August 2, 2021

Online Grocery Store Business & Revenue Model

Today people are very much used to the ecommerce market. Ecommerce stores have contributed more to the nation’s economy. Many businesses have gained more response by being available online. In this list, the recently added industry is the grocery industry. Online grocery stores have reached unbelievable heights in recent years.

Every grocery ecommerce store has become the need of the hour as the whole world is facing a pandemic situation. Ecommerce giants like Amazon, Instacart, and Tesco & Saintsbury have taken the major market share in the global market. Undoubtedly online grocery businesses have a clear sign of development and growth in the coming days.

Now let us first analyze the grocery eCommerce market and its business model in detail.

How to Start an Online Grocery Store?

Setting up an online grocery store needs a complete understanding of the grocery business model and the fine ways of generating more revenue through the grocery store.

Get a clear idea about your products and your business type and check with the available grocery store business models and select the one that suits your business. Only then you can survive easily and can move the grocery store to the next level. A clear illustration of the grocery business model and grocery revenue model are listed below for your better understanding.

Popular Online Grocery Store Business Model

Inventory model

The grocery store will take the complete responsibility of maintaining stocks in their warehouses. Once they receive orders from customers, they will use their own stock and will deliver them through the shipping logistics that has been tied with the grocery store.

Not necessarily the store owner should produce products instead the grocery store owner can get associated with suppliers and can get their products and store in their warehouse. The product will be delivered to customers under the grocery store’s brand name irrespective of the supplier.

Multivendor marketplace model

This is the commonly preferred online grocery business model as there is no burden of maintaining stock, every startup finds this grocery model to be more cost-effective. The online grocery business model will combine several vendors and allows them to display their products through the grocery store.

Customers will order products and the vendor will accept the order and will process the order. The shipping and delivery process will be carried out by the grocery store owner.

Customers will pay for the product and the amount will be received by the grocery store owner. After deducting the commission fee the concerned vendor will receive the payment.

Shopping model

This is one of the successful online grocery store business models where inventory is not maintained at the same time it is not a multivendor grocery platform. Customers order products directly through the grocery store.

The online grocery owner will arrange delivery personnel who will collect products in the allotted store and will deliver them to customers. The leading eCommerce giant Instacart follows this type of grocery business model and has proved this business model to be a successful one.

Online Grocery Store Revenue Model

Commission Fee Revenue Model

The grocery store owner will decide the commission slab along with the vendor and will fix the commission fee. The vendor needs to pay the commission fee for all products that are sold through this online grocery store.

The admin will deduct the commission fee when he receives the payment from the customer and vendors can request for the withdrawal and can get their payment. This is a common revenue model of any online grocery platform.

Membership Fee Revenue Model

Through this model, you can give benefits to your customers by making them as members of the online grocery store. When they become members by paying a membership fee they can avail of additional benefits like free delivery, next-day delivery, and many more. This is a good source of revenue that any online grocery store can earn.

Subscription Revenue Model

You can set a subscription for a certain category of customers who keeps purchasing with the online grocery store periodically.

They may buy milk on a daily basis or even grocery items on a monthly basis. These types of customers can be recommended to go for a subscription that will generate revenue at regular intervals. By having an online grocery store, you can expect more customers to come under this plan and this will heavily increase your revenue.

Service Charges

There will be users who will not be interested to join as a member of your grocery platform or subscribe to your services.

For those customers you can charge a service charge on each order they make with your online grocery store. This will indirectly make customers think about getting into membership or subscription plans just to mainly avoid these unnecessary service charges.

Promotions

There will be several vendors in your online grocery store and all they want is to make their products to be more visible to customers so that they can get more orders. You can get a promotion fee from vendors who are interested to be ranked first while on search.

You can promote those vendors’ products by placing banners that will be easily visible to buyers. This will increase the traffic for their grocery store and will start getting orders.

Third-party advertisements

you can allow third-party advertisers to post their ads in your banner and can earn well through this revenue model.

The returns will be quite surprising and you can easily maximize your ROI. Whenever a customer enters your online grocery store he will be able to see those ads and will click the banner and that will lead to their websites. This will genuinely increase their website traffic.

Conclusion

Analyze the online grocery store business models and their revenue streams in detail. Before you enter this grocery eCommerce market, have a clear idea about the market and then develop and launch your own grocery eCommerce platform.

Get more ideas by visiting many leading grocery platforms like Instacart, bigbasket and many more and ensure your grocery store fulfills all demands of customers and vendors. Build your grocery eCommerce store with all essential features and get complete control over the online grocery market.

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Ramya is a highly competent product marketer who has a strong foundation in the area of customer behavior analysis and his critical thinking skills.