Grocery industry is a huge industry by any parameters and it is growing by leaps and bounds regardless of the challenges it is fraught with. We all need food for survival so we all go to a grocer to quench this basic human need. A growing trend of online grocery shopping has been seen. A number of reasons can be attributed to this. From high pressure jobs, to convenience of Grocery Delivery Application, to distances, long queues at the mall, maintaining work life balance etc you can have any innumerable reasons why people prefer online grocery shopping to buying grocery from brick and mortar stores.
In fact if you look at parents today, they juggle with so many responsibilities than what the parents of older generations had to do. Paying EMIs, long working hours all of these are propelling parents towards ease of online shopping in order to purchase food for their children. As a matter of fact, parents are the biggest demographic which are leading towards the Grocery Delivery Application trend.
The world is going the digital way
Apart from the need to shop online there is a huge chunk of population which loves technology and like to shift to online grocery buying App even when going to a store isn’t a problem for them. This has led to a huge shift in grocery business.
Also Read : How Do Grocery Delivery Mobile Apps Influence Traditional Shopping?
Having said that, online grocery industry is facing several challenges which are mentioned below:
- Escalating storage as well as delivery cost
Storage and Delivery of perishable items such as fruits, vegetables, milk etc is not easy.
If you buy huge storage spaces it is possible that demand can fall. Also, the place of delivery is usually not very close to place where grocery is stored. Building the right infrastructure is not easy. For an online store tackling issues such as delay in delivery, wrong product delivery, return etc can be a very big thing. The entire supply chain from the farms to storehouse to final customers needs to be managed with precision otherwise the entire business will fail. Imagine if a consumer does not get an item of need repeatedly, he will not get back to the Online Grocery App. So tolerance of error is just minimum in the online grocery business. Also, people are not keen to pay delivery charges. This becomes a huge issue when order size is small, because the cost of delivering the order is more than the order itself.
There are few steps which can be taken to combat this challenge. Some of these are:
- Integrate a powerful, Just-in-time (JIT) inventory management system with your online grocery store. This will automates everything, reduce your storage cost and you will know what the customer wants. This will also reduce wastage.
- Online grocery store should partner with a dependable delivery service provider so that it readily meets expectations of the customer
- In order to manage deliveries in a faster way it is better to section delivery network into different local network systems.
- Low Profit Margins-Eating away profits
These days a lot of people shop like to buy online not only for convenience but because they look forward to get good deals online. Now, these online grocers face this predicament of offering reasonable pricing. Having said that, they have to spend a lot of money on building as well as maintaining proper storage infrastructure together with well-organized supply chain system. All such costs are not borne by a stand- alone grocery store. So, maintaining fitting profit margins is quite a tough task.
Besides this, when it comes to fruits and vegetables, most of the customers like to make a purchase only after physically examination of stuff with reference to their freshness as well as quality. In shopping online, this option is not at all possible. So, persuading customers to purchase their groceries online is a constant challenge.
There are some steps which you can take to tackle this issue:
- Include more non-perishable items to your online store, like packaged foods, personal care items, beauty products, household items, etc. The storage and delivery cost of such products is relatively less
- Merge your offline and online grocery business to provide a stupendous customer experience. This will minimize your operation cost to a huge extent.
This premise that shoppers are ready to pay extra if goods are delivered at their doorstep is just opposite with reference to online shopping. For non- persiable items retailers can house goods at warehouses which are located out of the city as rentals are less. But for groceries centralizing on out of city storage option is not a good thing as it will ultimately increase your transport cost. An internet grocer needs to have a fleet of specialized delivery vehicles so that client gets the items they need within a short span of time. So, delivery charges for grocery delivery are quite high as compared to other products which are available online.
