March 2, 2024

Setting Up Online Grocery Business in 2022? Here Is What you Need to Know

Remarkable growth has been recorded in the online grocery market. The expected CAGR is 23% between 2021 to 2025. The incredible grocery industry development has aspired many entrepreneurs to venture into the grocery segment and reap greater returns. The increase in usage of smartphones is also one of the key reasons for this tremendous reach in the grocery store business.

Many interesting facts and statistics that are mentioned below will give you a clear dimension about how well grocery stores are performing in the market and what scope they have in the future.

  • By 2023, around 84% of U.S. citizens are expected to use online grocery platforms whose current rate is 64%.
  • Walmart is the highly preferred online grocery store in the U.S. as 37% of Americans are using this platform exclusively.
  • Complete automation of grocery warehouses is expected to be accomplished by 2025.
  • In 2021, $89.5 billion were spent on online grocery purchases in the U.S.
  • Amazon and Walmart hold the largest market share in the online grocery business.

Major Players of the Grocery Industry

Before you start building your online grocery marketplace you need to analyze more about who are the key players in this industry and what online grocery market strategy, they are using to reach this place. This will help you to attract your audience and get better conversions. First, let us identify the major players of the grocery market.

  • Instacart – founded in the year 2002 and sells grocery items to customers through online medium. Customers are allowed to select their favorite local grocery shop and order products through a dedicated mobile application or Instacart grocery website.
  • FreshDirect – this is one of the U.S.-based online grocery stores that hold thousands of active users and the Freshdirect company started its operation in 2002.
  • Peapod – Peapod is a leading online grocery marketplace that delivers grocery items to customers at their doorstep. This marketplace was founded in the year 1989 and is one of the oldest grocery stores in the U.S.

Things to Consider Before Starting an Online Grocery Business

Multiple factors are involved in elevating an online grocery marketplace in the market. If you miss any of them, then it will be difficult for you to get the expected reach and returns. Now let us find out the key aspects that are to be considered before you know how to start an online grocery store business.

  • Analyze and finalize the perfect grocery business model that will be the base for your grocery store business.
  • Should have multiple revenue streams to be integrated with your grocery platform.
  • Identify your target audience and streamline your grocery delivery regions.
  • Finalize features that are required for your grocery store business.
  • Know more about your competitors and their marketing strategies.

Different Business Models Of Online Grocery Store

As we have mentioned above, the business model you have for your online grocery marketplace will support you in your entire business journey. So, you should be more particular about the grocery business model you select and should make sure it suits your business pattern and requirement.

Hyperlocal Grocery Business Model – this model is quite popular in recent days and it connects customers to local grocery stores and will let them have their orders at their doorstep. Instacart follows this business model and has succeeded in the market.

Inventory Grocery Business Model – this model supports the admin of the platform to maintain the inventory and collect supplies from grocery suppliers. The platform will buy products from suppliers and will store them in their warehouse and will dispense it to their customers. FreshDirect is an example of this grocery business model.

Multi-vendor Grocery Business Model – this model doesn’t stick on to a particular grocery supplier as it will be connected with multiple suppliers and customers can select their grocery stores and can compare prices with other sellers and can select the one that is comfortable for them. Peapod uses this grocery business model.

Omnichannel Grocery Business Model – this model supports multiple modes to reach the grocery platform. Customers can reach either through grocery websites or through a mobile application or even they can have an in-store experience. Walmart is a perfect example of this business model.

Revenue Channels in Online Grocery Marketplace Business

Every entrepreneur should be more concerned about choosing the revenue channel for knowing how to start online grocery business. This is where the admin can earn income and if it is not effective then your business can face a major downfall in terms of revenue. Let us identify all possible revenue sources while running an online grocery marketplace.

Commission fee – this is the most preferred revenue model where the admin gets income on each order that is processed through the grocery marketplace. The supplier also needs to pay only when he gets an order through the platform and so both the parties are benefited.

Vendor subscription – vendors can pay a fixed amount to the admin and can subscribe to services listed on the platform. After subscribing he will be able to access the platform and can have his listings on the marketplace.

Delivery fee – as grocery items should be delivered at the earliest, the admin can charge a delivery fee on customers and can assure on-time delivery of products. According to the distance, the charge will vary.

These are the common revenue sources and apart from these, there are a few more revenue channels that can benefit the admin of the grocery marketplace. It can be on-site promotions, hosting banner ads, allowing third-party merchants to have their ads on the grocery website home page, and many more.

Key Features for Online Grocery Marketplace

While framing features for your online grocery marketplace, you need to consider each user group that will be accessing the platform. The admin, grocery suppliers, customers, and the delivery agent. Focus on each user and set features accordingly.

Admin features

  • Offer admin to provide administrative access to other employees.
  • Easy vendor management that will let admin approve or disapprove vendors or their products.
  • Advanced reports and statistics to understand the business performance.
  • Simplified customer and delivery agent management.
  • Effective inventory maintenance system.
  • User-friendly and mobile-responsive user interface.

Seller features

  • Dedicated seller dashboard.
  • Simplified registration process
  • Order approve/disapprove option.
  • Multiple shop management.
  • Bulk product upload and download option.
  • Map the shop and make it visible to customers.
  • Order tracking facility.
  • Permission to read reviews and ratings given by customers.

Customer features

  • Social media login option
  • Advanced search and filters
  • Product and price comparison tool
  • Review and rating option to register their feedback.
  • Social media sharing to share products and get others’ opinions.
  • Multiple payment systems to simplify payment processing.
  • Multiple delivery options to let them select their convenient delivery slot.
  • Real-time order tracking to know the status of their orders.

Delivery agent features

  • Order accept or reject option
  • Easy order cancellation feature.
  • Dedicated profile management
  • Simplified route navigation to reach customer/ seller place.
  • Delivery order management
  • Order tracking option

How to Start an Online Grocery Business in 2022?

By going through all the above-mentioned facts and stats, you could have come to a firm decision of building your own online grocery marketplace. But you may be in a confused state about how to build your grocery store business online. We can guide you with simplified guidance.

Build the platform from scratch – with the support of a dedicated development team with high experts you can build your grocery online store from scratch. But this is quite time-consuming and very costly and not affordable for startups and small businesses. But more customization can be experienced that can perfectly fit into any business model.

Get readymade grocery software – ready-to-use online grocery marketplace platforms are available in the market that will be more beneficial for users who seek instant launching of their grocery store online. These readymade platforms will have all essential features that are to be mandatory for any grocery business. It is very affordable and highly suggestible for any startup or small and medium-sized business.


Every human being needs food to survive and grocery is the basic item that is unavoidable for survival. Customers started utilizing online grocery platforms and so the growth is unbelievable. So, stepping into the grocery store business is the right decision and you can implement innovative marketing strategies that can help you to beat the competition in an effective way.


Marcel is a dedicated and professional digital marketer who always builds a perfect digital marketing strategy in promoting our brand in various digital channels.