HOW TO START A GROCERY DELIVERY BUSINESS?
A grocery delivery service will do people’s food shopping for them. They’ll typically partner with a grocery wholesaler to get a wide selection and may offer additional services to their customers to assist with meal planning.
Learn how to start your own Grocery Delivery Business and whether it is the right fit for you.
Start a grocery delivery business by following these steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your grocery delivery business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a grocery delivery business?
Costs involved may not be very much to start because you’ll mainly buy what’s already been ordered and you don’t necessarily need a formal space to conduct business. However, you’ll likely want to invest heavily in technology so your customers have an easy way of ordering. You’ll also need to insure your drivers with commercial auto insurance and workers’ compensation, and budget for marketing as well.
What are the ongoing expenses for a grocery delivery business?
Grocery delivery businesses have to account for the cost of salaries, gas, insurance, and equipment maintenance. They’ll also need to budget to keep their automation as relevant and reliable as possible.
Who is the target market?
The target market is anyone who can afford luxury, time-saving services or for those who may be unable to drive to the store or shop on their own.
How does a grocery delivery business make money?
Grocery delivery businesses charge people a membership fee for their services and a markup on the cost of food. They may also charge additional fees based on quantity of food ordered and location of the home.
How much can you charge customers?
Most delivery services make people sign up for a membership first, charging around $100 for the year. They also may charge a delivery fee or about $10 or so for smaller orders. For larger orders (e.g., over $50), they may waive the delivery fees in lieu of the profits they’re making off their personal wholesale markup. Check out your local competition before setting your terms.
How much profit can a grocery delivery business make?
Profits for grocery delivery services can be considerable in the right neighborhoods. Let’s say you charge a 10% markup for the food you sell, and sell $100,000 worth of food every two months. This leaves you with a profit of $10,000 plus delivery fee charges and membership charges (if applicable.)
How can you make your business more profitable?
You can make your business more profitable by expanding your services with additional perks. For example, delivering people their Starbucks in the morning the moment they step out the door, or offering an express option for small items where people can pay a modest premium to indulge their cravings.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a grocery delivery business
Look for angles that your competition (or near competition) isn’t serving in the area. For example, are people simply too busy to shop, are they inefficient when they’re at the grocery store, or are they finding it difficult to pick meals every week? This will help you decide how to appeal to different types of customers. You can certainly advertise your services online, but you should also consider advertising locally. After all, this is a local service, and passing out flyers on the street can help you engage so and better understand what people are looking for.
How to keep customers coming back
Owners have to consistently deliver groceries on time, every time. They should have contingencies and communication plans in place in case there’s a hiccup and clear contracts with customers that explain the terms. These types of services are unfortunately easy to dismiss for many people if they’re not perfect, and it really only takes one bad experience for a person to be turned off to the service entirely.
Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Is this Business Right For You?
People who are organized, creative and familiar with technology. Grocery delivery involves a lot of details to get right so it helps to start with a strong foundation and a focus on accuracy and value.
What happens during a typical day at a grocery delivery business?
The name of the game is flexibility when it comes to grocery delivery businesses. Owners may find themselves doing everything from maintaining relationships with wholesalers to completing the actual deliveries. In addition, owners also need to coordinate pick-up times with staff, keep up with invoicing, and figure out ways to market their services to a greater audience. But the biggest thing an owner may need to do is work with their automated features. Most delivery businesses find they need constant fine-tuning to ensure the customer experience goes well.
What are some skills and experiences that will help you build a successful grocery delivery business?
Owners should definitely have some type of experience working in the delivery industry. There’s a lot to keep track of when it comes to perishable food, especially considering that schedules can be difficult to coordinate with customers. From spoiled onions to box theft, there are a million ways for the order to go wrong. That’s why it helps to understand the logistics of ordering and delivering. It can’t prevent every mishap, but it can go a long way to ironing out the kinks before they actually occur.
What is the growth potential for a grocery delivery business?
People are starting to shift a significant portion of their income into services and they’re willing to pay a premium for convenience. As cities like NYC and LA continue to become more condensed, grocery delivery can look more and more appealing to a young professional who probably doesn’t want to navigate traffic or spend time perusing 30 different supermarket aisles.