How to Build a Successful Online Grocery Store

According to the latest estimates for 2018-2023, as seen on Statista, online grocery store sales are booming in the US.

Especially after the COVID-19 situation, it wouldn’t be a surprise if these stats revise to grow at least three-folds after 2020. Not just in the US, but grocery consumers across the planet are now developing a new love for online shopping.

From Africa to the US, Europe, and South East Asia, the demands for online groceries have surpassed the stocks during the lockdowns. It’s a perfect time to invest in this booming market and start an online grocery shopping business in your locality.

Wondering how to setup an online grocery store? Here’s how to proceed.

Online grocery stores come under the special category of eCommerce. Many of us know this category by the name ‘on-demand services’. Platforms like Instacart, Uber, Lyft, Eat24, etc. fall within this group. It’s a simple concept.

Unlike general eCommerce stores that receive an order and deliver the same within the next few days, an on-demand eCommerce store allows a customer to place an order and receive the delivery within hours or minutes. In the meantime, the customers can track the order status in real-time and see the approaching delivery on a map interface. Here is how to proceed to set up a online grocery store delivery platform.

Step 1: Decide your business location

Grocery delivery businesses are hyperlocal. It means, they depend entirely on the local supply chain and local customers for the business. That’s why it’s important to decide the area of your operation to proceed in a manner that you can best use the local infrastructure to conduct your business. Here are a few things to consider while selecting your area of operation:

• Existing competitors in the local market
• Access to local shops and suppliers

Step 2: Decide your inventory sourcing and business model

There are two major ways to source your inventory, and both the ways formulate two different business models:

• Traditional inventory model: It’s a straightforward paradigm. You will connect with suppliers in your area and purchase all your stock from them at wholesale rates. You will keep the stock in your warehouse and deliver the products as you get your orders. Here, you can build your own delivery fleet or hire a 3PL company to take care of the deliveries.

• Marketplace model: Purchasing and managing your inventory in-house could be a hectic and expensive task. You can skip this entirely by adopting the marketplace model in either of the following two ways:
  • Direct Marketplace model: Invite your local suppliers, vendors, shops, and wholesalers to sign-up on your platform and set up their storefront. Your website/app will allow the customers to pick the shop from where they want to make their purchase. Once they place the order, the respective shop or seller will get the notification and fulfill the order on your behalf. In return, the seller will pay you a commission for giving him/her a sale.
  • Marketplace Shopping Model: Instead of transferring the received orders to sellers, you can have your own fleet of shoppers who will go from shops to shops and purchase the ordered items. The shoppers will then deliver the orders to the customers. Instacart, the popular grocery shopping app follows the same model.

Choose an eCommerce platform

Once you decide your business model, it’s time to build a platform for the same. There are several turnkey solutions available in the market that you can use for building an online grocery store shopping platform in any of the business models.

For example, if you liked the marketplace shopping model of Instacart, you can use an Instacart clone script to build your Instacart-like platform in a quick time. A decent Instacart clone will provide you a ready-made package of all the solutions that you need to set up your platform:

• Mobile app for customers
• Mobile app for delivery partners (shoppers)
• Website for customers (optional)
• Control panel for admin

Note: I recommend using clone scripts, as they will save a lot of time and money that would go into developing the same thing from scratch. When you are getting everything ready-made at a fraction of the cost, why waste all your money? You can put that money in good use for the marketing of your business after the launch.

In fact, there are good clone scripts in the market for all popular on-demand business models like Instacart, Uber Eats, Amazon Fresh, and Eat24. A good turnkey script company will provide you open source-code access, which you can use for customizing your platform according to your brand identity.

Step 3: Setup your storefront

Once your app is ready, you need to set up the app with your preferred options and customizations to represent your brand. Use the Admin control panel to create new categories and sub-categories. For example, Kitchen Items, Gourmets, Dairy Products, Vegetables, Fruits, etc.

Here is an example from a demo of an Instacart clone:

Now, you have all your categories ready. However, before you upload product listings under these categories, you should make sure if your suppliers and local shops have these products in stock. An Instacart clone also allows you to partner up with your local vendors and let them list their available products from a dedicated seller dashboard.

The vendors can update all kinds of product details and stock information. Besides, you can also add sellers and products from the admin panel, if your vendors are not able to use the platform.

Step 4: Setup your Delivery Model and Network

There are two ways to set up your delivery network, and each requires a different approach. Be advised that the profit margin and level of investment will also increase and decrease with the respective delivery models:

• Setup your own fleet: You can set up your own fleet under your company’s contract. You can hire delivery persons under your payroll, just like Instacart. Since they are your staff, you can have better control over order fulfillment.

• Hire a 3PL company: Various 3PL companies provide delivery services to businesses like yours. You need not invest your time and effort in setting up and in-house fleet. Just hire a 3PL service provider, they will take care of your deliveries. They will use your delivery partner app to receive your orders, collect them from the vendors, and deliver to the mentioned location.

In this entire process, you need not have your own inventory or own delivery network to launch a business. Just a decent platform (which you will get using an Instacart clone) to let you earn hefty commissions from customers and vendors who are selling on your platform. This is Instacart’s model, the most affordable and quickest way to set up your own grocery delivery business.