There are millions of mobile phone users across the world and online shopping has been increasingly growing at an exponential rate. People buy things like clothing, electronics, and all essentials online. So the trend has been set to even buy groceries on the go using mobile applications that are supported on Android, IOS and all other major platforms. This paves a way for existing grocery store owners and new ones trying to set up an online platform through which people can order groceries and then it can be delivered to their doorstep without any hassle.
People today are faced with so much work and responsibilities that they do not have the time and means to actually visit a supermarket and buy fresh day to day groceries that are required for use. The quality of the goods available in the supermarkets is also not always standard due to the storage and transportation time before which the products reach the supermarket. Also waiting in long queues in malls and stores to buy the things required is another problem people want to avoid. In addition to all these, grocery applications provide a bigger list of items to choose from and also products from a lot of brands and companies are also available all in one place. By using online grocery applications, people can find things that are required easier as they are very well organized and categorized. With a lot of delivery agencies available to partner with, deliveries have also become faster and more precise. These applications also have tie-ups with local producers and markets to keep good quality produce and products available for the customers.
Reasons behind the growth of online grocery shopping applications
The main reason for the increasing likeliness of grocery shopping apps is the comfort that they provide to the users. This is due to the fact that they provide a good quality fresh produce delivered to the doorstep at any time convenient to the user. There are also many reasons which are stated below.
1. Easy categorization of products –
Arranging products manually by hand in supermarkets and users searching for the products on shelves is all in the past. All the products and brands are listed directly and the user can search for the required product or filter and then choose whatever is required. These items can then be easily added to the cart and checked out altogether after the selection of all the items. With the overall smooth shopping experience, customers are also more attracted to choose online shopping over traditional shopping in supermarkets. Thus to attract a larger audience and also retain them, these applications are a good choice.
2. Streamlining the grocery business –
As a grocery shop owner, building an application for the existing grocery business can improve the target customers. This method is also more users friendly and the customers can also track their order and when they want it delivered. The owner can also easily manage their business through a backed administrator panel. The application can also get a good income by promoting ads for the products in the application. Having a good user interface and good customer service will be necessary for having good customer retention.
3. Getting a good understanding of customer behavior –
Having a mobile application for a grocery business is a very good solution for catering to a bigger customer base. The application also allows the customer and the owner to have a better experience in managing the grocery store. Based on the customer purchases and previous data, the application can help in suggesting products or also show shortcuts to add favorite products directly to the cart. These applications can also improve and make changes to the user interface based on user feedback and ratings. Based on the ratings for the products provided by the customers, the suppliers for the store can also be changed to get the best quality products.
Problems faced by online grocery shopping applications
1.Quality and freshness –
Although a lot of supermarkets are present in every locality, fresh vegetables and other perishable goods are very difficult. Although the supermarkets try to get the best quality produce from producers directly the transit time spent in travel and storage spoils the freshness of the products. Online grocery delivering applications create tie-ups with producers directly and procure the products only after the customer orders and delivers it directly to the doorstep within the least possible time. The price of the products also vary according to the season, weather and other conditions but the grocery applications need to provide the best possible price for attracting customers. So the customers also feel satisfied that they receive the best quality products at the best possible prices at their doorstep.
2.Doorstep delivery –
The delivery option allows the customer to feel at ease as they do not need to stand in queues at shopping malls or supermarkets. They can also order the groceries and wait for it to be delivered and track the progress of the order. It is also delivered based on customer requirements. The customer can request to have their order delivered on the same day with a small delivery fee or the order is delivered the next day in case the customer opts for normal delivery. As the perishable goods are bought directly from the producers and delivered to the consumers, the products are almost twice as fresh when compared to the products available in the supermarket.
