Online grocery shopping is becoming a vastly growing market and one that many people are leaning towards these days. Most modern consumers are looking for convenience, and there is nothing more convenient than grocery delivery right to your door.
Following the global pandemic and the growth of technology, shopping habits have changed dramatically. Consumers are now expecting fast and easy shopping experiences which do not require them to compromise their safety or comfort.
This is where an online grocery store comes in very useful, and now can be a great time to start an online grocery business. As online shopping is such a large market, it makes sense to offer the kind of products that everyone relies on, which is groceries.
In this guide, we are sharing the best ways to grow your online grocery business and what you should consider to ensure your success.
Table of Contents
- What Is An Online Grocery Store?
- Things To Consider Before Creating An Online Grocery Store
- Types of Online Grocery Shopping Business Models
- Multi-vendor business model
- How To Make Money As An Online Grocery Business
- Secondary Revenue Streams
- How To Entice Consumers To Your Online Grocery Store
- Inventory management
- How To Take It One Step Further
- Useful Guides
What Is An Online Grocery Store?
Ecommerce is a massive business these days, and there are many forms of it out there. All forms of online shopping take place on an eCommerce platform, which could also include your online grocery store, and allows businesses to sell their products through an online platform.
Like brick and mortar stores, online grocery stores allow customers to browse items, select what they need, and pay for them. However, as this is done on an eCommerce platform, like an online grocery store, all of this can be done from the comfort of the shopper’s home, and an online grocery delivery business will bring the groceries to the customer at a convenient time.
There are many perks to online shopping, and this market has seen a huge increase in recent years. Online grocery shopping is proving to be a big hit with consumers across the globe.
All forms of grocery businesses can create their own online store, whether this is a local grocery store that appeals to customers in a specific area or a large box store that reaches clients across the nation.
Your grocery business is missing out if it is not available online, as these new shopping habits account for a large percentage of all profits. More people than ever before are buying online, and this applies to all areas, including grocery shopping.
With an online grocery store, you can offer customers across the field everything they need most conveniently. It is this convenience that can bring in more business to your grocery store and is a great way to see profits, as long as it is done well.
Things To Consider Before Creating An Online Grocery Store
While it can be a good business model, there are many things to consider before opening an online grocery business and providing grocery delivery to consumers in your area.
Due to the popularity of online shopping these days, becoming part of the online grocery retail market is most likely a very good move. However, there are some things you need to consider before starting this business in grocery eCommerce, including:
- Your current grocery business model or creating one suitable for online grocery shopping
- Your target market and the impact that current events can have on their demands
- The transformation process between a traditional grocery store and grocery eCommerce
- Delivery regions and the segregation of these
- Analysis of competitors and market research
- Other forms of eCommerce that can apply, such as mobile shopping and mobile apps
To ensure success with your online grocery shopping business, you need to have a solid plan in place that considers all of these areas.
In this guide, we will be diving deeper into all the tools we have mentioned and sharing how you can ensure a successful online business.
Types of Online Grocery Shopping Business Models
To get started, let us take a look at the different kinds of business models online stores are currently using and how this may apply to your grocery business. By determining the business model that most applies to your grocery business, it will be easier to set up an online grocery store and ensure you are appealing to customers.
The following are examples of current grocery store models being used in the market and what they best apply to:
Hyperlocal business model
This is ideal for local grocery stores that aim to provide rapid grocery delivery by focusing on a specific local area and a local set of consumers.
With hyperlocal delivery, consumers can get fresh produce and other grocery items on a same-day delivery basis which should come from micro fulfillment centers to ensure rapid delivery.
This kind of business allows any local physical store to maintain customer loyalty by ensuring the online offerings cover the most basic needs and delivery divers have a door-to-door service that can be completed quickly.
Instead of having local consumers come to the store with a good online experience, they will still be putting money into the business but in a way that is more convenient for them and profitable for the business when done right.
This e-commerce business model is mobile-friendly and relies on a three-tier system – the local grocery store that offers the products, and this can be multiple vendors, the shoppers who collect the items in-store, and delivery services.
Inventory business model
This is a way of providing fresh grocery items from a range of vendors to consumers with door-to-door delivery, such as through FreshDirect.
With good inventory management, you can ensure fresh groceries are available to consumers at all times, and this inventory usually comes from several vendors in the area.
A local store, as well as supermarkets, can get involved in these grocery sales by offering a wide variety of products and ensuring fresh produce is always available. The delivery services rely on a refrigerated van to keep produce fresh and accurate route planning technology to perform the fastest delivery possible.
Multi-vendor business model
As we have mentioned, a grocery website does not have to be dedicated to one grocery store as it is possible to provide online shoppers with items from a range of vendors.
