How to Grow Your Online Grocery Delivery Business?

By Ruchir C.

Online grocery stores sell a wide range of products. These include spices, seasonings, packaged goods, and beverages. Online shopping has become more popular among first-time shoppers from Tier 2 and 3 towns and cities.

In the last year, many social commerce start-ups have delivered household necessities and fresh and dry groceries to customers' doorsteps. There have been both established eCommerce companies and newcomers who have experienced incredible growth in the grocery market. According to industry reports, Amazon Fresh's grocery division nearly doubled in size during the Covid19 pandemic.

Smartphone usage is the main reason the demand for building grocery apps is increasing rapidly. People can order online from the convenience of their own homes. This segment has huge growth potential, and many foreign companies have invested in it.

The US grocery store sector was behind other retail sectors in eCommerce adoption before the COVID-19 epidemic. The combination of high e-commerce fees, confusing website designs, and customer reservations about purchasing fresh food online has slowed adoption. Groceries had a penetration rate of 3 to 4 percent, which was significantly lower than that of beauty, apparel, electronics, and other sectors, with 10 and 20 percent penetration rates.

The Incredible Statistics of the Grocery Delivery Market

  • This chart shows online grocery shopping in the United States between 2012 and 2021 in billions of dollars.

  • The 2012 online grocery market sales were only $6 Billion.

  • In just four years, it doubled. The online grocery market had reached US$12 billion by the end of 2016.

  • It surpassed US$17.5 Billion by the end of 2018.

  • It is predicted that it will surpass US$22 billion in 2019.

  • The original 2012 figure, US$6 billion, will be multiplied by 5 by 2021. US$6 billion will be born 5 times, bringing it to the close of US$30 billion.

Trends Grocers Must Watch Out for in 2022

Retailers face many challenges in 2022. Retailers are facing 2022 filled with challenges. The supply chain crisis continues to affect shelves. Record-high inflation isn't likely to end soon. This forces companies to increase prices and possibly frustrate customers.

Grocers also have trouble keeping their warehouses and stores staffed during what many fear is a fundamental readjustment in labor markets.

These challenges were highlighted by industry experts when they discussed their top trends for this year. However, they pointed out many opportunities for grocers because more people order and eat food at home now than ever before.

Increased Omnichannel Expectations

During the pandemic, customers preferred to order online and have their orders delivered. This trend is expected to continue this year. Many people still prefer to shop in-store due to the lack of personal contact and high delivery costs.

Grocers should be encouraged to spend more on seamless online shopping, as shoppers expect the same assortments, pricing, and promotions across all channels. Consumers are increasingly valuing app user experience, loyalty, and personalization.

New In-Store Shopping Experience

Grocery stores are implementing innovative solutions to enhance the shopping experience in-store. Grocers can partner with other retailers to offer store-within-a-store solutions that provide more options for shoppers. Demos can be held in person in several locations around the store and feature content that ranges from product supplier spotlights to recipe demonstrations.

Grocery stores have also used store space to open food-service businesses. Some transformed rooftops into coffee bars, while others created restaurant-style spaces for special occasions and party rentals. Supermarkets will experience an increase in prepared meals in-store and online in the next year. Customers can order takeout from them at a cost-effective and simple price, as well as their grocery shopping experience.

Ultrafast Delivery Extension

Jokr, Getir, and Gorillas, which offer ultra-fast delivery, are growing across the US, putting pressure on grocery stores to increase their delivery services and reduce delivery times. Grocers have been partnering with third-party delivery firms to improve delivery times and implement new technology to help manage deliveries more efficiently.

Ahold Delhaize continues to expand its omnichannel partnership and opens virtual convenience stores for multiple branded delivery services such as Stop & Shop Express, Giant Instant Delivery, Food Lion Now, and Giant Instant Delivery. This instant delivery service is available at over 1,400 Ahold Delhaize banner stores across the country via Instacart's Convenience Hub. Customers have access to a wide range of products within 30 minutes.

Investment in Tech and Analytics

Grocers are being forced to adapt to changing workforce requirements. They have to find new ways to re-skill employees. These include tuition reimbursement programs at The Kroger Co., Publix Super Market, Walmart's Live Better U program, and Amazon's free education for employees through its Career Choice program. Further, 54% of retail work can be automated. This puts even more emphasis on technology/advertising intelligence.

