December 2, 2020 Last updated December 2nd, 2020 1,928 Reads share

Top Challenges Faced by Online Grocery Businesses and Their Possible Solutions

Image Credit: DepositPhotos

The online grocery delivery business is a massive one, accommodating each and every new player in the industry. The rising trend of online grocery shopping has skyrocketed the demand for online grocery app development. More and more entrepreneurs are attracted to the business model. With the COVID-19 pandemic, the call to “stay home and stay safe” has proved to be a blessing to the online grocery delivery industry. It grew by leaps and bounds.

The Population Is Going Digital

Yes, the population is going digital. More and more people are resorting to online grocery delivery apps to order groceries, thus saving their valuable time and avoiding long crowded queues of grocery stores. Check out the latest statistics before you begin developing your grocery app:

Let’s Peep Into The Statistics Of Online Grocery Delivery Business

  • A staggeringly high number of Americans (95%) shop for their groceries online
  • The usage of online grocery delivery apps has increased by 50% since 2018.
  • U.S. online grocery sales are expected to peak at $30 billion USD in 2021— in contrast to $17.5 billion USD in 2018.
  • Globally, grocery shopping apps have reached 106 million downloads.
  • It is expected that about 30 million adults will use grocery delivery apps by 2022.
  • The analysts opine that in the coming 5 years the online grocery delivery business will grow from the current $1 billion to a $3-$5 billion market. The market has much more potential than imagined.

The figures precisely state how the online grocery delivery industry is booming. Convenience is the primary motive for customers using grocery delivery apps, and the platforms are garnering huge popularity for this reason.

No matter how well you keep your ducks in a row, as an entrepreneur you are bound to stumble upon the challenges of the online grocery business. The challenges are inevitable. The growing sector brings with it added challenges that need to be tackled well to survive in the marketplace.

Now, Let’s Throw Some Light On The Challenges Of The Online Grocery Delivery Business And Its Possible Solutions.

Before jumping into building a grocery delivery app, direct your attention towards the following challenges and potential solutions.

Challenge #1: Low-Profit Margins

Earning profit is the sole concern of any big or small business, and as the competition grows, the online grocery delivery business is facing low margin issues. There are growing trends of discounts and deals which are thrown by the online grocery delivery app to the consumers. These deals and discounts favor the customers but the cost of operations rises for the app owner and borne by him alone. Additionally, food items like dairy products, fruits, vegetables, meat, etc are perishable in nature. Thus requires same-day delivery. People also prefer buying fruits and vegetables after a physical examination. Thus, virtually they are less bought. A grocery delivery app dealing with such products can incur spoilage costs too.

Solution

Some basic steps that you can take to sort out the problem are:

1. Build a grocery delivery app that includes more non-perishable items that don’t require same-day delivery. In addition to this, you can switch to rental warehouses at least rent to store these items.

2. Additionally, you can focus more on non-perishable goods to cut down on your whole operational cost.

3. Merge your offline and online grocery business to provide an over edge customer experience. This will cut down your cost hugely.

Challenge #2: Disorganized And Inefficient Delivery System

The name of the game in the grocery delivery business is an organized and efficient delivery system. The online grocery delivery business is dependent upon the delivery agents or logistic partners to deliver goods on time. The e-retailer should coherently manage the product quality, delivery charges, and time of delivery. There is a huge disorganization that is seen in delivery channels.

Solution

Build a grocery delivery app with the following tools which will solve the challenge.

1. Route Optimization: chalking out the shortest route and traffic-free routes can enhance the delivery by cutting down the delivery time and fuel expenses.

2. Reward Programs: the owner of the online grocery delivery app can run reward programs for giving the best delivery performance. This will encourage the delivery partners to work better.

3. Real-Time Tracking Of The Delivery Partners: when the delivery boys are tracked live, they opt to conduct a responsible behavior in the work. This will ensure more quick and responsive delivery.

These smart policies can go a long way to overcome the challenges of the online grocery delivery industry.

Challenge #3: Skyrocketing Storage Cost

For any online grocery delivery business, the storage cost is huge to store the perishable goods in fresh conditions besides the cost of mobile app development.

Solution

Opting for an aggregator method and no inventory model works best for such issues. This will solve the problem of large investment and saves you from storage costs as well. The process requires good deal of planning. Make a beforehand plan to equip yourself better.

