RajKaran Rana in Online Grocery Model, Online Grocery Store, grocery app development Digital Marketing Executive • AblySoft Pvt Ltd May 15, 2018 · 3 min read · ~10

Why Is Online Grocery Store Taking The Center Stage?

                      Why Is Online Grocery Store Taking The Center Stage?In the last few years, the world of ecommerce has witnessed an exponential rise in many business models. Many entrepreneurs acknowledged the opportunity in ecommerce arena and came aboard this galactic starship. Among all these ecommerce businesses, Online Grocery business has got entrepreneur’s attention the most.

                      The number of prominent and renowned online grocery businesses is aplenty across the globe. The interesting thing is that majority of these online grocery stores started a couple of years ago and garnered massive popularity. Instacart, FrestDirect, Bigbasket and PepperTap are the names that come to our mind.

                      And just when the industry thought online grocery is a business model that attracts the new gen entrepreneurs only, in came the Amazon and Google to join the bandwagon. If we talk about India, Ola – an online cab booking service also made its entry into the online grocery shopping arena. If that doesn’t sum up the opportunities of this industry, I don’t know what will.

                      Let’s talk about some stats now. Online travel has a market saturation of 50%, and online electronics market saturates at 35%. On the other hand, online grocery store market saturates at 3-5%, depending on the demographics. Additionally online grocers are mushrooming at a 3x rate on an annual basis, signifying ample prospects for new entrees.

                      This post talks about the various challenges pertaining to this rapidly growing sector, its future prospects, and some important tips on how to launch an online grocery store.

                      Let’s begin with the challenges…

                      Where and How to Store

                      Warehousing comes across as a major point of concern for every retailer, both online as well as offline. And when the inventory revolves around groceries, particularly perishable items, the stakes get really high. You’ll need a refrigerated storage to keep the perishables stocked securely, and that increases the inventory costs and management efforts. Minimum spoilage and faster turnover ratios are important factors for an online grocery store to juice out a decent profit margin.

                      Packaging & Delivery Expenses

                      The perishability of grocery items extends from storage to the items’ packaging as well as delivery too, as these items need special “cold storage trucks” to deliver them to the customer. And all of this has to be done while keeping the delivery cost as low as possible. So, completing this supply chain becomes a major challenge, and needs thorough research and a streamlined planning.

                      The time is ticking

                      Similar to online food ordering and delivery business, online grocery model also thrives on quick and timely delivery. Most of the online grocery shoppers belong to the dual-income households group, and they prefer online shopping more because their time, or the lack of it, doesn’t give them enough room to indulge in conventional grocery shopping.

                      Attracting other consumer groups to this business model requires the business owners to ensure the goods grade high on the freshness and quality parameters when they reach customers’ doorstep. The only way to do so is to adopt the hyper-local delivery network.

                      When U-Turn Is Not an Option

                      Perishable items don’t leave a time window for returns. And thus, the ordering and delivery system needs to be streamlined, extensively thought out, well planned and well executed. At any time of the delivery, if the item goes bad, or the order turns out to be wrong, it becomes really hard to take a U-turn without incurring any, or least possible loss.

                      With all these challenges, how will online grocery shopping business sustain?

                      I’m glad this question dwells in every aspiring entrepreneur’s mind. The challenges surely are tough to overcome, but they are far from being an unconquerable quest. The times are changing, and things have started working out in following ways:

                      1. Customer behavior is changing

                      If we take a look at the last ten years, we’ll notice that online shopping has witnessed a lot of consumer attention. Customers look for convenience more than price, and this is why every online business idea is flourishing. And when we talk about grocery, which is not a luxury, but a basic necessity, online grocery shopping delivers more convenience than going to a local store. Consumers have identified this concept, and have welcomed online grocery shopping with both hands.

                      2. Industry’s Growth is Certain

                      Apart from the customers opting online grocery shopping more than the conventional method now, the business idea is itself very promising. In a study conducted by IBISWorld, it was found that the industry is witnessing an 11% growth on annual basis. Moreover, Statista predicts that by 2020, the online grocery shopping will be an $18 billion industry in the US alone. So one thing is for sure; online grocery is not a gamble or a safe bet, but a prolific idea that should be grabbed, understood and executed soon.

                      And now, it’s time for some tips to make sure your online grocery store is a success:

                      Board the Flight Before the Seats Fill

                      There is a saying that early bird catches the worm, but it would have been true if it was 2016 or the year before. Entrepreneurs have started recognizing the promising future of online grocery shopping, and as I mentioned earlier, the growth rate is high. To make the best of your time, join now, because in coming years, the market share will start decreasing as more players come into forefront.

                      Use Technology Wisely

                      Just like a convention grocery store, simply setting up a web based shop is not enough. There are some features that are essential for your website. You’ve got to make sure customers find your website navigable, find products easily, can add them to cart easily, and checkout easily. It’s all about user experience, it’s all about smooth order processing, it’s about giving them as many payment options as possible, and given the current times, it’s about letting them do everything while they’re on the move. Mobile websites, even better, mobile apps; when they are buying clothes from apps, why not groceries?

                      Don’t Go for the Home Run at the First Pitch

                      This is where the majority of entrepreneurs put themselves in the soup. Start small, go hyper local, build a good customer database, have a good number of loyal customers, expand when you can, and expand according to your budget. Remember, one step at a time, one step.


                      The points I discussed above, especially the challenges, point out that the major concern to revolve around perishable items, their storage, and their timely delivery. However, if you start small, plan ahead and keep a hyper local delivery system focused on quick deliveries, it can create wonders for you. Look carefully, these challenges are, in fact, opportunities to grab. And remember, only bite as much as you can chew. Good luck.