Robotics, Automation, and Automated Fulfillment

Augmented reality (AR), robotics, and automation will all be critical tools in reimagining brick-and-mortar grocery shopping with a digital twist. For example, robotic processes can simplify order fulfillment for in-store and online products, making managing and delivering orders more profitable.

The store of tomorrow might combine the capabilities and an MFC (micro-fulfillment center) to pick up and deliver orders and create a fully-fledged market for customers in-person. With MFCs automating backroom processes, more people can be put to work to offer a premium, in-person experience. This will include the expertise of experienced butchers and fishmongers and digital and AR-based add-ons that maximize in-person and remote shopping.

The storage and delivery requirements of fresh, dry, or frozen goods make it challenging to automate grocery store operations. Automation will therefore be slower than other retail verticals. Even though the AR-centric grocery store model is still not fully developed, 2022 will see more retail outlets experimenting with and implementing these tools. This will pave the way for a completely automated grocery shopping experience.

Sustainability Imperative

Companies are increasingly making decisions that consider social and environmental factors as consumers become more aware of the effects of their buying habits. McKinsey found that 44% of Fortune 500 businesses integrate environment, social, and governance practices into core business strategies. 76% of shoppers also boycott or buy brands based on values.

Things to Consider Before Starting an Online Grocery Business

These are the critical factors to success in online grocery shopping.

  • Selecting and improving (if necessary) the grocery business model

  • Understanding the impact of COVID-19 and any of its new variants, such as Omicron, on the target market

  • A roadmap is created to transform the business model into a flexible, efficient, and precise operating model.

  • Determining the market

  • Separation of delivery areas

  • Analyze of competitors

  • Grocery website and mobile app

Entrepreneurs and business owners are often overwhelmed by all of these factors.

We have provided examples of four main business models for the grocery industry.

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How Fast is e-Commerce Grocery Growing?

E-commerce grocery is experiencing a boom as a result of the pandemic. We were already trending in this direction before 2020. According to IGD, an online research company specializing in food and consumer goods, U.S. grocery sales are expected to increase 129% by 2022. These numbers will have risen due to the explosion in online sales caused by COVID-19 lockdown measures. You should be paying attention to and preparing for this significant increase.

COVID-19 was a tool that helped consumers switch from in-person shopping to online shopping. However, data suggests that this behavior will continue. McKinsey's research supports the idea that the COVID-19 panic will not end, and new habits developed during it will persist. Many shoppers were willing to try new brands and retailers during the pandemic. About half expect to keep their relationships with these retailers after the crisis.

Benefits of Grocery Application for Grocery Business

A mobile-based grocery shopping app has transformed the entire business landscape. This also applies to grocery delivery. In the past few years, grocery delivery has seen a dramatic increase in sales.

If you have an offline grocery store, this is the time to increase your business through covid-19. Make the best online grocery shopping app. You may be asking yourself why. Let's answer that question by explaining the benefits of automating grocery delivery through online app development.

Time-saving

This is an essential advantage in today's hectic modern world. Customers can shop for groceries from anywhere with mobile apps. Instead of searching for specific products all over town, customers can search for them online and add them to the cart. They don't have to lug heavy grocery carts around and wait in long lines for the billing process. Customers love that all tasks are completed in minutes on grocery shopping apps.

Optimizes Resources

Technology can help you optimize your resources for today's ever-changing business environment. Integrated software can improve operational capabilities by allowing you to manage inventory, customer relationships (CRM), payment processing, and web design. This will increase profits and reduce costs as it streamlines processes in your company.

It allows businesses to concentrate on their core activities and have complete control over all non-core functions, such as payroll, leave management, data capture, reporting, analysis, etc.

Payment Gateways

An online grocery app allows you to offer multiple payment options to customers. Online payments are usually secure, and customers can opt to pay on delivery.

It makes it easier to manage orders, and the admin panel makes it easy to manage the entire inventory. Using an online grocery app is easy, thanks to the latest technology.

Increase Profits

This is one advantage of a readymade grocery store app. To maximize profits, every business owner manages the company. It is the same for grocery store owners. A reliable online grocery delivery system is essential to boosting profits in the face of the pandemic.

