Online grocery shopping is catching up with consumers rapidly. According to Orian Research, the global online grocery market would grow at a CAGR of 23.7 % in the period of 2020- 2025. One more research suggests that the grocery ecommerce business is expected to reach $250 Billion in the next five years.
No doubt, this forecast will get a lot of entrepreneurs interested in the grocery eCommerce market. The purpose of this blog is to help such entrepreneurs gain an in-depth understanding of how an online grocery marketplace works, various revenue channels, key features along with useful tips and growth hacks to get a headstart in the market.
The top retailers of grocery eCommerce industry are not only popular among customers but many aspiring entrepreneurs or business owners study their order to cash process or frameworks before starting their own grocery ordering and delivery business. Some of the leading grocery brands are as follows:
To get successful in starting and operating an online grocery business, you need to focus on the following factors:
Out of all these factors, entrepreneurs or business owners often waste so much time and resources in choosing the suitable grocery business model.
To help you out with it, we have explained four major business models in the grocery industry with examples of market players.
Instacart is another prominent name in the arena of grocery delivery service providers. Its unique selling point is rapid delivery. Being a hyperlocal grocery delivery platform, Instacart connects customers with personal shoppers who are responsible for door-step grocery order delivery. It works on a 3 tier customer strategy, where buyers purchase grocery orders online via the application of Instacart. The last mile is an important aspect in hyperlocal grocery business as it avoids many health concerns raised due to COVID-19 as well as its new variant Omicron.
Grocery retail partners: Grocery vendors who have a contract with Instacart to list and sell their grocery items through the platform.
Instacart shoppers: Instacart shoppers shop for groceries as per buyers’ requirements and then deliver it to them.
Read More: Build an App like Instacart
The main USP of FreshDirect is to deliver fresh groceries to its consumers. By using the FreshDirect app, customers can order groceries with the click of a button. The order is later delivered to the customer’s doorstep by a refrigerated truck. Apart from customers, grocery suppliers, and FreshDirect buyers, are the key partners of FreshDirect.
Grocery suppliers: By partnering with FreshDirect, grocery suppliers supply their produce like meat, seafood, and poultry. Suppliers are also listed on the application of FreshDirect to showcase products to the relevant buyers.
FreshDirect buyers: Buyers of FreshDirect, check and purchase fresh grocery supplies from suppliers. The stock purchased is taken to the warehouse of FreshDirect. All grocery items are stored in a temperature-controlled environment at the warehouse.
A refrigerated truck later delivers the order to the consumer. As FreshDirect follows just-in-time practice, the order is prepared only after being placed by a customer. As COVID-19 shows resistance towards gradually fading away, its new variant, Omicron, further makes the just-in-time practice as well as door-step delivery a much needed practice.
Peapod is one of the oldest grocery delivery services in the US. Following a hybrid approach, Peapod acts as a service provider like Instacart and an online supermarket. It offers fresh produce, meat, alcohol, refrigerated foods, meal kits, and more.
Though Peapod primarily fulfils orders through its warehouses, recently, it has partnered with grocery stores to provide delivery services. The company has ‘warerooms’ that are attached to the grocery stores where employees prepare and fill customer orders.
Operating as a multi-vendor marketplace, Peapod facilitates shipping and payments.
With the integration of physical and digital storefronts, Walmart provides consumers with channel engagement as per preference. It operates as an omnichannel business model. Customers are seamlessly served via the website, mobile application, and in-store interactions.
Its essential resources include brick and mortar stores, eCommerce stores, distribution and storage centres, mobile app, and human resources.
The key activity of Walmart is to buy and deliver goods. The company controls the costs involved. In addition, it invests in inventory control, customer service, and distribution management. The company comprises three major categories:
Further, these categories consist of many formats: Hypermarkets, Supercenters, Supermarkets, eCommerce, warehouse clubs, and more.
Commission on each transaction: Admin can charge a commission on every transaction from the seller.
Vendor subscription: A vendor has to pay a fixed amount of money to the admin in order to list, access, and sell on a grocery eCommerce platform. A vendor can choose the required subscription plan from a number of available options and can also upgrade or downgrade the plan according to his/her requirements.
Commission on delivery: On every transaction, the admin can charge a fixed delivery fee from both buyer and delivery boy.
