before you dig deep into how to set up a grocery store, it’s crucial that we become accustomed to the hurdles that you might face in the journey. It’s better to strategize for the challenges beforehand so that the only thing that would want your attention from here would be the actual implementation and launch of a perfect online grocery store.
Inventory and Storage
90% of the grocery supplies are generally perishable items. Storing the inventory is a big concern for the traditional grocery stores as well. Therefore, before you begin with the ways to set up your store and start to sell grocery online among the public, make sure you have a plan to deal with the storage of the inventory.
Out of many overhead costs, the cost of a refrigerated storage facility is inevitable. The bigger the stocks, the bigger are the requirements for suitable storage solutions. Besides, you must also be able to predict the demand to ensure you don’t overstock, as some items are beyond refrigeration. You can optimize your profit margin and overhead costs up to great extent by optimizing your stock to a balanced level.
Alternatively, instead of stocking up the items, you can work in the marketplace model. Instead of fulfilling the supplies from your own inventory, you can simply connect the shoppers with local physical stores. You would be responsible for just collecting the ordered items from the stores and delivering them to the customers. Of course, there are options to tweak this business model to further extensions as well:
- You can receive the orders, purchase the items from local suppliers of your choice, and deliver.
- You can let the customers choose the stores from one or multiple local stores, and deliver.
- You can forward the orders to your partner stores and ask them to deliver the same.
In either of the cases, you can save on the overhead cost of managing and stocking the inventory in-house. However, be advised that the profit margin and the way you make money will change with every tweak in the fulfilment model.
Packaging & Delivery Cost
Based on the fulfilment model, you would be either responsible for the delivery of the items or just connecting the customers to local stores and let them deliver. If you are responsible for the delivery of the items, be advised that transportation of perishable items require special care. You would need a fleet of small, medium, refrigerated, as well as non-refrigerated vehicles. Besides, perishable items need special care for packaging as well. It’s obvious that packaging must ensure that items stay safe during transportation.
Having managed that comes to the biggest challenge –delivery speed. You cannot compromise with the one-day delivery; it’s a necessity. However, this doesn’t mean, you can simply deliver at a random time of the day. Most of the successful grocery delivery businesses not only allow customers to choose from same-day delivery and scheduled delivery but also let them choose the time slots. You can take a cue from the below screenshot from Instacart’s delivery options.
Instacart allows customers to choose from same-day delivery, or scheduled-delivery for another date in advance. With the option, they also let the customers choose a period of the day. It seems simple, but not quite so in reality for the businesses. They have to pay for the delivery services and manage their margins at the same. So how they manage to stay in profit after offering a variety in the delivery options?
Different brands use different strategies to sell grocery online. For example, Amazon gives the free same delivery to only the ‘Prime Members’, while Instacart charges extra three-five dollars based on the delivery slots. To encourage customers to use advanced scheduling more, Amazon also rewards the customers for not rushing.
Besides, some platforms don’t provide same-day delivery for all items. Customers get same-day delivery options in only selected stores on the platform.
Future Scopes Of An Online Grocery Delivery Business
Grocery delivery is not a new business idea. Like every online business that we see today, online grocery delivery has also evolved from a traditional form. The online version of grocery deliveries is on a boom today, and increasingly, there is a massive boost in the number of people using them very often in their daily lives. Especially in developed countries like the UK, Japan, and France etc., it’s a big trend.
Where more than half of the online population in developed countries has already adopted the online grocery stores, the developing countries aren’t any lesser convinced. You can guess the scope in developing countries by the fact that Amazon started delivering groceries in countries like India, Brazil, and many more. Besides, an increasing number of local entrepreneurs have also started delivering groceries to tap on the market in both developing and developed countries.
Contrastingly, unlike other developed countries, the customers in the US have not realized even the quarter of the potentials. With only three per cent of people (according to CNBC) shopping grocery online in 2018, the US market is expected to explode with opportunities. Interestingly, the penetration in the UK and South Korea is far better with over 15% of people already shopping their groceries online.
Over time, as the infrastructure advances, the market is poised to penetrate a massive population of the worldwide population. Because of the local nature of the business, tapping on this particular market is the most suited business idea for local entrepreneurs. Early birds have the biggest prospects to claim most of the worms.
Tips And Insights Into How To Start Online Grocery Store
Starting a grocery delivery business is not just about back-end support, delivery, storage, and inventory. It’s also about studying the market and choosing the right kind of strategies and policies to capitalize on the local prospects. Moreover, it also deals with choosing the right kind of technology to build a cutting-edge online platform, that too with least investment.
Start with a Niche Market after a Comprehensive Scrutiny
It’s not wise to go full-fledged at the beginning itself. It is better to target a small market with limited funds and resources. For example, a citywide service to begin with. However, you shouldn’t just pick any random city. You must consider the local infrastructure, feasible innovations, available technological solutions, local laws, geographical barriers, and most importantly, available B2B support services such as courier, packaging, storage, and suppliers, etc. You should begin only after studying all the prospects and challenges comprehensively.
Selecting Your Technology Stack for the Online Platform
Once you have your plan ready, the next big job would be building an online platform aligning with your planned business model. So how to start online grocery store?
Luckily, we have achieved so much in the software development field today. An entrepreneur need not think much about the hassles of development anymore. Here are some tips should you follow will let you build a cutting-edge grocery delivery platform without much of the hassles:
Cover all kinds of devices: website, mobile responsive site, and mobile apps. Go for ready-made grocery delivery business software such as an Instacart script if you don’t have an entirely unique requirement in your plan. Most of the Instacart scripts are open-source and can be self-hosted. Therefore, you can also customize your platform by simply modifying the source code. From adding new features to changing the UI design, you can make all sorts of customizations to give a unique brand identity to your platform.
Most importantly, a suite of Instacart clone would consist of a website as well as mobile apps. Most of the time, you can purchase a decent script with a one-time payment of roughly 1000-2000 USD. This is affordable considering the same solution would cost not less than 100,000 USD if you were willing to build everything from scratch. I don’t recommend re-inventing the wheel, as you can easily get a script and customize it as per your requirements at a much affordable cost. So what do you think, isn’t it the right time to start your grocery delivery business or sell grocery online?