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Online grocery stores are one of the fastest-growing businesses throughout the globe. The main reason behind this is the increasing preference for online purchases by the customers.

The online grocery business in India is relatively new but has been growing at a tremendous pace of 19% growth rate year on year. As of 2019, the online food and grocery market in India accounted for merely 0.2% of the total market but it is expected to reach 1.2% to touch USD 10.5 billion by 2023.

The opportunities have attracted new players to enter the market with existing players trying to strengthen their hold. For growth and sustainability, it is important for the new players to keep their basics right from the onset. So, the question is not simply ‘how to start a grocery business online’ but to answer how to build a business with a solid foundation and digital agility.

Market Research

While there are a lot of players available in the market, new businesses will have to come up with something which others are not offering. For that, detailed market research to understand the problems faced by customers is necessary. Also, deciding on a specific target region is important. A new business must understand the target audience first before selecting a region. It cannot sell groceries online in the region where people do not have internet access or a rural area where people still do not buy groceries online. The following questions could be useful:

  •         What demographic factors define the target audience?
  •         What problems do they face while buying groceries online?
  •         What extra features can be provided?
  •         How to create competitive differentiation?
  •         Is the target audience comfortable using websites, apps? 

These are some of the questions which will new businesses understand their customers better and offer them something which will fill the existing gap. The two most popular forms of online grocery business models are the inventory model and the marketplace model.

Website/App Development

An integrated IT platform for customers and backend order management and fulfilment is essential in e-grocery business.

The online shopping app/website should be compatible with all operating systems (iOS, Android etc.), be user-friendly and deliver a superior user experience. It should fulfil all the modern-day expectations of customers from an online shopping app or website. Customers need to be able to search for products by filters, find product specifications and prices, product images and videos, access and read product reviews, area delivery details etc.

On the backend side of the platform, there should be a proper order management system in place for receiving and processing orders and for communication with customers in the likes of sending order confirmation notifications, live tracking of their orders, delivery timelines, etc.

Process Manuals (SOPs)

It is only when the duties and responsibilities are crystal clear to all of the employees in all the departments will they be able to carry out what they are needed to do. Now, how to achieve such clarity for all? The answer is SOPs. SOP is an operational roadmap for each operation or activity. SOP defines the step-by-step approach to carry out a particular task or operation. SOPs need to be planned and documented. It removes subjectivity and doubt. It also makes supervision, monitoring and improvisations easier. There should be SOPs for every department like finance, HR, store operations, merchandising, purchase, inventory, etc.

Robust IT Systems

Running an online grocery business involves multiple business processes and operations that need to run in a synchronized manner moving the wheels of the entire business. A strong IT infrastructure to support all the departments and the business processes becomes necessary.

The leverage provided by business software applications can significantly trim operational costs, especially in the long-run. A suitable business software application, customized to suit specific business strategies and the resultant operational requirements, can simplify complex business operations to a matter of few clicks and a few inputs. Such software applications collect the data fed into the system by different users across the enterprise, store such data centrally, and make it possible for other process owners to access the relevant data for further decision-making in their respective departments. This results in automation, more accuracy of the information, and speedy decision-making.

Procurement

With hundreds and thousands of products and brands, procurement is a tricky process for grocery businesses irrespective of the channel. The big question shortened would be – what products to keep of which brands and in what quantities?

Reliable demand forecasting and precise procurement become a necessity. There are various analytical and BI (business intelligence) tools for more reliable, data-driven decision-making in inventory management (including procurement).  Auto-replenishment systems could be a game-changer.

Marketing Planning

Marketing begins with the idea of business itself. But we need to understand marketing in action.

For an online grocery business, marketing, in the sense of brand and product promotion and advertising, can be done in two ways:

  •  Digital marketing
  •  Conventional marketing

Under online digital marketing, there are two important fields – search engines and social media.

Businesses can use SEO and SMM techniques to increase their brand visibility (website/app/listing) on the search engine result pages. They can also leverage the power of social media to reach out to a wider audience, engage with customers, or even sell products.

Conventional techniques can be more effective for local audiences. Some of the popular old school advertising mediums are:

  •         Advertising in the local newspapers
  •         Pamphlets and flyers
  •         Hoardings, electronic billboards

Financial Planning

Irrespective of markets and geographies, some important aspects to be covered under financial planning are:

  •         Assessment of capital requirements, source(s) of capital, capital structuring, cost of capital, terms of repayment, etc.
  •         Operational expenditure budget
  •         Sales forecasting
  •         Projected cash flow
  •         Planning for working capital management
  •         Projected income statement
  •         Projected profit and loss statement
  •         Projected balance sheet
  •         Break-even analysis
  •         Ratio analysis

COVID-19 Measures

Hygiene and safety precautions and measures are of the highest relevance in the present context and will continue to be so for a couple of years or at least months. Thus, all grocery businesses, new or existing, must incorporate the necessary measures in every aspect of their business operations.

Some of the must-have measures are contact-free delivery, distancing norms, preference for digital payment, use of masks, hand gloves, and face shields by employees, surface disinfection, sanitization, high standards of cleanliness and hygiene at places of work, advanced packaging, routine body temperature check etc.

The future of brick and mortar retail grocery business is omnichannel. Whether in-house or with the help of retail grocery consultants having omnichannel expertise or retail eCommerce consultants, retail and online grocery business will share a common future.