The grocery industry is vast, and many companies offer products that your customers require daily. While some brands, such as Peapod, started out offering a range of grocery brands from their own warehouse, as the online marketplace has expanded, they have been able to connect with other grocery businesses to provide a better service.
Working with other online grocery businesses in a multiple vendors business model, you can not only maintain your existing customers by offering them the groceries they expect but also gain shoppers from these other vendors.
As the heart of the multi-vendor business, the delivery service needs to be maintained to a high standard, ensuring customers will remain working with your company rather than go to the online grocers direct.
Omnichannel business model
All major grocery stores, like Walmart, are a part of the omnichannel business model where customer data is shared across channels. Large brands like this allow customers to engage with the company in the best way for them, whether this is through online channels with their online grocery store or mobile app or the traditional in-store experience.
Customer data is shared across these channels through the omnichannel business model, ensuring the customer experience moves seamlessly from in-store shopping to online.
With the right technology, it is possible to have a seamless transition between in-store shopping, website orders, mobile app delivery services, inventory management, customer service, and distribution management.
How To Make Money As An Online Grocery Business
As well as considering the overall model for your online grocery business, it is important to consider the revenue channels that you want to activate.
There are various ways that grocery delivery services can make money, including:
Commission per transaction
Businesses can charge a commission for every transaction done in online grocery sales. While the online sales within itself is a form of revenue for a grocery store, this is very likely to bring in the same amount as sales in the store, so there needs to be something extra to ensure going online is the right move for your company.
The commission per transaction is common across the e-commerce grocery industry and is something that can make online grocery stores more profitable in the long run.
If you are working with multiple grocery retailers on your site, then revenue can come from charging a subscription fee. For this, online grocery retailers have to pay the online business a set fee periodically to remain available on the e-commerce platform.
For a successful subscription service, the e-commerce platform should have several options or tiers to appeal to grocery retailers, allowing them to choose the best payment plan based on their business requirements. Being able to upgrade or downgrade the subscription gives retailers more control and allows them to determine their involvement in the e-commerce business.
Commission on delivery
One of the key areas of revenue and, therefore, success when it comes to an online grocery store is the delivery services. As most online grocery businesses are more than half controlled by the delivery business, it makes sense for a large portion of the revenue to come from here.
Most e-commerce businesses make money from their delivery services by charging a commission for every delivery. There can be separate fees from the grocery store, which customers have to pay on top of the price of their groceries online, as well as a charge from the delivery service itself.
Secondary Revenue Streams
- On-site promotion for merchants, grocery items, and grocery delivery
- Hosting ads, such as banner ads
- Sponsored content that can be published on the website or relevant blog
- Sell customer data to market research firms
- Ensure there is a good range of products available with branding to improve brand image and awareness (i.e., reusable shopping bags)
How To Entice Consumers To Your Online Grocery Store
The online grocery market is vast, which means you have a lot of competition out there.
While more people than ever before are buying groceries online, they do have a lot of options, and your brand needs to stand out to entice people. As an online store, you can offer a range of features and services which can make shopping easier for consumers as well as help you to stand out from the competition.
To bring in potential customers and ensure success for your online grocery store, your website needs to be managed correctly. Your website needs to run as well as a traditional store, offering customers ongoing support and ensuring the best shopping experience possible.
If you are looking for new customers for your brand and want to ensure success with your online grocery business, then you need to control the following areas:
Much like your physical storefront, an online store needs to be properly managed to ensure it is offering the best experience to customers. Your online storefront gives off the same impression as your store to new customers, and you want to make it count, which is why ongoing shop management is so important, as it allows you to control what can be seen by customers.
For an online store, shop management is a feature that allows authorized members to make alterations and updates as necessary.
Based on the model, it may be required for vendors to give control over shop management where they can alter available items along with other key aspects like delivery slots, operational hours, packing time, and commission charges.
This is where the grocery shopping takes place. As an online vendor, the order process needs to be easy and convenient to entice and keep customers interested, which is why management of this aspect is vital.
The best management process will vary based on the business and the number of vendors using the same e-commerce platform, but there should be multiple tools available.
For high levels of order management, your grocery site needs to offer features for all aspects of the ordering process and make it easy for vendors to manage multiple orders at once. A website will be open at all times to an infinite amount of customers.
Just like the importance of staff in a traditional supermarket, who process payments and help customers with their shopping, order management on the site needs to follow the same principles. With this in mind, features such as allowing vendors to see their pending orders, total orders delivered, and overall order history is essential.
This data can also be used to determine the success of the business and operates as a form of customer feedback, where vendors can see what issues may occur during the order process and what needs to be changed for a better shopping experience.
