Last Updated: 23rd March, 2021
Online grocery shopping is catching up with consumers rapidly. According to Orian Research, the global online grocery market would grow with a CAGR of 23.7 % in the period of 2020- 2025. One more research suggests that the grocery ecommerce business will be expected to reach $250 Billion within the next five years.
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:
Peapod, Fresh Direct, Shipt, Instacart, Fresh City Farms, Grocery Market, Loblaws,Inabuggy, Grocery, Spud, Thrice Market, Boxed, Grocery Market, Food Land, Cornershop, El Grocer, Good Eggs, Carrefour, SafeWay, Farm Drop, Talabat, The Fruit Box, Arabind, Rappi, La Ruche qui dit Oui!, Aussie Health Products, The Veggie Box by Victoria Whitelaw, Domicilious, Far, Box, Organic Delivery Company, Aussie Health Products, Mercadoni, etc.
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 right grocery business model.
To help you out with it, we explained the three major business models in the grocery industry.
Online Grocery Store Business Model:
A business owner starts his online grocery store (website/app) and delivers groceries to customers in a specific city or region. Either, he has inventory stored in a warehouse or running an offline grocery store. In this business model, there are mainly two players- 1. Business Owner (who is also the admin & seller of the store) and 2. Customers.
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Hybrid Grocery Business Model:
It is a combination of inventory and marketplace grocery business model. One of the best examples of this business model is Peapod. Contact Us to know more about it.
Online Grocery Marketplace Business Model:
A business owner starts an online grocery marketplace by tieing up with local grocery producers/retailers who will sell their grocery products on the marketplace. Key players in this business model are-: 1. Business Owner, 2. Sellers, 3. Buyers, 4. Delivery Staff.
Specifically, in this post- we will be discussing the vital aspects of the marketplace business model.
View Canvas Model for Online Grocery Business
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 admin in order to list, access, and sell on grocery marketplace. 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, 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:
Discount coupons
These days, it is a common practice among businesses to send discount coupons to make the most out of seasonal sales. So your website must have the feature to receive & process these discount coupons.
Search Tool
If customers can’t find what they are looking for by browsing product categories, they should be able to search for it. To enhance customer experience, the search tool should have the auto-suggest feature & should be error-tolerant to minor spelling mistakes.
Social Commerce Features
Features such as sharing products on social media, social signup, or selling directly on Facebook, would also help your business get good exposure.
SEO Ready
Make sure that your marketplace website has all keys features to get easily crawled by search engine bots and to rank better.
Mobile-Friendly
It is certain that most customers will buy from you on mobile. So make sure to enhance your store’s on-the-go purchase experience, whether you make the website responsive, build a separate mobile website, or an app.
As mentioned earlier, the unique challenges this business model presents are due to the nature of grocery products, which are either perishable or intended for immediate consumption. Let’s discuss the major ones in detail:
Regular online stores can afford to tackle instances like delays in delivery, wrong item delivery, returns, etc. But for online grocery stores, it will be a pretty much ‘do or die’ situation. Therefore, the entire supply chain – from farms/manufacturers to storehouse & then to the customers – needs to be very robust & time-efficient.
Additionally, since perishable food products need to be stored & delivered in refrigerated chambers, storage infrastructure would add up the business operations cost marginally.
There are certain steps you need to take to combat these challenges. Some of which are:
Today, people shop online not just for convenience but also because they expect to get better prices. Online grocers face the same challenge of offering competitive pricing. But with too much money spent on building & maintaining the storage infrastructure & efficient supply chain, keeping satisfactory profit margins might become difficult.
Other than that, when it comes to vegetables & fruits, most customers prefer to buy only after physically checking them for their freshness & quality. When shopping online, such an option is not possible. So, to persuade customers to buy groceries online remains a persistent challenge.
There are a bunch of steps you can take to address these problems:
Online grocery marketplaces that don’t have physical stores can launch their offline chains to benefit from the blended online-offline grocery shopping concept.
We analyzed the current state of the online grocery supermarket business across various countries and provide historical background to identify key grocery industry trends.
To gain insight into the current and future state of the online grocery business in the US, we scrutinized 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 currently lying around $20-$25 billion. By 2021, this number will reach $38.16 billion.
To lure 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. According to Statista, the UK will become the second-largest grocery market after China in 2020. 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 of 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 analyzing 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 go about them by leveraging the right technology, trends & tactics. And that’s where this post serves as a valuable resource.
