How to Start an Online Grocery Store?

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  1. Start of Online Grocery Stores
  2. Promising Statistics
  3. Why Online Grocery Store?
  4. How to Start an Online Grocery Business in India?
  5. Steps to Start your Business

Online grocery stores had started cropping up towards the end of the past decade. A variety of packaged products, right from spices and seasonings to beverages, have been selling online consistently. During the Covid 19 pandemic and the subsequent lockdown, the number of people buying from Amazon, BigBasket, and Grofers, rose considerably. The pandemic especially brought Tier 2 and Tier 3 cities’ buyers online.

Promising statistics

“The Indian online grocery market size was valued at USD 2.9 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 37.1% from 2021 to 2028,” says research.

Several social commerce start-ups have delivered fresh groceries to customers’ doorsteps in this period. Even established Ecommerce giants have made incredible business by venturing into the grocery segment. According to industry reports, Amazon Fresh’s grocery division almost doubled during the Covid lockdown.

The rise in online grocery stores’ popularity is mainly due to the increased usage of smartphones, as now they can order from home comfortably. Looking at the growth prospects, several foreign businesses are investing in this segment.

As this business model involves multiple vendors, it offers a host of opportunities to those who wish to start their grocery store online for their localized customer base.

Why online grocery stores?

One reason to start an online grocery store is that a large part of any Indian family’s daily budget goes into groceries. And this is an expense which will never go down. Secondly, the number of people who prefer online grocery shopping is growing by the day, so the business has tremendous prospects of growth. A Praxis Global Alliance report says that India’s online grocery market is set to reach $7.5 billion by 2022. The business is growing at a staggering CAGR of 70%.

How to start an online grocery business in India

It is not a difficult nut to crack if you can gather a sound understanding of the business, and a backup of web solutions providers to take care of your online front. There are 3 important parts of an online grocery store:

Collecting orders – You have to ensure that when the customer orders for the first time, it should be a hassle-free experience. This will determine whether the customer is going to buy from you again. He should be able to place his order through both mobile or web with equal ease. For this, you can either develop an efficient app, or simply register with an Ecommerce platform. For a start, you can also take orders over the phone.

Order execution — Fabric, a micro-fulfilment company that specializes in grocery operations, claims that 65% of customers would replace a grocery supplier who can’t provide same-day delivery. It is, therefore, very important to streamline your supply chain.

Payment collection – Since it’s an online store, a smooth online and mobile payment facilities are a must. Online payments save yours and customers’ time and create transparency.

You can follow these Steps to Start Your Online Grocery Business:

  1. Registration – Registering your business is the obvious first step. Get in touch with a reliable tax consultant or chartered accountant, who will help you in registration as well as the required licenses and permits to start an online grocery business in India. The most important ones are:
  • FSSAI License to sell food products and processed items.
  • Shop Act Registration for your retail business.
  • GST Registration, which will cover all central and state indirect taxes.
  1. Define Target Audience – Do a quick research on the eating habits of the people who stay in the area you are operating. That will help you anticipate and stock high demand items well in advance. Another important data to gather is the number of households with young and educated members, because they are the prospective customers of your online store.
  2. What’s Your Delivery Radius? — Your online grocery business heavily depends on how fast you can deliver. Select delivery locations which will allow you to send grocery supplies quickly to your customers. Also, you must have a backup of smart delivery boys and sufficient number of two-wheelers.
  3. Inventory – You can manage your inventory by either keeping your stock ready in the warehouse, or tying up with local kirana stores as well as wholesale suppliers. This also makes a warehouse and a store space — designed with the right fixtures and shelves — essential. For this, you need to consult a store design expert who can help you make the optimum use of your store and warehouse space. You also need a racks and fixtures provider who can provide you with shelves which can be arranged and rearranged quickly according to your needs. Instor has provided a wide range of flexible shelving solutions and customized store designs to hundreds of retail stores, supermarkets and hypermarkets. You can contact its experts for help in shelving and store design.
  4. Funding – The margins are thin in a grocery business, just 2% to 5%. So, the funding capital you arrange should be enough to cover the overheads for the initial months without having to depend on the profits. Since you are delivering at the customers’ doorsteps, those expenses also must be factored into your overall business expenses.
  5. Payment Facility – Besides keeping online payment facilities, it is also important to keep a backup of cash for a grocery business. For this, you can create a Cash on Delivery (or COD) system for accepting payments from customers. It will allow you to always have some ready cash, which is so much needed in a grocery business. Besides, credit/debit card payment gateways take time to give you access to the cash you have earned in the online accounts.
  6. Pick-up Facility — You can have a pick-up facility so that your customers can order online and pick them up at their convenience. This will also minimize delivery costs for you.
  7. Marketing – Since your business runs mainly on the internet, you can reach a vast audience through innovative and engaging online campaigns. The biggest advantage is here you can create a high ROI-giving ad campaign within a comfortable budget.

That also says, you need a nice website for your prospective buyers to land on. Take an expert’s help to optimize it with relevant keywords.

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