How To Start Online Grocery Delivery Business: The Definitive Guide

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The age of the Internet and smartphones has completely shaped our life. From daily essentials to luxury goods, everything can be purchased on the Internet within a few clicks. Grocery is no exception. 

There were days where you’d run errands to buy groceries, thankfully, things have changed now. You can order your groceries from the comfort of your home and get them within a span of 24 hours. No more standing in chaotic billing ques! 

Read this blog to know the step-by-step process to start an online delivery grocery business in India.

What is Online Grocery Business?

A mobile app or eCommerce website that sells groceries online is an online grocery store. The seller can be a supermarket or a brick-and-mortar store or simply a mom-and-pop shop. 

It is a platform displaying the list of products and their respective prices. You can enter your pin code to check the delivery availability and the time taken for delivery. It offers you comfort, affordability, accessibility, and lastly top-notch service.

Why Online Grocery Business?

With time, the demand for online grocery apps is ever increasing. The recent pandemic outbreak has just facilitated the high demand. 

In India, online grocery businesses have witnessed high growth during the lockdown. For instance, Big Basket reported a 2X growth during the lockdown. It delivered over 3 lakh orders daily as compared to the 1.5 lakh orders in the pre-COVID era.

The young generation is pressed for time. They find it convenient and efficient in ordering groceries online. Online grocery business offers a comfortable way of browsing and shopping groceries. 

Since the last few years, there has been a paradigm shift in consumer’s purchasing behavior. This has led to the emergence of new startups in the online grocery space. In India, the grocery market is approximately expected to grow from 6000 crores in 2018 to 1 lakh crores by 2023. Globally, the online grocery market is forecasted to grow 23% CAGR between 2020 and 2030. Impressive, isn’t it? 

If there is ever a right time to start an online grocery delivery business, it’s now! Take the right steps today and see your business flourish in this emerging industry! 

Read on to know the step-by-step guide on how to start an online grocery business in India

1) Shortlist Product Categories

Which are the products you’ll sell? You have to decide the products and categories before you establish your online store. This is a core task. 

You can establish different categories of products in your system and sell hundreds or even thousands of products. The proper categorization of products will also help you manage your inventory with ease. You can take into account different aspects before finalizing categories i.e. % margin, storage hassle, delivery hassle, wastage volume, etc.

You can create an excel document and place these metrics in different columns. Now populate this sheet with some sample dataset to get a better clarity of things.

In the long run, the type of products you sell will also determine your brand USP.  The proper categorization of products on an app also makes the navigation easy for users. Therefore, defining products and their categories gives you enough clarity from a business point of view and provides ease of use to the visitors.

2) Market Research

What is your target area? Do you aim to start your grocery business first in a small locality, town, city, state, or directly nationwide? It is imperative to be clear about the market size. This will help you make relevant business decisions. 

Once you have decided on the target market, it’s time to identify the lifestyle and buying behaviors of consumers in your target market.

What grocery items do customers shop for? How much is their monthly grocery spendings? Do they order groceries online? Which factors do they consider before purchasing groceries – price, quality, others? What is the typical age group of your target market? 

All these questions will help you do your market research efficiently. It will give you some crucial business insights and lead to better decision making. It will also help you understand the grocery items which are in demand. Hence, you can plan your inventory and other operational activities in advance.

3) Decide the Delivery Process

Vegetables, fruits, milk, and several other grocery items have a limited shelf life. Hence, all these items need to be delivered quickly. Therefore, you need to plan your delivery area and operations to ensure that the groceries are delivered on-time and in the purest quality. 

Fast and proper delivery is the key to the success of an online grocery store. To ensure hassle-free delivery, you can partner with third-party delivery companies such as WeFast, Dunzo, Grab, and many more. These partners offer on-demand hyperlocal delivery services.

However, you can also set up your own delivery team. If you’re delivering groceries within your vicinity, you can onboard a few delivery boys who can help you in your delivery operations. 