3.Escalating storage and delivery costs –
For any grocery delivery application having a good quantity of stocks available and stored in storehouses built across the city for making easier delivery of the products. An also the entire chain from the producers to the consumers has to be managed perfectly to keep the delivery of the groceries hassle free. There are also problems like wrong item delivery, delay in delivery, return, etc. which require a good administration of the logistics and proper documentation of the stored goods. Also, the error in the orders is not tolerated much by the customers because they tend to choose other grocery applications which give offers. So solutions include using a Just in time management model for the grocery application so the problem of renting or maintaining big storage is not removed. Partnering with a good delivery partner will give the application an edge over the competition. Subdividing the delivery network into local delivery maintenance also helps in making the process of delivering to customers faster and easier.
4.Low margins of profit –
The cost of development of the application, maintaining it for a proper seamless performance is usually not very less. So the profit made with the help of the application does not account too much in the beginning. There is also money spent on maintaining the proper supply chain and on the delivery personnel. And also when it comes to perishable items like fruits and vegetables, there is also some wastage in the period of storage and transit or transportation. Also, customers like to make a purchase only after careful examination of the product to ensure proper quality. So while making orders online, they do not have complete trust in the quality at first so if the quality is not maintained then they tend to change to other applications or supermarkets. A few steps that can be used to avoid this problem are adding more packaged products, non-perishable items, healthcare products, household items, etc. Merging the online and offline store to cater to customers who choose both an actual store and the online store. Thus the storage and cost of delivery can be reduced to a minimum. In the case where customers need the products earlier, a little higher delivery cost is paid.
5.Delivery system –
Having a proper delivery system is very essential for the success of the online grocery application. People want their groceries delivered to them and want to buy products they choose at any moment. Due to the busy schedule they have, people are away most of the time and there is no one available in the provided address to receive the items. This becomes a big hurdle to the delivery system. So while taking the orders, the preferred delivery time should also be asked for from the customer. This can help in reducing the problems with the unavailability of the customer during delivery. The customer can also be intimated that the items are out for delivery before the actual delivery. The customer can also ask for immediate delivery of the items if required urgently but will be charged a little extra on the delivery.
6.Non-availability in small towns –
The maintenance of the complete grocery network in cities is simplified by having separate suppliers for each product but in small towns, it cannot be done so easily. This means that the application customers are limited to only people in big cities as the markets in small cities and towns are not so far away and also there are any big queues and traffic that people want to avoid. The application users do not find time to actually go and shop from supermarkets, but in towns, the housewives are the ones doing the shopping and find the experience of actually going to the market and bargaining to buy the required products as a daily task. So it is merely impossible to bring the application successfully into small cities and towns.
7. Fluctuating prices –
Based on the availability, climatic changes like excessive rain or drought, poor growth of crops, etc. The fluctuations can also be due to the non-availability caused by the seasonal growth of the crops. With such a problem at hand, it is difficult for any online grocery store to offer an attractive price compared to the competition in the market. Customer loyalty is also to be considered as if another store offers the same products at a lesser price, customers shift without any thought as the people are always discount-hungry. So putting up offers from time to time and also giving promotional offers on the payment modes can get more customer retention.
Different types of online grocery stores
1.Grocery chain –
This is for an existing grocery chain filled across a country or many countries and has stores in almost all localities. With such a big chain of stores, the company usually prefers to have its own chain of delivery personnel to deliver the customer all the required groceries with a little delivery cost.
2.Aggregates –
This type of online grocery application provides the customer with a list of supermarkets in the locality and the user can choose one from the list to view the list of products available there. From this online list, the customer can choose the required products and pay through any number of methods available in the market. After the payment, the store confirms the request and dispatches the products within a stipulated time. The customer can track the delivery after it has been dispatched. This kind of application only has a group of delivery personnel and partners with the local supermarkets to supply the items.
3.Single store –
This type of online grocery application caters to only a small radius of the local audience and the store does not have much profit from the application. It is only to improve the customer relationship and provide the customer with groceries from the store when requested by them.
Let us look into the business model that an online grocery app has to follow
1. Key partners
The company trying to make the application must first have a good tie-up with local supermarkets or suppliers to provide the products that the customers require at any time. Providing fine quality and freshness for perishable goods is very difficult and thus the company must contact the producers directly and make contracts with them for getting the best possible goods. Delivery personnel is also another important part of the application which must be well built to have a seamless performance. The application must also partner with financial institutions which can cover the initial development costs and maintenance cost.
