From operating losses to poor management, let’s take a look at the key challenges faced in an online grocery business.
Even though the brick and mortar stores are still a conventional way of shopping for groceries, online grocery shopping is becoming a trend like social media - rapidly and addictive.
This is the reason, in 2018, online grocery shopping has crossed USD $17.5 billion worth of grocery sales in the U.S., let alone the rest of the world where online shopping is a sustainable business. According to Statista, online grocery sales are expected to grow nearly USD $30 billion by the year 2021.
The booming market for online grocery is enticing investors from other fields as well. As the market expands, investors are investing in the development of some smart and feature-packed grocery mobile apps. But like any other business, the online grocery shopping business also has some blind spots that can be neglected by over-optimising the investors.
Therefore, to save you some effort, I have prepared a list of common challenges that an online grocery business is likely to face. Acknowledging is the first step to finding the solution for these challenges:
For any online grocery business, storage and delivery systems are the two biggest capital investments besides the cost of mobile app development. Every year, increasing prices of storage and delivery costs keep on making a bigger hole in the pockets of the investors.
Therefore, it becomes mandatory to find a way around this problem so that a large amount of capital can be saved and invested in another part of the business. Many investors chose the aggregator business model in order to save initial capital investment.
Operating losses take the largest toll on the revenue of an online grocery shopping app business. Lower margins, the dissatisfaction of the customers and management of perishable groceries and many other things that cause rising operating losses.
At the beginning of the business, the operating costs are likely to be more than the revenue itself. However, by incorporating smart and intelligent management strategies and working systems, the operating losses can be minimized to a great deal.
Delivery aspects of any e-commerce business are inefficient and online grocery delivery systems are no exception. It is because relying on delivery executives does not seem like a robust idea. Dependency on a 3rd person is the root of this inefficiency. This can be minimized by providing training and education to the delivery execs.
In addition, special rewards for good performance of delivery execs can also promote the right conduct of their duties as well. These small yet smart policies make a huge difference and may save millions in revenue for an online grocery business.
After all, the grocery business is all about serving the end consumers. And in order to serve them better, you have to understand the consumer behavior towards the products they purchase the best and even the user interface of the mobile application as well. The problem with this whole theory is that it is unpredictable.
The whole marketing strategy and business development depends on the unpredictability of users. However, this challenge can be handled efficiently by utilizing some complex user behavior and habit analytics and can help you to devise some lucrative strategies.
So far, investors haven’t convinced themselves to bring their online grocery shopping business to small towns. Their inclination towards online big cities is making the competition dense in those areas. Consequently, they have to deal with low margins. Hence, introducing a robust business model that can target small towns to cater to their needs of grocery could unlock some unprecedented opportunities.
Even brick and mortar stores are not immune to this challenge. The fluctuating price of grocery items can affect the profit from a significant margin of your online grocery mobile app business. Proper and sustainable management is required to face this challenge as well.
As we discussed above, the brick and mortar retail stores are still the traditional grocery shopping destinations. The reason is the majority age group of grocery shoppers are not tech savvy or they do not appreciate using their smartphones for these tasks.
In both cases, potential users of an online grocery app are drifting away from it. If you want to promote the use of the app among this particular area of users, then a comprehensive ad campaign, explaining the ease of usage and benefits of online grocery shopping, can increase the awareness among the uncharted user-base.
A poor inventory management of an online shopping app ultimately affects the user experience with the application. And a disappointed customer of the application can affect the opinion of thousands of internet users for your application - certainly not a healthy situation.
Therefore, with the help of expert mobile app developers, you can get smart automated inventory management integrated within the application. It not only manages inventory perfectly but also makes everything fast and efficient.
Storage, management, and delivery of perishable products can be a tricky challenge to deal with. Because a customer expects absolute freshness of the order and failing to deliver less than what is expected may result in a review of the service. This is why customer satisfaction in online business is a very sensitive goal that must be achieved by all means.
Another big bite from the pie of the business capital goes right into the mouth of marketing and advertising. You have to spend a great deal of money on marketing and advertisement to attract more users and boost the sales for your online grocery business.
The cost is inevitable but you can monitor the ROI of the money that you spend in marketing. The goal is to leverage investment in marketing as much as possible by adopting app marketing strategies that influence people and build trust for your online grocery brand.
You cannot just ‘buy’ loyalty. In order to build brand loyalty among the users for your online grocery business then you will have to maintain the quality of your service. In addition, loyalty programs can also help you to retain your most loyal customers. Because in an online business, bad reviews and feedback with poor user experience can force your customers to switch to another grocery app.
The changing market and always has something to entice users or customers to the latest trends. App features and offers get outdated easily on the internet. Even the customers are molded to behave in the same pattern. They seek something new in the app after a certain period of time. If they don’t find anything new and interesting, then they start looking for an alternative.
Therefore, if you want your online grocery app to be the top choice of the customers, then you need to make sure you and your business adapt according to the market trends. If possible, always a step ahead of the market.
Hence, here are the top challenges that I have enlisted here for you. If you are planning to develop an online grocery app then you may find this a little heads up useful.
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