To ensure a delightful customer experience, you can offer an order tracking option to your buyers. Give them a facility to track their order at regular intervals. 

You can also provide them with the estimated delivery time and the delivery agent’s name and phone number. Smoother and quicker delivery are the most important aspcts to get an edge over your competitors. It is also the best way to ensure customer loyalty.

4) Finalize the Company Name

What’s in a name? Probably, everything! Naming a business might seem like an easy affair but it’s one of the most challenging and undervalued aspects of business. The name of your business is the heart of your brand. The name should resonate with your target audience. 

Your business name needs to be short, catchy, and original. While brainstorming the business name ideas, you need to be cognizant of your business USPs and future goals. 

Whether you’re looking for a unique domain or a catchy brand name, several online tools like Namelix, Name Mesh, Oberlo, and many more help you generate brand name ideas that capture the personality of your brand. 

You can buy a domain name from websites like Godaddy and Bigrock.

5) Register Your Company

Business registration is another crucial step for starting an online grocery store. First, take the required permissions from various authorities. 

It’s recommended to take assistance from a Chartered Accountant or a well-known tax consultant to complete the tax submissions and GST formalities. 

If you’re a single individual, you can do proprietorship registration. In case there are partners, you can opt for partnership registration.

Proprietorship, Partnership or LLP have fewer compliance aspects compared to a Private Limited. To understand their differences in depth, you can refer to the following blog.

6) Select the Right App Development Company

Your mobile app will be the identity of your online store. Your Android and iOS app will be the customer’s first interaction with your business. The first impression is often the last, isn’t it? Hence, to give a lasting first impression among customers, it is pivotal to select the right app development company.

You can consider the following points while shortlisting an app development company:

  • Check out the portfolio of their past projects
  • Ask for client references to get first-hand feedback directly from their customers
  • Ask for the tech stack they will use to implement your project
  • Enquire about their app development process  
  • See if they have a dedicated UI/UX team
  • Understand their post-delivery support process and charges
  • Most importantly, if they empathize with your vision and are ready to walk an extra mile to achieve it

Related: Check out our blog on things to consider before hiring an app development company.

7) List Down App Features

What distinguishes an ordinary online grocery store from the extraordinary is the best in class features. To build a top-notch online grocery store, you need to equip it with stunning UI, easy sign-in, add to cart features, push notification, feedback, live tracking, recommendations, and smooth payment facilities. 

The most important feature to add to your online grocery store is the easy sign-in process. You can enable users to sign-in via Google or Facebook. An add to cart function exactly works like a trolley. A user can add all the items to the cart or wishlist and then proceed for checkout. He can also add/remove items based on his/her choice. 

Through push notification features, users can get regular updates about the discounts, new offerings, order updates and more. Customer reviews and feedback also play a vital role in influencing the purchasing decision. Hence, the customers should be able to write and see the reviews for all the groceries you sell. 

Many times, especially in the grocery segment, a customer wants to reorder the same items he/she purchased previously. Hence, there should be a feature of repeat order which allows the customers to select the same items again.

You can also take inputs from your app development company to finalize features in the first version of the app.

8) Inventory Management

To build a profitable, scalable online grocery business, inventory management should be the foremost priority. In the beginning, you can partner with a supermarket to cater to all the orders. As you see some traction, you can also rent a warehouse later to stock up your inventory. 

When you manage your inventory on your own, it is essential to keep a track of demand. Which are the best selling products? Which are the least selling products? What are the upcoming marketing campaigns and for which products? Taking all these things into consideration, you can plan your inventory. 

A hassle-free inventory management can help you increase sales and profits.

9) Set up a Secured Payment Gateway

A payment gateway is a third-party service that automates the transactions between your grocery store and the buyer. It is safe and secured and enables quick, hassle-free transactions. Razorpay, PayU, PayPal, and ccAvenue are some prominent examples of payment gateways. 