Challenge #4: Impulsive Ordering Behavior Of Customers

Customers don’t always shop Impulsive but most of the time they shop in a jumbled way. This poses a greater challenge for the online grocery delivery app owners to tackle the delivery because they are not present at home for the collection of unstipulated time frames.

Solution

It’s not possible to check the customer’s impulsive buying behavior but the grocery delivery app owner can allow customers to schedule their delivery time when they are available to receive. This will not only solve the problem faced by customers but also the trouble faced by the delivery men.

Challenge #5: High Delivery Cost

The final cost of procuring the grocery app development and delivering to the end customers includes heavy delivery charges including the delivery truck, individual repositories, etc. Additionally, the customers are not keen to pay delivery charges. Sometimes, when the order size is too small, the delivery charges of the order exceed the order amount. This again is a huge challenge for the online grocery delivery business.

Solution

The probable solution to the problem is:

1. You can partner with the best logistics partners and provide super-fast delivery at a nominal cost. With help of these logistics partners, you can meet the real delivery expectations of the customers.

2. Divide wisely the deliveries in section into different local networks as to fasten the delivery process.

Challenge #6: Deep-Rooted Consumer Behavior And Habit

While online grocery shopping has become a trend but still a majority of the section prefers brick and mortar stores to purchase groceries from. As they don’t physically examine the products, they doubt the quality of the products. Thus, they avoid online grocery shopping. This consumer behavior poses a great threat to the online grocery delivery business. There is a huge market still untapped.

Solution

The online grocery delivery app owner can wisely take up to marketing strategies and business development depending upon the unprecedented behavior of the users. Additionally, a detailed analysis of the consumer’s behavior will help you chalk out the best strategies to cope with the challenges. Make sure you have enough resources before building a grocery delivery app.

Challenge #7: Difficulty In Penetration In Small Towns

Small towns do not offer much scope for virtual grocery shopping. The people of small towns have fewer entertainment sources. Thus, grocery shopping is one way to kill idle time.

Further, no traffic issues distance is also less, etc so these all lead to difficulty in penetration of online grocery delivery business in a small town.

Further, the ladies who are major grocery shoppers are not tech savvy in small towns and they are also robbed of their bargaining power while shopping online. So, they find it a costly affair.

Solution

What can be the probable solution to this problem? Experts of the grocery delivery industry opine that the consumers of small towns have to be convinced. In a way brainwashed pointing out the positives of the online grocery delivery app. Focus can be given to features like discounts and offers, personal recommendations, push notifications, easy search of products, and also quick order from the history panel.

These features can help the small town consumers to realize how convenient the grocery delivery app is and are as affordable as their local grocery store. These require frequent marketing and personal marketing strategies.

Challenge #8: Marketing And Advertising Costs

The marketing cost takes the lion’s share of the total cost of grocery delivery apps. But without strong, target-based marketing, people will not be aware of your online grocery delivery app. So, it’s mandatory to spend on the marketing strategy.

Solution

Instead of investing huge amounts in digital marketing etc, going for the word of mouth publicity is the best and most powerful marketing and branding strategy. When your loyal customers spread about your best service, people tend to believe them more and use the app. So, you can also run referral programs and first-time customer delivery free, etc. These are tiny gigs that help you gain trust and leverage your business.

Challenge #9: Fluctuating Customer Loyalty

In the era of cut-throat competition, the customers are served with multiple options to choose from. Customers are served the best service at their platter. In such circumstances, you cannot garner customer loyalty. They are dispersed in nature.

Solution

The best possible solution to gain the customer’s loyalty is by running referral programs. When they are rewarded for being a loyal customer. Provide them good service and encourage them to give positive feedback for the online grocery delivery app as their reviews matter. The bad and poor reviews will hamper your business image.

Final Word

The other side of the grass always looks greener. The success of giant players like Instacart, Amazon, etc can lure you with the opportunities but it may not hint you about the challenges of the grocery delivery industry. Being an investor or an entrepreneur, you need to know all the opportunities and challenges before going for grocery app development.

In this article, I have come up with all possible challenges that can erupt in your way like a roadblock to success. Buck up yourself with the best strategies so that the roadblock can be eliminated. Let the Challenges not hinder your path of progress and you keep going ahead in the growth curve.

Grocery shopping cart concept -DepositPhotos