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A Guide to Start an Online Grocery Delivery Business in India

The way people shop for groceries in India has changed drastically in recent years. Gone are the days of physically visiting stores and markets. Instead, online grocery delivery services have become increasingly popular due to their convenience and time-saving benefits.

With the adaptation of modern technology, there has been a rise in the online grocery delivery business in India. 

And the reason behind it is crystal clear. 

It saves time and people get their desired items at their doorstep within a few taps. 

Wise are those entrepreneurs who know when and how to enter the market. If you’re one among them – this blog is the right place to get all the information to make your online grocery business a success. 

So without any further delay let’s get into the details! 

Market Analysis 

The online grocery market research data shows that India is expected to generate a revenue of $73.89 billion by 2029. 

Factors like customer preference due to convenience, express delivery, availability of organic & locally sourced products, and digitalization have played a significant role in the increasing demand for grocery delivery business. 

Let’s take a peek into India’s online grocery delivery and beverage shopping by store brands as of December 2023 –

market-share-of-stores-based-on-online-grocery-and-bevarage-shopping

Chart: Market share of Popular Indian online stores based on online grocery and beverage shopping

Also Read: eCommerce Development Guideline with Cost 

Steps to Start an Online Grocery Delivery Business in India 

You can follow the steps below to start your dream online grocery delivery business in India. Each of these steps is required to be checked in your to-do list if you want to launch a full-fledged business.

Research the Market & Define the Target Audience 

Market research should get the prime focus before anything. In the online grocery delivery space, this means researching existing players, and consumer preferences in your city and identifying a gap you can fill. 

Finding out the needs and wants while determining the target market would help you deliver exactly what they need. 

For this, you will need to analyze the – 

  • Market trends 
  • Consumer preferences
  • Regional demand

After analyzing, you will need to define your target audience based on the – 

  • Demographic data
  • Shopping behavior
  • Preferences

This insight guides your marketing strategies and product selection, ensuring relevance and appeal to potential customers.

Identify Delivery Location

Delivery is key in the online grocery business. Selecting the right delivery locations is essential for operational efficiency and customer satisfaction.

Choose a strategic location for your warehouse or partner with local stores to ensure quick deliveries within a defined area. You can always start serving a small area and gradually expand your business zone to perfect your operations. 

Remember, fresh produce requires a tighter delivery radius to maintain quality.

Choose a Business Model

Decide how you’ll source your products. There are four different types of grocery delivery business models- 

  • Inventory-based business model
  • Multivendor marketplace business model
  • Hyperlocal Grocery Delivery Business model
  • Click and collect or buy online pitch up in-store ( BOPIS) business model 

You can ask yourself questions like – Will you maintain your own inventory or partner with existing stores? 

Each model has its advantages and challenges, so carefully evaluate them to align with your business goals and operational capabilities.

Business Registration to Ensure Legal Compliance 

Every business needs a legal foundation. Obtaining the necessary licenses and permits for food safety, data privacy, and taxation is essential.  You can either register your business as a sole proprietorship or limited liability partnership based on your business’s goal and operational method. 

Depending on your business type and chosen model, you will need to obtain various licenses like – 

  • Shop License
  • FSSAI License
  • Trade License
  • GST Registration 

This protects you legally and allows you to open bank accounts and obtain necessary permits.  The Food Safety and Standard Authority of India (FSSAI) license is crucial for selling food products. 

By following the industry and government rules, you show that your business is trustworthy and legitimate in the market.

Partner with Suppliers 

Reliable suppliers are essential for the success of your grocery eCommerce. For this, you must look for wholesalers or distributors who offer competitive prices, a wide range of products, and timely delivery.  

Negotiate fair prices and delivery terms to keep your stock fresh and available. Having strong ties with suppliers helps your business run smoothly and keeps your customers happy. All over, it ensures consistent product quality and availability.

Investment Sourcing 

Launching a business requires investment. Consider your initial costs for inventory (if applicable), website development, delivery vehicles, and marketing. Assess your capital requirements and explore various funding options, including personal savings, loans, investors, or crowdfunding.

To secure financing from potential investors, you will need to develop a comprehensive business plan and financial projection.

Build Online Platform

Today’s consumers expect a seamless online experience. Choose a reliable e-commerce platform or engage a skilled web development team to build and optimize your digital platform. 

So good business owners would invest in developing a user-friendly website or mobile app for browsing products, placing orders, and securing online payments. 

But wise business owners often seek good ROI for their one-time investment into a complete solution with all the essential panels and mobile apps required for running the business. Take 6amMart as an example. It is a multi vendor eCommerce solution that serves multiple business modules under one platform. 

