Covid has changed the way the world operates, including how we buy groceries.
It is estimated that by 2026, groceries ordered through e-commerce channels in the US will form 20.5% of the total grocery sales.
So if you want to cash in on this changing consumer behavior and start a grocery delivery business – we are here to help you!
Let’s get started right away!
Steps to start a grocery delivery business:
When you are trying to start a grocery delivery business, you may feel confused. It’s not like traditional business, it’s relatively new and involves the use of technology.
Don’t worry! We’ve made a list of 11 steps you need to take to get your grocery delivery business up and running!
- Market research
Before starting a grocery delivery business, or any business for that matter, you should spend time researching the market. It’s important to understand if the market will be receptive to the idea, who the competitors are and how big are they. The target audience should be tech-savvy for such a business. Conducting market research will give you clarity about the viability of the idea in your target location.
- Decide your niche
Once you understand the competitive landscape, you can identify the gaps in the market and decide your niche. If the market is highly competitive then having a niche will help you stand out. For example, you could provide the delivery of organic groceries. However, if the market is not competitive then you can start with the basic grocery delivery model.
- Financial planning
You need to arrange money for investing in software, inventory, storage space, delivery vehicles, hiring delivery drivers, licensing fees, maintenance expenses, etc. You should also project the revenue to ascertain how long it will take until business becomes profitable.
- Legal and administrative work
You have to get the business registered with the local authorities before starting the operations. You have to decide the company name and address for it to be registered. Acquiring relevant licenses is necessary too. Also, open a business bank account to keep the finances in order.
- Develop an app
An app serves as the storefront for your grocery delivery business. It enables potential customers to browse through the groceries you are offering, place an order and track the order until it is delivered. The interface of the app should be user-friendly and provide a smooth customer experience.
- Partner with grocery stores or set up your own warehouse
There are two ways to go about building a grocery delivery business – you can either partner with local grocery stores or set up your warehouse. In the former, you don’t need to maintain the inventory. You are a mediator between the customer and the local store. In the latter case, you will have to invest in storing and maintaining the inventory.
- Get equipment in place
You can either purchase the delivery vehicles or lease them. You will need technical hardware like computers to process the orders and mobile phones for the delivery drivers. Start only with as much as you really need and scale up as the demand grows.
- Integrate software
Software plays a key role in the delivery of groceries. It helps in the efficient running of business operations and reduces human error. You will need order management software to manage the incoming orders, inventory management software to keep track of the stock levels, and route optimization software for fast and accurate delivery to the customer.
- Hire employees
Hiring employees with the right skills and values that align with your vision is crucial. While hiring delivery drivers you must ensure that they have a valid driving license and a clear driving record. They should have skills to deal with and communicate with the customers as they’ll be the face representing your business when they go out for deliveries.
- Perform test runs
It’s important to do test runs to identify any manual or technical glitches in the process. You want to streamline the processes as that would result in a better experience for customers as well as employees.
- Market your business
You could be offering the best products and service to the customers at competitive prices but it will be of no use if the customers are not aware of your business. That’s where marketing comes into the picture. It helps in spreading the word so that once you open the doors, orders start flowing in.
What are the challenges of a grocery delivery business?
- High competition
Given the low barriers to entry, the business landscape is highly competitive. Bigger companies like Amazon, Walmart, and Target make it even more difficult for a new entrant to succeed. Hence, market research and if needed, developing a niche become important.
- Planning high volume of deliveries
There can be certain times of the day or certain days in the week when the order volumes spike. Managing this spike with your given delivery fleet may become overwhelming. Irrespective of the volume of orders you have to ensure each order is delivered within the promised ETA. That’s why you should integrate the necessary software to make your life easy.
- Protecting your margins
It’s tempting to lower your prices to compete with others in the market who are already playing on thin margins. However, it’s not a sustainable approach for your business. Instead, you can focus on offering niche products or providing top-notch customer service to build a loyal customer base.
How can Zeo help you build a profitable grocery delivery business?
Zeo Route Planner helps you plan optimized routes so that you can deliver the groceries in the shortest possible time. Faster deliveries mean more deliveries can be made in the same time thus increasing revenue. It also helps in controlling fuel and maintenance costs which results in healthy profitability.
Zeo ensures the optimum utilization of your fleet of drivers. As the drivers are able to deliver the groceries faster, it builds customer trust in your brand leading to repeat customers.
We’ve armed you with all the information you need for starting a grocery delivery business. It’s challenging but not impossible with the right team, equipment, and software. Now it’s onto you to bring a successful business to life!