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Start An Online Grocery Store in India: Its Concept and Process

Start An Online Grocery Store in India: Its Concept and Process
Shivani Jain
| Updated: Dec 07, 2020 | Category: Business, FSSAI

Nowadays, smartphones and the internet have totally transformed our lives. From clothes to home, and food to furniture, almost everything we think of is available on the internet to buy. Moreover, the same has increased to all-new next level during the period of COVID 19 pandemic, because customers have shifted their focus from physical stores to the e-commerce industry. As a result, the demand to start an online grocery store in India is mounting at a significant rate as well.

Moreover, in India, grocery stores are termed as heart and soul of the community as they act as the key economic drivers and provides jobs, source of nutrition, tax support, etc.

In this blog, we will discuss the concept, growth, benefits and process to start an online grocery store in India.

Growth of Retail Grocery Stores in India

The growth and demand for grocery stores in India can be summarised from the various research reports as follows:

  1. As per a report published by the Grand View Research, named Food and Grocery Retail Market Forecasts 2020 – 2027, published in May 2020, the global grocery and food retail market size is projected to grow at a CAGR (Compound Annual Growth Rate) of 5.0% from 2020 to 2027;
  2. According to a report published by Redsheer, the Indian Online Retail Grocery Market is expected to reach $10.5 billion by the end of the year 2023;
  3. As per a report published by the Statista, named Number of Retail Grocery Outlets across India from 2013 to 2023, published on 16.10.2020, there are about 12.8 million retail grocery stores operating in India;
  4. According to a report published by the Research and Markets, in April 2019, the value of the online grocery market of India is expected to reach Rs 1034.13 billion during the period 2018 – 2023;

Key Players of Indian Online Retail Grocery Market

The key players of the Indian Online Retail Grocery Market are as follows:

  1. Amazon India Private Ltd;
  2. Godrej Nature’s Basket Ltd;
  3. Grofers India Private Ltd;
  4. Paytm E-Commerce Private Ltd. (Paytm Mall);
  5. Reliance Retail Ltd. (RelianceSmart.in);
  6. Supermarket Grocery Supplies Private Ltd. (BigBasket);
  7. UrDoorstep e-Retail Private Ltd;
  8. ZN Retail Private Ltd;
  9. ZopNow;
  10. AaramShop;

Reasons to Start Online Grocery Store in India

The reasons to start an online grocery store in India are as follows:

Reasons to Start Online Grocery Store
  1. Requires only Minimum Start-up Cost;
  2. Offers Good Earning Potential;
  3. Provide Flexible Working Hours;
  4. Offers Competitiveness;
  5. Assures Industrial Growth;
  6. Transformed Consumer Behavior;

Process to Start Online Grocery Store in India

The steps involved in the process to Start Online Grocery Store in India are as follows:

Process to Start Online Grocery Store

Decide Delivery Location

One of the major step in the process to start online grocery store in India is to identify or decide the area or location of delivery. The reason behind the same is that fresh vegetable and groceries can only be delivered up to a limited radius. Therefore, one needs to decide the location of the office, warehouses, and tie-ups with local groceries accordingly.

Moreover, it shall be relevant to state that the factors that need to be considered while deciding a location are as follows;

  1. Geographical Habits;
  2. Cultural Habits;
  3. Eating Habits;
  4. Number of Households;
  5. Count of Youth Population;
  6. Suburban Families;
  7. Educated Population;
  8. Urban Families;
  9. Older Singles, etc.;

Acquire Required Licenses and Registrations

Required Licenses and Registrations

In the next step, the applicant requires to firstly obtain business registration for his/ her firm or company. That means if an individual decides to start a business, then, in that case, he/she requires to get Sole Proprietorship Firm Registration. However, if partners decide to start a business, then, in that case, they must apply for a Limited Liability Partnership Registration.

Further, the other licenses required to start online grocery in India are as follows:

Trade License

To start online grocery store in India, the proposed owner needs to obtain Trade License from both Municipal Corporation and Health Department.