So you can build your online grocery store using this solution with always a chance of expanding your business into different zones and adding another business module in your business growth journey. 

Set Up Delivery Logistics

Reliable delivery is your lifeline. Decide if you’ll manage your own delivery fleet or outsource it to a third-party service. Ensure your chosen method offers timely deliveries that meet customer expectations.

Making sure orders are delivered on time and reliably makes customers happy and more likely to return. This also encourages them to tell others about their positive experience.

Implement Marketing Strategies

Executing effective marketing strategies is key to attracting and retaining customers. After all, you need to – Spread The Word!

For this, you can use channels like – 

  • Social Media
  • Local Advertising 
  • Email Marketing 
  • Search Engine Optimization (SEO)
  • Google Ads 
  • Content Marketing 

Highlight what sets your service apart and offer promotions to attract customers in your initial launch phase. For promotional offers for your business, you can use tactics like – 

  • Discounts 
  • Loyalty Programs 
  • Referral Incentives etc.
Also Read: Best Tech Stack for eCommerce Business Website

Benefits of Online Grocery Delivery Businesses

The online Grocery Delivery Business in India is booming, and for good reason!  This business model offers a wealth of benefits for you, the entrepreneur, and your customers.

Be your own boss

Building your own online business offers the exciting opportunity to be your own boss. You will be able to afford a level of independence that you won’t get working for others.  You’ll be free to make key decisions, shape your brand identity, and watch your venture flourish.

Offer convenience to customers 

Imagine the ease of grocery shopping from your couch! Your customers will love the time saved by skipping crowded stores and long checkout lines. In fact, many Indians prefer to stay inside and use their smartphones instead of going out in this scorching heat.  They can order fresh produce, household essentials, and more delivered straight to their door. Ultimately as a grocery delivery business owner, you’re gaining a profit. 

Reduced Costs

Believe it or not, online Grocery Delivery Businesses can help customers save money. When you showcase this advantage to your target market, they’ll avoid impulse purchases at the store and can easily compare prices online. Plus, with efficient delivery routes, you can potentially offer competitive pricing.

Scalability for Growth

Unlike a physical store, you’re not limited by location when you own an online business. As your customer base expands, you can easily scale your operations to reach new zones, neighborhoods, or even different cities.

Flexibility

The flexibility of online grocery shopping is unmatched, with the added benefit of being able to order groceries anytime, day or night. 

The ability to access the online store at any time is a perfect fit for today’s fast-paced lifestyle, where people often juggle multiple responsibilities and don’t have the time to visit physical stores during the day.

Challenges and Considerations to take into account 

Starting an online grocery delivery business comes with its own set of challenges and considerations.  
The online grocery delivery world is exciting, but there are hurdles to consider before you launch.

But that doesn’t mean you won’t even take your first step toward this blooming industry. Knowing what needs to be done before launching your business will put you way ahead in this competitive market.

Challenges Considerations / Solutions 
High Competition Provide exceptional customer service (friendly, helpful staff, easy return policies). 
Offer a unique selection of groceries (local produce, speciality items, organic options). 
Keep your prices competitive (promotions, loyalty programs, bundle deals).
Delivery EfficiencyPlan for efficient logistics, whether managing your own fleet or outsourcing deliveries
Building Customer TrustPartner with reputable suppliers who prioritize quality. 
Implement quality control measures throughout the picking and packing process.
Provide clear labeling with information about product origin and ingredients.
Offer transparent communication about substitutions (if necessary).
TechnologyInvest in a user-friendly website or app with secure online payment options or a readymade solution, and consider partnering with a development agency if needed. 
Marketing on a BudgetUse social media platforms to connect with potential customers (run targeted ads, & post engaging content).
Explore local advertising options (newspapers, community events, flyers).
Partner with complementary businesses for cross-promotion (local bakeries, coffee shops). 
Track your marketing results to see what’s working best and adjust your strategy accordingly.

Table: Challenges and Solutions for Starting an Online Grocery Delivery Business in India

Final Words 

Starting an online grocery delivery business in India offers immense opportunities but comes with its challenges.

While challenges exist, careful planning and focusing on customer satisfaction can position your business for success.  Remember, exceptional service, a unique product selection, or competitive pricing can help you stand out.

See you in the next blog!

FAQs

How can I market my online grocery business on a budget?

You can use social media marketing methods, local advertising, and partnerships with complementary businesses to market your online grocery business on a budget.

What legal stuff must I handle for an online grocery store in India?

Register your business and obtain an FSSAI license to ensure food safety compliance. It’s always best to consult with a professional for legal advice.

Is this a good business opportunity in India?

The online grocery market is booming!  You can build a successful and rewarding business with the right planning and a commitment to great service.