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From food storage to supply chains, there’s a lot of setup involved in starting an online grocery store – but it’s not as complicated as it might seem. When you break the process down, each task is straightforward and achievable.
As a business owner myself, I have experience in this area and I'm here to help. To help you achieve a smooth launch, I’ve broken down the process into 10 simple steps.
I’ll cover everything you need to do to get set up and ensure your online grocery store is compliant, organized, and profitable.
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10 Steps to Start an Online Grocery Store
It’s important to set up your online grocery store in compliance with local and national regulations on food storage, transportation, and handling. These 10 steps will help you get everything done the right way while avoiding needless complications.
1. Scope Out the Competition
The first step towards standing out as a brand and a company is finding something to offer that’s different or in demand. To discover what you need to focus on, you need to know who the local competition is and what they do.
For instance, if your area only receives service from big-brand grocery stores, focusing on being an independent store with locally sourced produce might be appealing. If your area is on the edge of a delivery zone and getting groceries takes time, you can try to focus your operations closer to home and offer more convenient delivery plans.
You can also niche down and pick a certain group of people to target, such as by catering to vegans and vegetarians or focusing on offering the cheapest produce or fastest delivery services in your area.
You can also aim to offer different and interesting products based on what the other grocery stores are lacking. Whatever products you can’t find available in your area will be potential gaps in the market for you to cover.
2. Write a Business Plan
With this research complete, you should have the foundations of a business idea that you can now expand into a full business plan. Here, you can lay out your strategy, list the resources you need, map out financial plans, and anticipate potential roadblocks and their solutions.
Having a business plan will help you stay on target as you progress through the launching process, and it will also help bring other people on board if you need to find partners and funding.
The basic elements to include in your plan are:
- A summary of your business and its purpose
- A brief analysis of the market
- A list of products
- A marketing plan
- A financial plan
3. Register Your Business
The process of registering your business will depend on your location and the business structure you choose. Because an online grocery has many moving parts and you need to partner with other organizations to source and deliver products, choosing a Limited Liability Company (LLC) may be the safer option.
This structure will help protect you and your personal assets should your company run into any fines or court cases. To form an LLC, you need to file articles of organization with your Secretary of State and choose a unique, distinguishable name.
The second part of registering your business is researching and obtaining the different licenses and permits you need. The state you’re in, your local government, and the exact items you want to sell will affect the permits you need, but here are some common examples:
- Business license: This is typically required by the local government to show that you’re operating legally and following regulations.
- Food handling permit: This is necessary if you’re selling perishable food items, and may involve taking a food safety course and passing a test.
- Alcohol sales permit: You need one if your grocery store has an alcohol section.
- Health department permit: To sell food products, you may be required to submit to inspections and meet certain health and safety standards.
4. Find Wholesalers and Choose Your Inventory
Once your business is officially formed, you can start choosing and sourcing the products you want to offer. During the planning stage, you likely decided the main categories of produce and products you want to sell, but now you need to choose brands and find specific items.
Your inventory is something that you can change anytime, so this list doesn’t need to be permanent, but any iteration of your inventory needs to be well-planned and thought out.
A grocery store needs to have a fairly extensive selection of products to make it worth a shopper’s time but a new business also needs to be careful not to offer more than it can handle, so this requires some balancing.
When you know what you’re looking for, you then need to figure out where to source products from. You can do this by finding wholesalers and distributors to sell you products in bulk, or you can buy directly from manufacturers if possible.
You may need to find wholesalers that cater specifically to smaller businesses, as some places might have minimum buying requirements that exceed your means. You can also partner with local food producers to source fresh food from a close location – this can help shorten your supply chain and also define your brand as a supporter of local farmers and artisans.
5. Organize a Storage Facility
A storage facility for perishable food products will need to meet certain requirements to ensure you can store food in an optimum environment in terms of temperature, airflow, and cleanliness.
A typical food-grade warehouse will include dry storage, refrigerated or chilled storage, and frozen storage. You also need to store food on pallets to prevent any contact with the floor. For most online grocery stores, inventory software is also necessary to help you organize and count your products quickly and efficiently.
It’s possible to rent out food storage facilities already equipped with everything you need to start storing produce. When it comes to location, you don’t necessarily need your warehouse to be close to your place of business if you plan to outsource or hire workers to handle the upkeep and cleaning.
Instead, choosing a spot near the center of your planned catchment area can help shorten the average delivery route and keep things efficient.
