Between dropping the kids to school and dumping dirty clothes in the laundry to grabbing some coffee and making it to work on time and heading back to take the kids to soccer practice to keeping the orthodontist appointment and finally arriving back home with just enough time to put together a healthy meal, there’s hardly any time left for grocery shopping. Who wouldn’t want a break from the confusing aisles of cereal, produce and dairy and the endless lines at the counter? That is why when apps showed up with the promise of delivering fresh groceries at your doorstep, often with tempting discounts and same day delivery, consumers instantly warmed up to them.
Within no time, new startups like InstaCart as well as already established big brands like Amazon Groceries and Whole Foods had jumped into the game and the grocery apps ecosystem was growing. Today, the transition is well wrought and the market is highly receptive to innovation and even new entrants in this segment. People today are largely comfortable ordering groceries on an app which means the market is ripe, yet far from crowded. A survey by the Food Marketing Institute revealed that 51% millennials and 35% people in all have used a mobile app to order groceries online.
So if you can find a better way to deliver groceries fresher, faster, better or cheaper, you’ve got a shot. The idea is to offer a better service than the current competitors. And in this post, we’ll talk about just how you can do that.
First, Pick a Suitable Operational Model
There are a few ways to do this. You could have a warehouse model where you stock goods and handle taking orders, packing and dispatching them. Alternatively, you could use the ‘ship from the store’ model where you have a well connected delivery staff that simply picks up an order from the nearest store or supermarket, and delivers it to the customer.
Also called the Inventory Model, this is the kind of model used by brands like Amazon Fresh and Big Basket. These eGrocers have a facility of their own that stocks a large inventory of items, usually in a fulfillment center on the outskirts of major cities. They distribute using their own fleet of refrigerated delivery vans. This is a high investment venture for sure, but the returns come in the way of direct sales, no middlemen and very strong branding. Once established, the ROI in such a business scales well too. Big Basket made over Rs 2000 crores in the year ending March 2018. A major benefit of the warehouse model is the native branding that allows you to sell products under your own label, like big basket does for about 40% of its inventory.
However, the warehouse model comes with some challenges too. Being on the outskirts of the city, the distribution is a long haul and refrigerated and frozen items need to be stored very carefully in ice boxes and portable refrigerators during the long and multi-stop commute. It is expensive and can lead to product returns. Routes need to be optimized very well as one van usually delivers to all stops in an area.
Store Pickup Model
Another very popular model is the store pickup model. Localized delivery staff is deployed in all serviceable localities, and tie-ups are made with local stores and supermarkets. The app displays all nearby stores to the customers, letting them order from a specific store of their choice. A local deliverer receives the order through the app and immediately collects it from the store to deliver it to the customer. InstaCart in the US, Zakaz in Ukraine and our very own Grofers is a great example of this model.
Store pickup models are more cost effective as there isn’t much stocking, storage and inventory involved. As a result, startups can start off without a massive nest egg, and scale up as they go. The key challenges in this model lie in managing the delivery network and keeping a real time record of each store’s inventory, tracking their stock outages and making the app reflect these changes in real-time.
App Specific Aspects of Grocery Delivery
The notable thing is that unlike many other apps that serve as platform as a service or PaaS, a grocery delivery has a fairly heavy physical component. There are actual products in the picture, and plenty of fieldwork involved – like fleet management, storage, network of drivers, shipping and returns, and more. This is a full-fledged ecommerce business, with even tighter deadlines considering that most groceries are perishable goods, with dairy and produce truly testing your management acumen.
However, in this article, let us focus on the software aspect of the business. You need to develop an app that is impeccably designed to display a huge inventory of products without overwhelming the customer. At the same time, products need to be divided into broad and finer categories. How will you design the app and display related products so that the customers can buy products by looking at them in the suggested options will greatly influence the cart value. You know how grocery shopping is; it’s hard to remember things until you see them. Additional features like creating shopping lists, automatic refills, proper information about expiry dates and other details are what will set you apart from your competitors.
The app needs to have a smooth payment system. It must be also be able to reflect real time changes in inventory and delivery time slots.
Regular features like social login, user profiles, product search and filters must be spot-on. Location and GPS are of course a necessity. Customers should be able to track their orders and raise cancellation/refund requests if required, easily. Also notable is the fact that 82% people come to these apps after they received a discount coupon, so take due care of that aspect in your app too.
Only if your app provides a great user experience will the customers have the faith in you to deliver their groceries. The app must be able to allow users to order quickly and receive promptly. Only then will you be able to draw the maximum people into using your app instead of someone else’s of hopping over to the local supermarket.