Top 10 challenges that you face while starting an online grocery business
- April 18, 2018 /
- Ecommerce Solutions
Technology today has touched life in various ways and has made it easier for us to live life. Among different technological advances that have seen light of the day in last few years, online shopping is one of the most popular and life changing. Online grocery stores in recent times have become hugely popular owing to the convenience they offer to customers for buying items of need from the comfort of their home.
Although Online grocery stores render the facility of buying items of daily needs at attractive rates, the competition in this segment is intense and therefore it is tough for grocery startups online to enter into market and taste success immediately. Starting an online grocery business and making it successful comes with set of challenges and if they are not looked into well it gets difficult for the business to survive. Continue to read on the following paragraphs to know about the challenges that starting an online grocery store comes with
Developing an ideal Grocery Portal -
To be able to take orders in real time and enable customers pay via payment gateway at the virtual store itself requires startup businesses set up a perfect online grocery portal. It is no less than a challenge to finalize grocery shopping script and provide customers with customized options for the shopping. Additionally, grocery delivery software too requires some investment and needs to be implemented with right set of options and facilities to enable customers experience hassle free shopping.
Customers often show unwillingness to pay delivery charges -
While many established online grocery store provide the facility of free delivery with fruits and vegetables for orders above certain amount, startup businesses find it difficult to give free delivery facility owing to lack of funds. It is therefore gets difficult for them to convert leads into actual customers of the business as most users show unwillingness to pay delivery charges. Big Basket, Top Tomato, and My Grahak are some popular virtual grocery stores that come with option of making payment without delivery charges thus enabling customers to opt for their services ignoring startup businesses.
For online grocery business startups, one of the major challenges at the initial stages is the competition that they are supposed to face from small and bigger competitors. At a time there are more than 30 small and big online grocery stores available in the online space that give customers the luxury of choice making it tougher for startup small online grocery businesses to make a case for themselves. All the more, online grocery startups face competition from local physical grocery stores that provide the facility of home delivery to boost their sales.
Homemakers are not tech savvy -
Since most of the vegetable shopping is generally done by housewives, it gets difficult for startup businesses to reach to this audience as they are not much tech savvy. An average housewife finds the idea of buying vegetables from virtual store mundane which acts as a barrier to the success of online stores. Things like grocery apps, comparing prices and paying online for purchases do not excite normal housewives and they find it ideal to purchase grocery items from local vendors directly.
Shifting Customer loyalty -
Most online grocery startups during the initial period of their business give attractive incentives to customers to lure them for buying from their store. However once the incentives become little lesser, customer like to shift their loyalty and switch to some other reliable source whom they preferred before. Since customer like to shift their loyalty, it is always a challenge for new virtual grocery stores to for a customer potent customer base.
Heavy marketing cost -
One of the major challenges that virtual grocery startups face while starting an online grocery business is the huge marketing cost. Since the competition in this domain is quite great, businesses are required to spend heavy amount and effort to market their business in the area of their operations. So any small startup that wants to promote its grocery store at low budget finds it difficult to capture buyer attention which poses challenge in the longer run.
Low gross margins -
Online grocery stores operate at a thin margin of 5-7 % that from any stretch of imagination is not an attractive profit percentage. Since during the initial phase of the business sales remain low, it gets quite difficult to achieve profits. Costs such as marketing, delivery and procurement add to the total expenditure and if sales are not greater than a profit margin of 5 to 7 % does little for the betterment and success of the business.
Inefficient delivery -
For an online grocery store, it is paramount to put up at place a perfect delivery system to delivery fruits, vegetables within promised time. However, there are many startups that try giving complete grocery solution but fail to deliver products on timely basis. This proves their undoing and customers lose their trust in them making them face the heat of competition.
Storage and freshness of grocery -
Starting a grocery business comes with its set of challenges and among them the primary is the storage of the vegetables and fruits. Since you cannot deliver the grocery to customer from market, it gets crucial to rent a proper storage room or warehouse where fruits and vegetables can be stored before being delivered or picked for order. Moreover, grocery items are required to be kept fresh which in itself is a challenge that can only be managed by putting in place a proper system.
Operation and training challenges -
Starting an online grocery business requires the management to recruit to delivery boys and train personnel to manage inventory and operations. Things like logistics, return requests and wastage of products add to the cost of order fulfillment and further increase the cash burn. This means that operating a newly setup business gets little challenging and if funds are not utilized properly it gets difficult to survive leave garnering profits.