6. Partner With a Shipping and Logistics Provider
If you want to offer straight-to-door delivery, you need to partner with a shipping and logistics provider that understands the compliance requirements you’re working with. As you consider the options available, it’s important to ask potential shipping partners what their protocol for handling perishables is.
As the merchant, you’re responsible for choosing the right delivery methods and therefore ultimately responsible for the condition of your product when it reaches the customer’s door. Depending on your business size and the catchment area you intend to serve, you could also consider joining local food delivery services like Uber Eats or DoorDash.
7. Build a Website
Next, you need to create an online storefront. There are different ways to make a website depending on your budget, including hiring web developers to design and construct a site from scratch or using a website builder.
In terms of website design, simple and clean styles are great for grocery stores and most big chains use these kinds of designs. Colors and animations can be used to draw attention to sales and deals, but having too much going on can be distracting for shoppers.
Many shoppers will already have clear expectations of what an online grocery store should look like from their experience with other stores, so drawing ideas from successful competitors is a good tactic here. It’s never a bad idea to pick your own, unique color scheme to make your design instantly recognizable.
8. Set Up a Smart Payment System
When shoppers make a trip to a physical grocery store, they’ll use their credit card or cash to pay and walk away with their purchase. This simple and hassle-free experience is what you want to recreate for your online grocery shoppers.
The easiest way to set up a payment system and accept credit card payments on your new website is to sign up to Pay.com. As soon as you complete the straightforward onboarding process, you can set up a personalized checkout page that matches your store’s branding. Developers can rely on Pay.com’s API to fully integrate the payment system with your existing website.
As well as credit and debit cards, Pay.com also lets you accept a wide variety of payment methods such as PayPal and digital wallets like Apple Pay and Google Pay. By offering multiple payment methods, you can create a convenient and effortless checkout experience for your customers.
9. Create and Launch a Marketing Campaign
Once you have products, a shipping method, and a payment system, the final step for a smooth launch is starting a marketing campaign. The research you did on the local competition and how you can stand out as a brand will help you to create a marketing plan that speaks to your target audience.
You can use social media, online ads, Google Business Profiles, SEO, blogs, and many other strategies to promote your new grocery store. Depending on your budget, you can also consider paid ads both online and on local TV for more mature audiences.
10. Hire Staff
To run your online grocery store smoothly, there are a few types of employees you may need to hire. As well as delivery drivers, you’ll also need warehouse workers and cleaners, customer service representatives, accounting staff, and administrative staff. You can also hire a managing director or take on the role yourself.
Some of these jobs can be outsourced, so if you don’t want to handle the hiring yourself, you can contact an agency and discuss your hiring needs.
The number of people you need will depend on the size of the business you’re starting, but here are some specific jobs and tasks you need to think about:
- Packing orders in the warehouse
- Cleaning and upkeep of the warehouse
- Delivering orders
- Ordering new stock and inventory
- Managing marketing
- Bookkeeping and accounting tasks
- Dealing with customer questions and problems
- Maintaining and updating the website
- Managing staff and day-to-day operations
The Pros and Cons of Starting Your Own Online Grocery Store
Online groceries are in high demand, which is a clear pro for starting your own online grocery store, but pros never exist without cons. It’s always worth weighing the positives and negatives before committing to a new venture.
Pros
- Be your own boss: Working hard for your own business, setting your own goals, and reaping the rewards of success can be a rewarding experience.
- Benefit from scalability: You can decide how big your business will be, how many people you want to serve, and what you want to prioritize. You can sell big brands to as many people as possible, or supply your community with local produce.
- Enjoy easy maintenance: A successful online grocery store is all about having an efficient and well-oiled system and processes that work well with minimum effort.
Cons
- Dealing with regulations: Handling food comes with serious regulations involving inspections, courses, and tests. Trying to cut corners will end badly, so putting in the effort is the course of action.
- Paying investment costs: From website costs to storage facilities and shipping partners, there is a good deal of things you need to pay for before you can start making money.
The Bottom Line: Is Starting an Online Grocery Store Right for You?
If you do your market research, determine a gap in the market for your business to fill, and follow our steps to set up your store legitimately, you’ll be able to do very well.
Just remember that creating a great customer experience is essential for success, and a smooth checkout process is an important factor in this. When you sign up with Pay.com, you’ll get a simple and convenient way to accept a range of payment methods and keep your customers happy.
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