An entrepreneurial spirit can cause us to consider multiple business ideas. You might want to start a service-based business, such as becoming a plumber or electrician, because you hear that it's a safe option with the rise of AI. But there are other niches that will always be in demand. Everyone needs to eat, and a grocery shopping service is one that offers:
- Low startup costs
- High demand
And the industry is set to continue to rise by 11.8% over the next few years. Even with fast growth and all of this potential, you still need to do your due diligence, including extensive market research, to be sure it's a viable option in your area.
Here's how to launch and grow a grocery delivery business.
Conduct Market and Competition Research
Local grocery delivery service works well in some cities and not others. If you plan on delivering in New York City, there's surely demand. But the market may also be saturated, so the first steps you'll want to take involve researching the market.
Market research will involve multiple components that work together to better understand the local market, such as:
- Review local census data to understand the total population in your area, the number of families, age groups and income ranges. If you live in a town like McMullen, Alabama, where there are 32 people, you might not have the demand necessary to keep your service running.
- Send out surveys to locals or questionnaires to understand demand. Asking locals if they would use a service like yours and at what price point will help you better understand the market.
- Interview potential customers, especially if you can land restaurant customers, to learn their needs and what they may want from a company like yours.
If your initial research shows that your idea has potential, it's time to move into competitor research. Competition is good for business, but you need to consider a few things about the competition:
- Pricing. What is the competition charging for their service and can you compete while remaining profitable? You can also learn a lot about price tolerance from the surveys you conduct and the interviews in the market research section of this article.
- Demand. Are there too many companies in the area that demand will be sparse? If you have five competitors serving a small city, entering the market may be challenging and unprofitable.
You might even try out the competition's service to learn their strengths and weaknesses and use them to build out your business plan.
Create a Business Plan
You have the initial research showing that your idea is viable, but now you need to focus on how to open a grocery store with a true plan in place. Books have been written on creating a business plan because they're so extensive.
A few books to consider are:
- Richard Hedberg's How to Write a Business Plan with No Experience
- Alex Genadinik's Business Plan Template and Example
You'll also find plenty of websites that can guide you through this process. But the key components of every plan will include:
- Target market
- Competitor research and analysis
- Marketing strategies
- Financial projections
- How you'll source inventory
- So much more
During the creation of or after you've completed your business plan, you can focus on forming your company.
Form Your Company
You know there's a market for your business and you've created a business plan. The next step in starting a grocery store delivery service is to make your vision a reality by forming a company.
There are four main types of entities to choose from:
- Sole proprietorship: If you plan to run the business on your own, you can operate as a sole proprietor without needing to formally incorporate. Just keep in mind that you will be personally liable for debts and lawsuits.
- Limited liability company (LLC): An LLC can shield you from liabilities if properly formed and operated.
- Corporation: S-Corps and C-Corps have their advantages and disadvantages, but they can be complex.
- Partnership: If you plan to operate with a business partner, a partnership may be the ideal option.
When forming your company, consider consulting with an accountant and business lawyer to understand your options and find the best course of action.
Forming your company is an important first step in officially launching your grocery delivery business.
But how will you handle the logistics of delivery?
Sort Out the Logistics
Opening a grocery store delivery service comes with its own set of challenges. Along with finding reliable suppliers for your inventory, you'll also need to sort out the logistics of delivery.
Ensuring deliveries run smoothly and efficiently is key.
Here's how:
- Find the right platform for order management: First, you need a system in place that makes it easy for customers to place their orders online. Look for a platform that specializes in grocery delivery and offers a user-friendly interface, secure payment gateways, customer support options and real-time order tracking.
- Hire delivery staff: Naturally, you'll need to hire a delivery team and invest in training. Creating written policies and procedures will ensure that customers receive a consistent experience and your team knows what's expected of them.
- Invest in route optimization software: Planning delivery routes can be complicated. Fortunately, there are tools that can automate the process for you and optimize routes to ensure deliveries are made quickly and efficiently. Route optimization software takes into account traffic, driver preferences and other factors when optimizing routes.
Once you have the logistics sorted, the next step is to focus on promotion.
Develop a Marketing Plan and Online Presence
Launching a business is just one piece of the puzzle. You need to attract customers and build brand awareness if you hope to have the best online grocery shopping business.
That's where marketing comes in.
Because you only serve a limited area with your delivery service - at least initially - you'll want to focus on local marketing, including:
- Direct mail
- Print advertisements
- Billboards
- Pay-per-click and social media ads
- Local SEO
- Social media marketing
- Email marketing
Online advertisements and direct mail ads can drum up business quickly, but SEO, social media marketing and email marketing may take some time to drive leads and customers. All of these elements can work together to bring new customers to your doorstep now and over the long-term.
Final Thoughts
With the right strategy, a grocery delivery business can be a profitable and rewarding venture. It all starts with market and competition research to ensure there's demand for your services. From here, you'll need to create a business plan, sort out the logistics of delivery and develop a solid marketing plan.
Don't forget to consider where you'll source your supplies. At McDonald Paper, we carry a wide range of disposable supplies and borsa bags with branding options.