Top 5 Business Models For Grocery Delivery Apps

Is the growing number of people shifting to online grocery shopping influencing the spike in grocery app development? Or the convenience on-demand grocery delivery apps offer makes people turn to online grocery delivery services? It’s like debating over who came first, the egg or the chicken, right? 

Anyway, the online grocery market has gone through the roof, opening the gateway for business owners. Starting an online grocery delivery business by developing an app is among the best digital business ideas today. 

However, if you ever want to develop a grocery delivery application, don’t step ahead without a crisp yet detailed business model. Without a business model in place, your online grocery business would be like life without a purpose.

A crystal business model includes your aim, resources, and actions you need to achieve your purpose, and every cornerstone your development team should focus on. It simplifies how to start a grocery delivery business for you and steers your grocery delivery app development as well. Since plenty of grocery delivery apps are out there with distinct operating models, you get many options to choose from.

But more options drive more confusion, and you can be stuck in the paradox of choice. Learning about the most successful business models for online grocery businesses might help you decide better. Grab a pen and paper. In this article, you get to learn business models that brought fortune to many grocery app startups. And the next could be yours!

First, let’s analyze what a business plan must incorporate with the Lean Canvas Model’s help —the most straightforward template to put every touchpoint of an e-Grocery business on one page.

A Curated List Of Online Grocery Delivery Business Models | Aces Of The Online Grocery Delivery Market

Zero Inventory OR Multi-vendor Online Grocery Delivery Business Model

This model is nearly omnipresent across different eCommerce platforms that promote the business-to-customer approach. The primary purpose of the mobile app developed on this model is to connect customers with local grocery stores. When the customer places an order, the app administrator transfers the order to the respective grocery store. 

However, the order delivery service is taken care of by the platform owner. The delivery boy is sent to the store to pick up the order and deliver it to the customer. And, yes, the grocery items are labeled with the respective store’s name & logo.

Pros:

• It allows you to target multiple markets and regions at the same time.
• It offers excellent scalability.
• You don’t have to worry about stocking and managing any warehouse.

Cons:

• Quality control & supply consistency may become difficult.
• You have to face an existence of cut-throat competition.

Inventory-focused Online Grocery Business Model 

With this model, online grocery shop apps first stock the grocery items or directly source them from various suppliers. When the customer orders online, they deliver the order either through their in-house or outsourced delivery network. However, orders are supplied with the logo & brand of the app, regardless of where items are sourced from.

The inventory-based grocery delivery business model is more suitable for single-product stores. Small businesses with niche grocery items can also benefit from the model’s simplicity—for example, vegetable delivery, daily milk delivery, etc.

Pros:

• You can have reasonable control over maintaining the product quality and delivery.
• It enables faster delivery as only a single player is involved.
• It helps to build customer trust since the product and service quality remains consistent. 

Cons:

• Maintaining inventory & warehouse may create logistical issues.
• Warehouse administration & transportation and quality control requirements prove the business model to be expensive.
• Limited cash flows

Hyperlocal Model For Grocery Delivery App Development

It is pretty similar to the multi-vendor grocery delivery business model. You can partner with as many grocers as you can to let your app users order groceries online. The significant difference between both models is that you target a definite geographical location, a city or town in Hyper-local. Furthermore, the model focuses on specifically offline local suppliers and offers a platform for them to serve their customers online.

Pros:

• Since orders are fulfilled from the nearest suppliers, it helps to provide prompt grocery delivery services.
• Local vendors possess their own customer base that helps grow your user base.
• Customers highly rely on local suppliers that add up the app’s credibility. 

Cons:

• Logistical expenses can exceed the budget.
• Difficulty in maintaining numerous local merchants and practicing quality control

Online Order With Curbside Pickup Grocery Delivery App

Since the COVID-19, online grocery shopping has become a new norm for everyone. And the “Click & Collect, buy online & pick up in-store or curbside pickup” grocery delivery model has never been more practiced than today. From big to small grocery suppliers, this model suits all sizes of grocery delivery businesses. 

With this model, you allow customers to order online and pay on the app and pick it up at a local store. The business model is quite trending nowadays as it supports contactless delivery.

Pros:

• It ensures the customers receive what they order on their schedule.
• Click and collect delivery models require a less operational overhaul.
• Suppliers and customers both save on shipping costs.

Cons:

• Walk-ins and pickup customers may cause congestion and lead to long queues if not have enough space or organization.
• There is a chance of store location mixups that may frustrate customers.

Online Grocery Shopping Model

The Shopping Model appears as the most prominent when you intend to scale up to the global market. Many giant grocery delivery apps like Instacart operate with the model or in a hybrid form. Basically, in this grocery delivery business model, app users hire a shopper who does grocery shopping on their behalf. 

As the app owner, you are required to manage an in-house delivery network. The customer places an order, the platform delegates the details directly to the available delivery person. The delivery person then does the grocery shopping on the customer’s behalf and delivers the order to their doorstep. Customers can use the real-time tracking feature and contact the shopper in any case.

Pros:

• Customers receive the delivery within hours that uplifts customer satisfaction.
• You can tie up with as many existing supermarkets as you can and leverage their inventory.
• You don’t need to manage any warehouse.

Cons:

• Non-technical persons may find it challenging to use the app.
• You may require to spend for the reliable delivery personnel.
  
  

Before you start an online grocery delivery business, you must comprehend every aspect of the market. Knowing the market aspects helps you identify where you need to focus the most so your business may thrive faster. Practicing a business model that suits your business requirements helps you build a sustainable brand. 

Also, to expand the market reach, brands tend to adopt a hybrid business model as well. A hybrid model is a fusion of two or more business models to target different types of markets and audiences at the same time. If you need a partner to assist you in creating a better business plan, you can reach out to us.