Secondary revenue streams:
It is essential that your grocery marketplace website is quick to load, easy to use, mobile-friendly, and has the following unique features:
Below-listed are some offerings that you must include on your online grocery marketplace to attract vendors and buyers:
This feature enables vendors to add, update, or edit their shop details such as name, address, delivery slots, operational hours, packaging time, working days, and more.
Order management option helps vendors to systematically manage multiple order requests at a single time. They can view the number of pending orders, total orders delivered, order history, cancelled orders, withdrawal requests, among other things.
This feature makes it easy for vendors to add or remove products based on the buyer’s demand and the current market scenario. They can update or edit product details and change the product status as available or unavailable.
Managing inventory operations without having a standardised inventory management system could be challenging. An online grocery marketplace integrated with an inventory management module helps vendors monitor their products’ stock and regularly track inventory status.
Tracking and analysing sales reports on a daily basis is no longer a hectic task with this feature. Vendors can check the total earnings of their store and get daily sales updates to see the business performance.
An online grocery marketplace that comes with logistics support/delivery apps helps vendors manage logistics operations effectively. Vendors can easily deliver grocery items to buyers without any delay.
Multilingual functionality allows buyers to browse an online marketplace in their native language. Buyers from multiple regions can choose their preferred language and buy grocery items conveniently.
It is an advanced feature that helps buyers place an order online and collect it from the grocery store or any other pick-up location.
This feature enables buyers to add grocery items from different stores to a single cart and place a single order for all items at once.
A multi-payment feature helps buyers to select the payment method of their choice. They should be able to complete payments via credits & debit cards, net banking, digital wallets, cash on delivery, among other options available on the marketplace.
This feature enables buyers to schedule the order delivery as per their convenience. They can choose the preferred day and time of product delivery during the checkout process. During the COVID-19 pandemic, door-step delivery played an important role. With the delivery scheduler option, the buyer can ensure the door-step delivery of the ordered item as per his / her availability. This remains important as the world is seeing a new variant coming to light – Omicron.
An online grocery marketplace that comes with a buyer app makes online grocery shopping an enjoyable experience for buyers. Rather than searching for the online grocery marketplace on the web, buyers can place an order anytime and anywhere within just a few clicks through a mobile app.
To launch an online grocery business in 2022, two methods can be followed:
To build a grocery eCommerce marketplace from scratch you will need a dedicated development team of your own or will have to hire a leading website development company. Both the cases require hours for research, development, testing and deployment. The process adds up to the time, making it expensive.
On the other hand, a ready-made grocery eCommerce platform is convenient and less expensive compared to the development from scratch. Ready-made grocery eCommerce platforms come with pre-integrated features and APIs, there is a one-time payment, and the time required for setups is less.
Growcer is one such readymade grocery ecommerce platform that can launch your online grocery business in a short time frame.
It also offers exemplary features and functionalities and offers a lifetime license. Equipped with readymade buyer and grocery delivery apps, Growcer is a perfect platform to launch a grocery business online without any hassle quickly.
We analysed the current state of the online grocery supermarket business across various countries and found the following dominating trends:
To gain insight into the current and future state of the online grocery business in the US, we scrutinised both incumbent companies and innovative newcomers.
According to eMarketer, a subscription-based market research company, the US grocery eCommerce is the fastest-growing product category online.
The online grocery delivery industry in the US is expected to surpass the 24 billion mark by 2023.
To attract the young, affluent, and urban US households, you have to work on 3 major things:
Online grocery shopping in the United Kingdom is the fastest-growing purchase channel. No doubt, when we talk about edible grocery sales, the online grocery supermarket business in the UK has changed a lot because of Asda, Ocado, and Tesco. But yes, there is a huge scope for new online grocery websites in the country.
Attentive service and friendly interaction play a major role throughout the entire eCommerce grocery experience. Also,
In the emerging eCommerce horizon, Canadians want their groceries to be delivered directly to their homes. Currently, they are spending around $6.4 billion per year on online grocery shopping.
By analysing the Canadian shopper journey and working aggressively at every step of their purchase journey is the key step in winning them over.
Grocery consumption is the basic human need, and people are increasingly relying on online shopping. So, the online grocery business idea fits perfectly in the current dynamics, despite the above-mentioned challenges.
The important thing for entrepreneurs planning to enter this sector is to be aware of these challenges & know how to tackle them by leveraging the right technology, trends & tactics.
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