Digital Marketing / SEO

How to start online grocery business in 2021?

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According to Grandview Research, The global online grocery market is expected to grow at a compound annual growth rate of 24.8% from 2020 to 2027 to reach USD 1.1 trillion by 2027. Furthermore, the outbreak of COVID-19 has led to an increase in the number of customers buying grocery online in order to avoid going to stores and avoiding social contacts. Although the impact of coronavirus has caused an upsurge in online grocery shopping across the world.

Grocery trend 2021


Types of Business Model for Online Grocery business.

To get successful in the beginning and performing an online grocery business, you need to focus on the business model which help you to identify assets and key work points.

  • Click and Collect Business Model

This model is the perfect blend of online and offline shopping experience. Because where user can buy online from the website and collect from the store. For example, Walmart, Where the customer can order online and choose pickup timeslot afterwards they load items into the customer car.

  • Hyperlocal Grocery Business Model :

According to this model the system to satisfy the on-demand needs of the consumer of this “hyper” locality. The objective of this kind of business model is Provide to the demand of customers within a limited area and Fast delivery and support the local grocery stores. For example, Instacart supply hyper-local on-demand grocery delivery by connecting customers with local grocery shoppers.

  • Multi-Vendor Marketplace Business Model :

According to this model, Buyer & Seller get themselves registered on the website. This business model is also known as the ‘Zero Inventory Business Model. The eCommerce platform has no responsibility for managing the inventory. In this case, the Website charges some specific percentage of sales as a commission from the sellers. And the seller can handle the logistics themselves if either eCommerce platform manages the dispatch. For Example, Peapod operates on multiple vendor marketplace business models.

  • Inventory Based Model : 

According to this model, the eCommerce business owner is accountable for purchasing stock from the different suppliers and storing the inventory in the warehouse. For example, Bigbasket works according to the inventory business model and witnessed intensified sales in a short period. 


Canvas Business Model for Online Grocery:


How does Online Grocery Market Place work?

Multi Vendor Flow chart

Key Features for Online Grocery Marketplace.

  • Online Grocery Website Key Features :

  1. Attractive Page Banner
  2. Call to actions
  3. Match SEO standards
  4. Mobile Friendly
  5. Discount Coupon
  6. Multi-Store
  7. Cart and Checkout
  8. Easy Navigation
  9. Multiple Payment Options
  10. Order Tracking
  • Key Admin Features in Grocery Marketplace:
  1. Tax & Currency Management
  2. Administrative access at multiple levels.
  3. Vendor Approval & Management
  4. Inventory Approval System
  5. Advanced level Reports & Statistics
  6. Subscription Packages Management
  7. Tax & Currency Management
  8. Progressive Web Apps (PWA)
  9. Operational Staff Management
  • Key Delivery Staff Features in Grocery Marketplace:
  1. My Profile Management
  2. Delivery order management
  3. Order Cancellation
  4. Define Delivery Radius
  5. Accept or Reject Order
  6. Route Navigation
  7. Push Notification
  • Key Seller Features in Grocery Marketplace:
  1. Separate Vendor Dashboard
  2. Order Cancellation
  3. Order Refund Requests Management
  4. Shop Management
  5. Sales Report & Other Statistics
  6. Wallet Management
  7. Bulk Imports/ Exports
  8. Delivery Slots Management
  9. Pin Shop on the Map
  • Key Buyer Features in Grocery Marketplace:
  1. Cart
  2. Return Order 
  3. Auto-Detect Location
  4. Schedule Delivery slots
  5. Cancel Order
  6. Tracking Order 
  7. Click and Collect

How to generate Revenue for Online Grocery Business?

  • Commission on Delivery: 

On every transaction, the admin can charge a fixed delivery charged from the buyer.

  • Commission on Each Transaction:  

Whether you work online or offline, taking Commission on every transaction is the traditional and most preferable revenue model for the grocery marketplace.

  • Subscription Fees :

A merchant has to pay a fixed amount of money to the admin in order to access website services and sell their own products on the website. The vendor can choose subscription plans according to and also upgrade or downgrade the plan according to requirements.

  • Use Digital Streams:

Promote Sponsored Advertisements for Vendors and Paid Display Ads.


Challenges Associated with Online Grocery Business.


  • Warehouse Infrastructure and Delivery cost:

Managing the whole supply chain, Warehouse to deliver products at the doorstep is the crucial aspect. Therefore, Many Investors use an aggregator business model in order to save initial capital investments.


  • Higher operational cost and Low margins:

Operating losses take the largest toll on the revenue of an online grocery. Online delivery can not afford delays in delivery, wrong item delivery, returns etc. because sometimes products profits margins less than operational cost. For overcome this issue certain steps you need to take. You have to partner with a trustable delivery services provider who can meet your customer expectations. Moreover, integrate inventory management system in order to automatically update inventory in the panel.


  • Price Fluctuations:

Online grocers face the same challenge of offering competitive pricing. The fluctuating price of grocery items can affect the profit from a significant margin of your online grocery. Proper and sustainable management is required to face this challenge as well.


  • Products Quality Assurance:

Probably vegetables & fruits, most of the customers prefer to buy if their freshness & quality remained good after delivery. For this, you can use the buy click and collect grocery business model where user can place an order online and collect from the store after checking the quality of products. either sell packaged foods, personal care & beauty products, household items, etc. as their storage & delivery cost less.


  • Customer Loyalty:

It is really hard to earn customers loyalty because loyalty can not buy. For that, you have to update your store according to updated products and discounts and beneficial deals. In addition, loyalty programs can also assist you to maintain the most loyal customers.

How to win in Online Grocery Business marketplace.


ow to win Online Grocery Market


The core strength of the online grocery delivery business model is that you need to make sure the order gets delivered on time. Furthermore, By satisfied customers with services you can earn customers loyalty benefits of word-of-mouth marketing.

Discuss your online Grocery store idea with us and our experts will help you.