Shop License

The reason behind the requirement of Shop and Establishment License or Shop License is to safeguard and protect the rights and interest of the workers, delivery boys, staff employed in the business.

FSSAI License

A large portion of the items available for sale at grocery stores are edible material, food. Therefore, any entrepreneur who wants to start an online grocery store in India needs to first acquire the FSSAI License online. Also, FSSAI by way of this license imposes several compliances and restrictions on the grocery store to protect and safeguard the health and interest of the consumers.

GST Registration

The online grocery business, just like any other business start-up, requires to pay tax and for that, it needs to obtain GST registration under the GST Act. Also, the same is a necessary requirement to deal with the sale of goods.

Also, Read: Different types of FSSAI License and their requirements

Arrange Inventory and Stock

Usually, there are two ways to maintain and arrange inventory and stock, which are as follows:

  1. The owner can keep inventory ready in the business warehouses;
  2. Can enter into tie-ups with local grocery stores in the initial age of business;

Further, out the two ways available, the best way suggested is to prepare a list of products that the owner wants to keep in the warehouse. In the same manner, he/she must tie-up with grocers who are interested in the multi-vendor business model.

Establish Local Delivery Modules

Normally, an online grocery store relies on the concept of home delivery. However, at times, it becomes a matter of concern as well if the delivery is not made on the same day due to unforeseen conditions or unavailability of vehicles.

At present, online grocery stores use their capital to fund and cover-up delivery charges. Further, on average, delivery charges cost around Rs 40 to 50 per delivery.

Also, the best way to deliver groceries at the doorstep is to hire delivery boys with two wheelers. But for that, there is a need to decide the range of delivery area in a city.

Development of Application and Website

Out of all the steps involved in the process to start an online grocery store in India, this is the significant one and acts as the backbone for the entire process. The reason behind the same is that all the goals, expectations, business opportunities are primarily based on the user interface. Therefore, there is a need for every proposed entrepreneur to invest some good time in the development of application and website.

Modes of Making Payment

As all the orders are delivered at the customer’s doorstep, the business can use COD or Cash on Delivery as a primary mode of accepting or receiving payments. Also, COD guarantees same-day payment, however, the same is not the case with different online modes, as in that case, there is a need to wait for the remittance from payment gateways. 

Finalise Marketing Strategy

The different modes of marketing an online grocery store are as follows:

  1. Local Newspaper;
  2. Pamphlets;
  3. Bulk SMS services;
  4. Banners;
  5. Hoardings;
  6. Door-to-Door Visits;
  7. Local SEO;
  8. Society Meetings, etc.;

Things to Consider While Starting Online Grocery Store in India

Whenever an embryonic entrepreneur decides to start an online grocery store in India, the things that he/she needs to consider are as follows:

  1. Must launch mobile apps for both Android and IOS platforms;
  2. Must include Integrated Google Translate and Multi-Lingual Feature in both the website and mobile application;
  3. Must display contact number of the authorised and suitable person, to whom customers can contact while placing an order or in case of any doubt;

Conclusion

In a nutshell, we can rightly state that no doubt, COVID 19 pandemic has changed our lives drastically, but at the same time, it has opened doors for everyone who wants to start online grocery store in India.

Further, groceries and daily need items are essential for everyone, however, due to lockdown, most of the people decided to stay back home and buy stuff online.

Therefore, this is the right time to start an online grocery store in India. In case of any doubt and perplexity, reach out to Swarit advisors, our experts will assist you with the registration process of each license required.

Also, Read: How to Start a Bakery in India: A Checklist to Open Bakery Business

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Shivani Jain

Shivani has completed her B com LLB (Hons) and has the experience of writing various research papers during her college time. Earlier she was working as an Associate in a Delhi based Law Firm, but her interest in writing made her pursue Legal Content Writing as a career. Her core area of interest is in writing about various legal enactments, tax, and finance.

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