While it is the convivence of online shopping that pulls in customers, this will only get you so far. Your site has to be well stocked at all times to maintain this convenience and keep customers using your platform over any other.
Online grocery stores aim to provide the same, if not better, service than physical shops, so customers do not have to break their routine to get what they need. With this in mind, product management is a vital aspect of any successful e-commerce business, and it especially applies to grocery stores where a range of essential items is needed at all times.
Product management is a feature that should make it easy for vendors to add and remove products based on availability. It is designed to offer customers an accurate representation of what is available at all times and should rely on market trends to keep them interested.
As well as allowing for the addition or removal of products, a product management feature should also support updates and editing of any product information to ensure it is accurate.
This is a similar feature to product management as it is focused on what your store offers and its availability. However, this can be an automated feature to make it easier to control, ensuring that effort can be put elsewhere into ensuring success with your business.
Controlling inventory without some form of a standardized or automated system can be tricky, as this needs to be updated after every single selection made by a customer.
Inventory management is the feature for all sales reports and will track the ongoing inventory status of all vendors.
Almost any development company can provide this feature to your business, and it makes the tracking of sales, inventory, and consumer relations easier than ever before. Online businesses aim to make things easier, including for the business owner, which is why tracking features should be present on your website.
From this, you can get daily sales reports, earning reports, and other essential information to determine the success of your brand through this online venture.
Delivery management platform
An online grocery store is also a delivery business as groceries are provided to customers directly at their door. To keep up to date with your delivery progress, times, and the quality of the service, you will need a management feature.
This can be combined with trackers on all delivery drivers to provide information not only to the business owner regarding the efficiency of your service but also allow the customer to have real time updates on their orders.
There should be two aspects to the delivery management feature, as both consumers and management need their own insights into this part of the business.
How To Take It One Step Further
Once you have covered the basics for your grocery website, it is time to consider other areas that can contribute to success.
Some features can be added to your website to offer a better shopping experience and more accurate insights, ensuring the further success of the brand. These should be considered once your website is set up and established, but there are many options.
If you want to take your brand to the next level, consider the following:
As websites are open to everyone, all of your customers must be supported. This is why it is a good idea to allow for multiple languages on your site, allowing people in all regions to choose their preferred one so they can shop easily.
This is something for sites with multiple vendors to consider as it allows customers to buy items from various stores and add them to one order.
This does require good delivery management, but it can be a great feature for your site that makes it more appealing to consumers from all walks of life.
Multiple payment options
This is a common feature on almost any e-commerce platform, but you may not have considered it for your grocery business. Online shopping is highly convenient for many reasons, including the fact that people can pay for goods and services through various methods.
With an online business, you can allow for e-wallet payments and online transactions to be used by customers as well as the traditional means, which include cash on delivery. Depending on the kind of site you run, you could also allow for other financial methods, such as payment plans to allow people to spread the cost of their grocery shopping expenses.
Instead of offering a set delivery time based on when the order was placed, a delivery schedule feature allows customers to choose time slots that work for them.
This feature is again heavily dependent on delivery management within the business, but it can be highly useful and something that will bring more success to your business. With this, customers can choose the best time and date for their grocery delivery based on what works for them or select a safe place for their order – such as delivering to another location or leaving items on the doorstep to avoid contamination, following the pandemic.
As well as allowing customers to choose the best delivery time, the delivery schedule feature can also allow for store pickup.
While your website should be accessible on all devices as standard, you can take things to the next level by creating a dedicated mobile app for your services. From here, customers can order grocery items, including their favorites, from an app that can be accessed on the go.
To invite customers to use the app, you can have promotions such as rewarding first time online shoppers of the app with a discount on their order.
Online grocery shopping is a popular option for customers these days as it offers safety and convenience. Following the pandemic, customers have grown more accustomed to getting their items delivered to their door or collecting them at a time that suits their schedule.
E-commerce as a whole has seen a great increase in popularity in the past few years alone, so now is a great time to get involved. An online grocery business can be very profitable when it is managed correctly and meets the needs of customers.
In this guide, we have shared some of the best ways to ensure you have a successful online business that continues to grow alongside consumer demand. Meeting the basic needs of your customers is only the first step, as there is much more that your website can offer to continue the growth of your brand.
Grocery shopping is made easier with e-commerce platforms, and more people than ever before are shopping online. You can fit their needs and fill this gap in the market by creating a great website for your online grocery business.
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Kasra Dash is a Scottish entrepreneur, Kasra Primarily focuses on SEO & digital marketing for companies in the UK he enjoys brining positive ROI’s for business owners with his marketing expertise.
Kasra is also an investor in Searcharoo.