Business opportunity-Online Grocery Store

Online grocery store/delivery business model is a fast growing business opportunity, as it brings convenience and saves time. Given the increasing internet penetration and the need to save time, the market has expanded rapidly. The key national level players include Bigbasket, PepperTap, ZopNow  and there are a number of local players as well.

Sighting the promising business opportunity lot of startups have emerged, and some of them did not quite survive but many others (eg.  Big basket,  Local Baniya etc.) have not only survived but also growing their presence across cities in India.

Online grocery store - How to go about it?

 Opportunity scope in Telangana and Andhra Pradesh

The online grocery store can be an attractive opportunity in AP and Telangana as many of its cities currently do not have an online store. As shown in the table, Karim Nagar, Khammam and Warangal do not have an online grocery market. However cities such as Guntur and Vijayawada currently look well served.

CityNumber of online storesPopulation (lakhs)Existing online stores
Hyderabad1380Big Basket, Local Baniya,Easy mandi, Vijetha Grocers, Reliancedirect,Zip. In, Natures Basket,One Mart, Kunnus Grocery, Payless bazar, Zop now, Call Groceries, Irely.in
Vijayawada615Fatafut.com, ADO mart, familyshopper.in, greenytails.com, Bigtrolly, Vijetha grocers.
KarimNagar2.6Tradewale (a general listing platform for online stores is present)
Khamam1.84Tradewale (a general listing platform for online stores is present)
Warrangal8Tradewale (a general listing platform for online stores is present)
Guntur410Mstores, family shopper, Guntur.Tradewale,Guntur Stores.com

Steps to start an online grocery store –

Anyone with some knowledge/experience in the retail business and little creativity can get started as an online grocery store. Creativity plays an important role in giving a web portal a unique character and features. For example, some of the grocery stores offer a feature of cash pooling between members where one can transfer or make the bill payment on behalf of the other member.  Below are some requirements and corresponding costs that should be taken care of:

Approvals: In order to start a store, one needs a host of approvals including company incorporation, VAT registration, shop and establishment registration .The total cost should be around Rs. 50,000

The Web Portal:   The utmost important part of the Online Grocery Stores, there can be broadly two types of portals:

  1. A portal which provides for a platform for the local grocery shops, whom the company shall have the tie-ups with, to update their products and respective prices. This form of portal is suitable for the OGSs [Online Grocery Stores] which opt to distribute without having their own stock and warehouses.
  2. The companies having their own inventory to offer can have a portal without providing the above mentioned platform.

Now the above two types of portals can be sub-classified into two:

  1. An open source CMS [Content management System] which provides basic structure for a website where one can choose or create themes and buy/create plug-ins to have more features. The cost of setting up a website via CMS can vary from free to 7 Lacs rupees depending on one’s choice of Free or Paid themes and plug-ins.
  2. The other option is to build one’s own website right from renting servers to post production maintenance of the website. And this could cost you upwards of Rs. 15 lakhs.

Inventory and Warehouses:  As in the case of physical grocery store, this may easily be the most important aspect of starting up which requires lot of capital. However, one can choose to not stock goods but procure them based on order. One would need to make arrangements with the local grocery stores, FMCG companies and nodal vegetable markets to purchase stock as per demand.

Other Assets: Vehicles delivering the goods to the customers, credit card swipe machines for on door step card swipe facility, office space and furniture and fixtures as per requirement and number of employees, computers etc.

Marketing: The Company needs to make publicity through radio and news paper ads, online marketing pamphlet distribution, allow initial discounts and offers. The marketing budget would depend on the exiting competition in the market and the area you are planning to cover.

How can FineTrain assist you? We can help you with the following

  1. Information on approvals required and help you in obtaining these
  2. Budget estimation
  3. Business plan preparation

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