2. Key tasks
Creating the technological infrastructure required for the online application is the initial task that is to be performed by the company. After the development and launch, the maintenance and management of the application become primary for the administrators. Partnering with local markets or suppliers to enable fast and hassle-free delivery of groceries is an important task that is to be done. The management of the people ordering through the application is also necessary to have good customer satisfaction. Any queries or suggestions provided by the customers are to be valued highly and is to be implemented so the customer feels comfortable in order through the online application. Chabot’s can be used for providing better customer service and only when required can the task be allocated to the customer service personnel.
3. Pivotal resources
The local shops and suppliers in all localities constitute a major part of the resources at the companies’ disposal. The delivery personnel also play a pivotal role in the flawless functioning. The technology supporting the application is also a part of the resources of the company.
4. Value proposition
The customer needs to believe that using the application for groceries and day to day products is the best method. Delivery of these products should be done as requested by the customer even in bad weather conditions. The delivery person should have good communication with the local supplier and the order of the customer should reach as requested by them and also on time. The local stores that are partnered with the application must cater to the needs of the customers thus increasing their overall sales.
5. Customer relationship
The main method used to regulate the performance of the application is the feedback and queries that are provided by the customer for each order. Keeping track of these and making the required changes will give the application more customers in the long run. Maintaining a proper social media page can also help customers in providing reviews and ratings for application performance.
6. Channels
The availability of the application for customers using all platforms like Android, IOS and other major platforms is absolutely necessary. Customers should be able to order through the applications installed on their phones and through the web. Using progressive web apps for the purpose is a very viable solution.
7. Segments
The app must consist of different segments for the users, local suppliers or stores and the delivery personnel. The customer segment is constituted by the people trying to order groceries and receive them at the doorstep, people do not prefer shopping in supermarkets or shopping malls, people who live far from a market or store, elderly people who cannot walk around a lot. The Shopper and delivery section consists of the people who have a vehicle and can deliver products, people who love shopping and can pick up orders for others, and people who are in search of work and can work as freelance shoppers for a steady stream of income. The third section is for the local store or suppliers who have the required stocks and can provide it to the customer through a delivery person. This segment is very important for the proper maintenance of the logistics of the application. As the supplier or the local store has to update on the availability of all products that are listed in the application and thus it becomes easier for managing the delivery of the products easily.
8. Cost structure
The financial part of the application depends on the initial costs and running costs of the application. The initial investment for the application is the money spent on the development of the application. After the application has been developed, the maintenance and management of the application require some funds. This can be integrated as the cost of the technological requirements. Then comes the salaries to the delivery personnel, the customer care executives and all other permanent employees of the company. At last the commission that is to be given to the local stores and suppliers of the products that the application provides. This commission is based on a percentage that is fixed by an agreement before partnering with the company.
9. Revenue streams
The main aim of the application is to generate revenues for the company creating and managing the application. The main earning for the application is through the commission it receives from each order made by the customer. The delivery fee that is levied on each order is also a source of income for the company. Based on the speed of delivery chosen by the customer, the delivery fee might also vary. The application might also offer premium membership to the customers which are a good source to fund the application. Timely promotions from the brands trying to outweigh their competition are also another great source of income for the application. Displaying Ads from time to time in the application is a good means for the company to generate revenue.
This business model of the online grocery application provided above is done after a good amount of research and does not discuss all the aspects of creating and running a successful grocery delivery application. The entrepreneur with the idea of creating such an application must spend a lot of time researching on the current trends and features that have to be implemented in the application to make it attractive and appealing to customers before the actual development of the application. They must also choose a developer or development service that provides the required application at a cheap cost and good performance. The developers must also provide regular maintenance of the application and provide updates to upgrade the application with new features and functionalities that might make the application more interactive. With the exponential growth of m-commerce, an online grocery application is a very good idea to make good money.