- Disorganized and Inefficient Delivery System
Online grocery Delivery App cannot handle impulse purchasing. People do not want to plan what they wish to buy for grocery. If they like to eat something, they want it without any kind of delay. The last thing grocery shoppers want to compromise on is the spontaneous buying experience. Most of the people still like to buy on their way back home rather than waiting for delivery of grocery items. Online grocery business is fraught with inefficient deliveries. You do not know with surety when the stuff will be delivered to you. Also as majority of generation is working, they are never home to receive the delivery of grocery which is sent to them. N This is a major hurdle and it can only be handled in online grocery companies follow a set system of delivery. For instance the buyer should get items ordered within a span of 45 minutes. Then only they will shift to online buying from impulse buying of grocery.
- Deep rooted consumer behavior
One of the biggest challenges faced by grocery industry is changing consumer habits. Most of the people are not ready to buy their groceries only because of habit constraints. In fact grocery shopping has been a social experience. People like to visit a store and then pick up things they need. Also there is this thing in mind that you will not get good quality stuff if you order online. As per a survey only 4% of consumers in Los Angles and 16% in New York bought their grocery online. So, there is a huge market which still stays untapped.
- Shifting behavior consumer preferences– You can never predict with certainty what the consumer wants and what he will shift to. Consumers have showed a huge bent towards organic foods off late. As per Statista poll the number of people buying organic food rose from 52.6 million in 2016 to 55 million in 2016. But then this trend cannot be sustained for long due to insufficient organic farmland resources. Grocers will have to find out ways how they can get hold of organic produce at reasonable rates otherwise they will end up losing a huge chunk of millennial shoppers.
- Brands making a foray into online grocery shopping– Another point about consumer habit is that they are now not just concerned about getting good quality food, they are extremely conscious about the quality of company they choose. So on one hand consumers seems to be reluctant on buying online and then there is a kind of consumer who is extremely brand conscious even with respect to grocery shopping. In short the number of variables with respect to consumer behavior is more than what you can think.
- Integration of voice technology with Online Grocery Delivery Application – With Amazon’s Alexa and Google Voice Search some customers now want to place their order by just giving voice commands. So, shopping for groceries needs to be integrated with voice system thus providing the customer a seamless buying experience. A lot of companies are now trying to get voice search on board, thus keeping on track with consumer habits. Walmart is attempting to obtain a patent for a system which is quite similar to Amazon Dash.
- Security concerns
Security concerns are huge with reference of online grocery shopping. It is possible that the delivery guy is physically threatened if something goes wrong. This can happen, the other way too. Clients usually do not know who will come to deliver a particular product. Delivery guy can find out what time the house is empty and plan a burglary etc.
- Difficulty in penetration in small towns
People in smaller towns do not have enough means of entertainment. So, for most of them going for grocery shopping is a means of keeping them busy and connected. Also, in smaller cities, the markets are not at a big distance. People are not scared of traffic jams, so the urge to do grocery shopping online simply dies. So, setting up a grocery store which caters to people from small town is virtually impossible. Also, grocery startups run on a very small profit margin which they are not able to capture in small cities. In short the business will not pick up. Housewives are the major buyers in most cases they are not tech savvy. They find pleasure in act of bargaining and are not ready to give it up in favor of online grocery shopping. The task of downloading an app, comparing prices seems like a huge ordeal for such a market.
- Price Fluctuations
Prices of fruits and vegetables keep going up and down. At times due to unforeseen conditions such as excessive rainfall or drought or poor crop there is huge variations in price. For a Grocery Delivery Application it is quite difficult to balance these variations and offer a competitive rate to the buyers. Also in order to promote people to buy online they have to spend a lot on marketing. As a result reaching to a good price for the customer becomes a huge hurdle. Customer loyalty is a big thing on online grocery world. If one online grocery store offers a particular item at a less rate, the customer shifts to it without even battling an eyelid. People are forever discount hungry and they switch their online grocery partner sans wasting any time.
Grocery consumption is the prime human requirement; people are fast turning to online shopping due to time constraints. So, online grocery business idea rightly fits the dynamics, of present day business scenario. Just check the challenges and try to carve your way through them in case you wish your online grocery business to touch dizzying heights.