What You Need to Know Before Starting an Online Grocery Store

Posted 2 years ago by Anastasia Prokofieva

These days, it’s possible to buy and sell just about anything online. It wasn’t all that long ago that buying books and electronics online was a new fad. But today, there are very few items you can’t find in online stores.

One of the most recent trends in ecommerce is the rise of online grocery shopping. The trend of buying food online had already begun prior to 2020. But the COVID-19 pandemic helped popularize (and necessitate) the idea of buying groceries online. Today, setting up an online grocery store is a completely viable business option for ecommerce entrepreneurs. If this interests you, here is everything you should know about how to start an online grocery store.

How Much Investment Is Needed to Start an Online Grocery Store?

The first concern for many entrepreneurs thinking of starting an online grocery store is how much it will cost. While it will require some financial investment, the commitment is not as much as you would expect. However, there are some key expenses to consider when starting a grocery business.

One of the fees that is unique to grocery stores is a retail food license. Retail food licenses are issued by state or local government agencies, so you will need to apply locally. Additionally, fees vary based on location but can range anywhere from $100 to $1000.

Perhaps the biggest financial investment, however, will be your inventory. Running an online grocery store means regularly restocking your inventory with new items. Most grocery items have a limited shelf life and, hopefully, will sell quickly.

Again, prices will vary depending on where you are, what you sell, and where you source your products. But you should expect to invest a significant portion of your budget into your products.

Another cost consideration that some businesses must consider is the cost of delivery. This may not be a necessity for every online grocery business. But, if you will be handling deliveries yourself, there will be fees involved. Paying a delivery driver or delivery team is the most expensive option, but delivers the best results. Meanwhile, a lower-cost model would involve delivering items yourself. But this could be very stressful and put major limitations on your expansion potential.

How to Start an Online Grocery Business From Home: Choosing a Supplier

A supplier is an important partner for any retailer. But choosing the right supplier is an even bigger deal for grocery stores than most businesses. Customers have a lot of options to choose from when shopping for groceries. The convenience of an online grocery store is a distinct advantage over physical grocery stores. But if customers are not receiving high-quality products on time, that convenience won’t matter at all.

Choosing a dependable supplier is the simplest way to avoid this problem. Ultimately, the best way to find reliable suppliers is to conduct thorough research into suppliers. For products with a short shelf life, local suppliers are much better. But for all other merchandise, there are two main categories to choose from: wholesale providers, and dropshipping providers.

Dropshipping

Dropshipping is a business model in which retailers (you) act as the middleman between the manufacturer and the consumer. In this arrangement, you reach an agreement with a dropshipping provider to list their products on your website. When a customer purchases an item from you, the dropshipper sends that item to the customer. You pay a small fee for the item itself while selling the item at a markup. The leftover revenue goes to you.

Dropshipping can be an effective business model for non-perishable food items. However, it is essential to find local dropshipping providers to ensure timely grocery deliveries. If there are no dropshipping providers in your area, this model may not work for you.

Wholesale

Buying groceries in bulk from a wholesaler gives you much greater control over your inventory than dropshipping. While it comes with greater upfront costs, it is often a more consistent and reliable model for online grocery stores.

In a dropshipping model, you would only pay for items as they are purchased by customers. But when buying wholesale, grocery stores typically spend a fixed amount each week or month. There are also storage costs and concerns to figure out when buying wholesale. Your feed needs to be stored safely and responsibly to avoid contamination. While the costs can add up, the convenience of buying wholesale makes it preferable to many online grocery retailers.

How to Create a Grocery Store Website From Scratch

After you have figured out all the logistics of your business, one pressing question remains. How do you build your own grocery store website? If you have no experience creating websites, this may seem like the most difficult task of all. But it’s not. You can use an ecommerce platform like Ecwid to help make this process much easier.

Using Ecwid’s website-building tools, you can easily customize your website with product listings and easy checkout options. But what are some of the key elements you need to include in your online grocery store website?

Branding & Display

First, you want customers to recognize and trust your business. This helps to ensure that they will return for future purchases. You can achieve this with distinctive branding on your website, and a crisp display. Your website should look nice and be easy to navigate for first-time and returning customers alike.

Product Information

Many people prefer to read the nutritional labels on grocery items before making a purchase. Shopping for groceries online can make this a bit trickier. That is why your website needs to make product information easily accessible to your customers. If you neglect to present this information in a way that’s easy to view, you may lose customers simply due to the inconvenience.

Easy Checkout

Speaking of inconvenience, shopping cart abandonment is something that every online retailer should try to minimize. One of the leading causes of cart abandonment is an inconvenient checkout process or complicated payment method. Your website can help reduce these problems by streamlining the user checkout process and incorporating multiple different payment options.

Want to learn more about building your own online grocery website? Read about getting started with Ecwid to learn how our platform can help get your business up and running.

About The Author

Anastasia Prokofieva is a content writer at Ecwid. She writes about online marketing and promotion to make entrepreneurs’ daily routine easier and more rewarding. She also has a soft spot for cats, chocolate, and making kombucha at home.