Start Your Own Online Grocery Store Business with this Guide

Only a few years ago no one could have even thought that one day we would be able to buy and avail any kind of services through the World Wide Web. But we have been proven that change is the only constant. The world is now convenience oriented and taking this into consideration everyone is using this as an opportunity to innovate new business opportunities and build them into a success. Online grocery store was one such business idea that has now become one of the major marketing sectors.

Before the COVID-19 outbreak, e-grocery sales were estimated at 4.3% of the 2020 total grocery market and projected to rise to 5.4% in 2021, reach 10.7% in 2024 and then 13.5% in 2025. But given the quantum leap it has made in this year itself it is now expected to swell up to 21.5% by 2025 according to studies made by Incisive projects.

Given the current scenario, guess this is more than enough reason for an aspiring entrepreneur to take his first step in this industry.

The late 90s were the era of internet innovations. That’s when all the online shopping sites started to sprout. HomeGrocer.com and Webvan were the initial shooting stars of the online grocers. Though they skyrocketed to fame instantaneously they came plummeting down at the same speed.

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Reasons being –

  1. They ignored the fact that the ROI will be painstakingly slow as the margin of profit is small
  2. Overestimation of profit
  3. Overestimation of internet’s impact on their business

So, as perceived, starting an online grocery store is not going to be a walk in the park. But, with proper planning, informed decisions and meticulous execution anything is possible. In this brief guide we have provided you with just the required information regarding how to set up an online grocery store.

Let’s get to business.

  1. Know your target audience/region:

The grounds on which your online grocery business will be built is this very point. You will have to take into consideration the region in which you want to start and the residents of that region. In order to zero-in on the region you need to ask yourself the below questions.

  • Will this audience benefit from your business?
  • How does your target audience shop?
  • How is their family quotient?
  • How accessible is the target region to any physical grocery stores?
  • What are their interests? (Eg: lifestyle, product in highest demand etc)
  • Is your target market comfortable with online shopping?

and many more.

  • Drafting your business and revenue models:

This step forms the foundation of your business venture. There are a lot of things that need to be taken into consideration before you divide your business and revenue models. Given you have just started your journey, there is a lot that you need to learn. So, first do a thorough research on-

  • The target audience
  • Your competitors
  • Your roadmap of the business operation
  • Evaluating your market

Here are three significant business models of the online grocery industry.

  • Online Grocery Store Business Model:

The main personals in this model are

1. Business Owner and

2. Customers

Here the business owner delivers groceries to customers in a specific region. Either, he has a separate inventory warehouse or is running a physical grocery store in that region.

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  • Hybrid Grocery Business Model:

It is a strategic weave of inventory and marketplace grocery business model i.e. store-pick model and the warehouse-pick model. Here the business owner need not own any physical grocery store. The owners who adopt this model usually operate on the pure-play model.

  • Online Grocery Marketplace Business Model:

The key players in this model are-

1. Business owner

2. Seller

3. Buyer and

4. Delivery Staff

This is the most widely used model where the business owner starts an online grocery marketplace by tying up with local grocery producers/retailers who in turn will sell their grocery on this marketplace.

And below are some of the ways in which you can earn your revenue.

  • Commission per transaction
  • Vendor subscription
  • Delivery commission

And some of the secondary revenue streams are:

  • On-site promotion for sellers
  • By hosting banner ads
  • By publishing blogs and sponsored contents
  • By selling additional merchandise like utensils, recipe books etc.
  • Find a reliable grocery and delivery partner:

This is the backbone of your grocery marketplace platform. Fast and reliable delivery is what all the customers look for in any ecommerce marketplace platform. Hence having strategic warehouses in your target regions is a must. However, due to money and other unforeseen circumstances this might not be possible for everybody. Hence outsourcing is your next best option. These are all whom you need to essentially partner with in order to start your online grocery business.

  • Grocery stores
  • Warehouses
  • Farms
  • Wholesalers and
  • Delivery partners

Don’t be in a hurry to start your business, always be methodical and meticulous in your decisions.

  • Register your business:

In order to go officially go-live you need to mandatorily take necessary permissions from the concerned authorities and get all the types of tax submission ready. Do take professional advice from a registered tax consultant or CA professional to complete all the registration and relevant GST formalities.

  • Build your virtual platform:

It is not a mandate that you need to be the boss of everything in order to start your own company. There are always other better ways to develop your website in a more effective way. Here are a few ways in which you can build your own online grocery store.

  • Developing from scratch
    • By yourself or
    • By hiring a team of professionals
  • Use a SaaS platform (Software as a Service)
  • Buy a Instacart clone script

The first method will definitely take time and need a considerable amount of investment. The second method is economical compared to the first one, but you will not get the complete ownership of your website. However the third choice will not only provide you the full administrative ability but is also economically more feasible compared to the rest.

  • Frame a strong marketing strategy:

All the above efforts will be in vain if you do not promote yourself adequately. Marketing your business is the only way in which you will be able to gain the attention of the right audience. Given it is a virtual platform, you need to use some creative and strategic marketing ideas in order to come up with an effective plan. Here are some of the best ways in which you can promote yourself through the internet and gain the right ranking on SERPs (Search Engine Result Page).

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  • Media advertising
    • Paid search ads
    • Display ads
    • Listing ads
  • Social media marketing
    • Facebook
    • Twitter
    • Instagram etc
  • Content marketing
    • Blogging
    • Reviews, testimonials etc
  • Influencer marketing
  • SEO optimization (Search Engine Optimization)

There is no better time than now to start your own online grocery marketplace platform. All you need to know is its pros and cons. With their busy schedules people are looking for more and more options to make their lives more simpler and comfortable.

Always be extremely wary of any dubious situations. And be mindful and make swift but completely informed decisions.

In case you need help in any regards, do feel free to contact us. We are more than happy to assist you. Do leave us a message and we will get back to you immediately.

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