Reduction in Staff

Professionals are essential for the smooth operation of a grocery shop. To run a grocery store efficiently, you'll need a certain number of employees. You can reduce the staff at your grocery store by using an app. It will take some time to get used to the app, but it is well worth it. You will need to pay the developer and maintenance fees for an app. On the other hand, the wages of employees will be high.

Brand Building

For any business to thrive and survive, branding is essential. On-demand grocery app development can help you break down barriers and grow your business internationally. Your grocery business will be a trusted brand. The on-demand grocery app is a great way to build trust in your business.

Your customers will remember your on-demand mobile app. The on-demand grocery application's key features that allow you to build relationships include 24/7 availability, in-app notifications, and reviews. This app will allow your store to stand out from the rest and increase customer engagement.

Managing Loyalty Program

A loyalty program is another benefit to an on-demand grocery delivery service. This program is a big hit with customers and can be an excellent asset for your business. Loyalty programs allow customers to visit your app more often than a brick-and-mortar store.

Push notifications are sent to the app about reward points and other promotions to keep people interested in your business. The app makes it easy to manage your loyalty program.

Cost of Developing a Grocery Delivery App

Delivery apps that can be ordered on-demand are a great way to take your services to the next level. To build a grocery delivery app, you can hire app developers from a reliable and trusted mobile app development company. The price of a grocery delivery app is determined by four main factors: features, complexity, development time, and hourly rates.

We present an hourly rate estimate for essential grocery delivery apps. It is between $25 and $30. Four phases make up the entire process of developing a grocery app.

  • Documentation$1000-2000

  • Design: $1500 - $3500

  • Front-end and Backend Development: $10000 - $20000

  • App Testing and QA: $2500 to $4500

The average grocery app development cost will be between $15000 and $30000, depending on all the phases. It is slightly more expensive to create a grocery app on Android than an iOS app. The development cost for an app with more features will be significantly higher.

Business Model for Grocery Delivery Business

Three models can help you generate good revenue in an on-demand grocery delivery company's business model. These are the best business and monetization models for an on-demand delivery app.

Advertisement Model

Advertisers can place their ads on the portal in the advertisement model. This monetization model allows sellers and vendors to run ad campaigns through the admin.

Subscription Model

As the name implies, this type of business model is based on subscriptions. There are many offers available depending on the subscription plan that people purchase. A subscription model allows users to buy a membership for a set period and then enjoy the benefits of premium services.

Commission Model

This is one of the most effective and oldest ways to profit. This model works for both vendors and business owners. Let's look at how the commission model works. The seller gets a portion of every sale made through the app. A small percentage of the money is charged to the seller for signing up and the buyer for purchasing a product from the app.

Why You Should Start Now

Early adopters will reap the benefits of e-commerce in grocery, which is expected to continue growing rapidly.

  • Keep ahead of your competitors. If retailers don't act now, they will likely fall behind their competition as more grocery stores adopt personalization strategies. The sooner you start e-commerce tech stacks, the quicker you will see substantial ROI.

  • Plan for the future. Your customer experience in the future can be improved by activating your data. You can harness it to improve your business strategy. You will need to have the data and insights necessary to create your digital experience strategy for the future to stay agile and profitable in today's uncertain market.

  • Use experience to differentiate. Today's consumer is more focused on overall experience than price and product. Grocery stores with a robust data-driven experience strategy can leapfrog their competition and create a competitive advantage that will last many years.

 

Want More Information About Our Services? Talk to Our Consultants!

The Key Takeaway

Your grocery app could grow by combining effective market strategies with the most up-to-date technology. Developing an app like Instacart or building a unique grocery app will allow you to establish a fully functional food distribution system that manages everything from one place. It provides exceptional customer service for order placement, shipping, payments, and grocery shopping. These functions are executed by specialized software used to manage everyday workflows for businesses.

You can offer an excellent service to your local community by providing grocery delivery services. You will be a nutritional source for many. This comes with great responsibility. To be a successful grocery delivery business, partnering with a wholesaler or local grocery store is a good idea. This will ensure that your customers have the food they want. You may also be able to offer additional services that will help your customers plan their meals.

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