When you integrate a payment gateway on your website or mobile app, take steps to ensure that the customer does not face any problems during checkout. In the online grocery business, problems in checkout can lead to a loss in sales. You can also consider providing a cash-on-delivery option as well.

Related: Check out our list of top payment gateways in India.

10) Develop a Mobile App

You can initiate the app development process at this stage. You can request the app development company to first share the UX and UI screens with you for approval. Once it’s reviewed and done, you can give them a green signal to convert it into a mobile app.

Also, check out the admin panel of your project. The admin panel will be used primarily to manage order and business logic implemented in your online business. You can communicate the type of reports you would like to see in the admin panel and also the KPIs you would like to glance at on the dashboard.

Connect on a regular basis with your developers to share your feedback and track the progress of the development work.

11) Beta Testing of App

Some companies skip the beta testing phase and directly launch the app. This practice may prove costly in the long run. Hence, it is important to test your app among people who’d be like your potential app users.

This is where beta testing comes into play. Through beta testing, you can test your app with a larger audience. It is an excellent method to fix bugs and get genuine user feedback on your app. It is like a soft launch of your app.

12) Launch your Online Grocery Business

After putting in all the hard work, it’s time to launch your online grocery store. Remember, your business launch needs to be classy and vibrant. Treat it like a marketing event which will get you maximum engagement and also, possible conversions!

You can announce your business launch on social media channels. Ask people to use your grocery app, rate it, review it, and share it in their network. Another great idea would be to throw a business launch party and invite some media people and your potential target audience.

A business launch event could be a fantastic marketing technique to kick-start your business. You can run a marketing campaign to promote your launch party. Go a step ahead and offer mega discounts during your launch event. This will help you gain new customers.

13) Marketing Strategy

With sound technical infrastructure and efficient operational activities in place, now it’s time to make it big. You need to burn the midnight oil to promote it and reach out to the masses. Otherwise, your tech-savvy online grocery store will just be another business in a sea of existing online grocery businesses.

Digital Marketing is the way ahead, so go digital! From creative Content Marketing to strategy-driven SEO and paid ads, you need to brainstorm various marketing strategies to make it big. 

To begin with, you can leverage the power of social media. Create your online grocery page on popular social media platforms such as Facebook, Instagram, and Twitter. Create engaging content with relevant CTA’s prompting people to buy groceries from your online store. Collaborate with influencers who can promote your grocery store. With a mix of unique content and the right influencer partnerships, you can ace your social media strategy.

Check out our detailed app marketing guide – it includes innovative marketing strategies that you can use to promote your app-based business. This guide was conceptualized by our in-house team of experienced app developers, consultants, and marketers that have helped launch several successful mobile-based businesses in the last 11 years.

14) Customer Feedback

How do you know whether customers are happy with your business? How do you know whether your business is moving in the right direction? The answer to all such questions is a candid customer feedback. 

Customer feedback is the most important thing for your business. It can help you improve your service and plan the right marketing campaigns or enhancements in the app. Through surveys and direct conversations, you should regularly interact with customers and dive deep into your business.

Bottom Line

When it comes to mobile app marketing, the sky’s the limit! However, make sure you get the basics right i.e. understand your target audience and devise marketing strategies accordingly.

From conventional digital marketing to referrals and rewards, you can come up with ample strategies to take your app to the next level.

Eiosys is a leading grocery delivery app development company in India. We have helped several companies develop mobile apps to start their online grocery business.

Published: December 10, 2020
Last updated: March 1, 2024


Mubasshir Pawle
Mubasshir Pawle serves as the COO of Eiosys, where his role is pivotal in leading the custom software development team. A developer at heart, Mubasshir thrives on creating bespoke software solutions, leveraging his mastery in Node.js, Flutter, and React.js technologies. His significant contributions to Stack Overflow underline his commitment to the tech community. With a track record of delivering hundreds of mobile apps and websites globally, Mubasshir's technical acumen and dedication have been instrumental in Eiosys's success.

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