Disclaimer: The Blog has been created with consideration and care. We strive to ensure that all information is as complete, correct, comprehensible, accurate and up-to-date as possible. Despite our continuing efforts, we cannot guarantee that the information made available is complete, correct, accurate or up-to-date. We advise - the readers should not take decisions completely based on the information and views shared by FATbit on its blog, readers should do their own research to further assure themselves before taking any commercial decision. The 3rd party trademarks, logos and screenshots of the websites and mobile applications are property of their respective owners, we are not directly associated with most of them.
Comments (32)
Bisi Alawode
FATbit Chef Post author
nisha
FATbit Chef Post author
awais mirza
Deepak
Amna
Deepak
Damon Burton
sell grocery online
sarah
FATbit Chef Post author
Abdullah
FATbit Chef Post author
RithikaValentina
FATbit Chef Post author
Ahaan
Frank Umeadi
FATbit Chef Post author
rishavp
FATbit Chef Post author
SHARMA
FATbit Chef Post author
supermarket near me open late
FATbit Chef Post author
william scottty
FATbit Chef Post author
supermarket near me open
FATbit Chef Post author
Peter
FATbit Chef Post author
Priya Anilkumar
Thank you for the eye opening article. It provided valuable insights and infused the needed drive for the future of our business
We are glad you liked it. keep visiting us for more such posts
Cheers!
FATbit Team
thanks for sharing this article
I like your thinking and your post
Your’re welcome.
Glad you liked it!
Keep visiting us.
Regards
Team FATbit.
Hello deepak, Thanks for a great article. You make it sound very simple and do able.
Thanks, Awais!
Glad you liked the article.
Let me know if I could be of further help, in case you plan to open your own grocery store.
Best,
Deepak
Deepak, What a great read
We are launching our online grocery store in 2017 and I am pleased that I come across your article. I think yes online grocery business idea fits perfectly in market where online shopping trend is picking up. Look how fast redmart and honestbesss growing in Singapore and obviously if big basket in India can have Shahrukh Khan as brand ambassador you got to believe that online grocery startups can do well in market.
Hi Amna,
Thanks for the comment; and yes, I agree with you on all points.
I just checked your grocery store, and find it really smart that you’ve put estimated delivery frame right up on the homepage.
Let me know if you need help with the online marketing of your grocery store.
You can reach us through this link: https://www.fatbit.com/website-design-company/requestaquote.html
Best,
Deepak
Doing an online business is not that easy. Following these steps is really important in order to be successful in any online business you’ll put up. Glad to read this article.
Very interesting blog. Grocery businesses move to online and sell grocery online.
Nice. It provides very useful information for setting up grocery business. Thank you so much for sharing.
You’re Welcome!
Keep Visiting us for more such useful information.
Cheers!
Team FATbit.
Wow excellent post, very useful and insightful
Thanks for the appreciation!
Keep visiting us for more such info.
Cheers!!
Team FATbit
Thank you for sharing this articles. It is very useful for me.
You’re Welcome!
Glad you find it useful.
Regards
Team FATbit
Online Grocery Business has great future in coming years. This ideas will make new entrepreneurs aware about the challenges that might come along.
Thank you so much for this detailed article. I had to bookmark this page for a very long time because I was always visiting it to gain insights while I was building my online supermarket in Abuja, Nigeria. We launched on 19th May, 2018 and believe me, it has been a thing of success and joy.
Thank you once again for this article.
Many congratulations!
We are really glad to hear it.
You are always welcome to connect with us for any startups related projects, services and ideas.
Keep visiting us.
Cheers!
Team FATbit.
nice article
Hi Rishavp,
Thanks for the appreciation.
Regards,
Team FATbit
Good
Hi Rishav,
Glad you liked it.
Regards,
Team FATbit
really cool site
Hello,
Thank you so much for your appreciation.
Regards,
Team FATbit
Can we earn via monthly subscriptions on a grocery delivery marketplace? In your other blogs, you have mentioned it as a viable revenue stream.
Hello William, thank you for sharing your concern. Yes, the business owner of a grocery delivery marketplace can generate revenue by selling subscription packages. He can create multi-tier subscriptions for both vendors and buyers.
really cool site
Hello,
Thank you so much for your appreciation.
Regards,
Team FATbit
i want the solutions in kenya
Hello Peter,
It would be our pleasure to be at your service. Kindly send us your requirements:
Email: [email protected]
Contact No:+918591919191
OR
Fill in the form:
https://www.fatbit.com/website-design-company/requestaquote.html
Best Regards,
Team FATbit
This article really helped me to know more about online grocery stores and how to build an e-commerce website.