Can Online Grocery Store be a Gamechanger in Current Scenario?
COVID is certainly the point of inflexion as there has been exceptional surge in creation of online grocery store. On 25th March 2020, online major e-retailer BigBasket had to announce that due to unprecedented traffic, it has stopped taking new orders on its website. Similarly, Amazon announced that due high demand of essential and food items, it has accordingly prioritized the shipments. These are the most exciting times to go online and set up a grocery store. By 2024, Indian E-Commerce market is forecasted to grow at compound annual growth rate of 18.5% (CAGR) to reach to a value of INR 10494.3 billion. To put simply, more and more people are taking online route to reach the end customers.
Through this blog, we endeavor to inform you of certain points that you have to keep in mind while opening an online grocery store and how it can be a game changer in your overall business plan.
Product and Brand Selection
The foremost and the most important aspect while opening an online grocery store is selection of products and their brands. As Rome wasn’t built in a day, you cannot keep all the products and their brands. Therefore, you have to do cherry picking.
Now, the next question is how to do the selection? Well, market research and customer segment identification are one of the best ways. You have to decide who are going to be your customers. This entails; economic, geographic and demographic identification. Accordingly, you have to choose the brands. The products and their brand should match customers’ aspirations. You have to understand whom to target and therefore you have to deep dive to analyse the data and understand finer points.
For instance, talking of grocery, there are few aspects the any e-seller has to look at in which category do my products fall from an online buyer’s perspective: -
Staples:- The main grocery item which can’t be done without e.g. Wheat flour, Rice, Pulses, Vegetables, Oil, Ghee etc.
Accomplishments:- Spices, Salt, Sugar, Tea, Coffee, Cereals, Fruits, Snacks etc.
Desirable:- Frozen food like fries, butter, cheese, Milk products, spreads, etc.
The ideal product mix would have the category of Staples and any one of the other two or both the categories (Accomplishments and Desirable). The need based or main products will pull the customers to your online store and the other product mixes will glue them to your website.
A buyer would always prefer a ‘One Stop Shop’ even if it is online shopping. Talking of Variety, it is another important part of the product mix. Use distributors and suppliers who supply different brands and product ranges.
Selecting the right e-commerce platform
Now that you have decided on the categories, products and you have shortlisted the brands, the next is putting them on the net. For it, you have to choose the right E-commerce platform. World over, the SaaS based platforms are preferred over customized or open source.
The selection of E-commerce platform has to be need based. One has to look into the following aspects before finalizing the one.
Well, it goes without saying the geography to be served plays the most important role. You have to decide region, demography or preferences of the customers whom you wish to target. The moat is the locality in the business model. Therefore, one can strengthen the itself in a limited area and then think of expanding the geography.
Payment Option - COD & Pre-Paid
There are two types of payment options- Pre paid and Cash on delivery (COD). Pre COVID, Indian Customers preferred Cash on Delivery over the online payments. As of now both the options are prevalent and opted by the customers. Online store should have robust payment options and preferably multiple as sticking to a few options will lead to restricted business volumes.
Coupon & Offer
You can generate discount code on specific categories or payment options. This, however, will depend on the type of the product and it is life cycle. If a particular product has come to an end of its life cycle, the endeavor should be to get it out so that one doesn’t end up stacking the dead inventory. Therefore, launch an offer for its faster offtake so that it clears the inventory line. There are a set of customers who look for such kind of deals and offers.
You can define delivery cost based on the weight of the product and area. To begin with, you can offer FREE shipping to attain a specific threshold. Should you charge for the delivery or should it be free is business call. Moreover, there is no fixed answer to it. However, you can decide the following parameters
Loyal Vs Fresh Customer
Free delivery with-in a defined radius/li>
Value of the order
After E-commerce, the world has shifted to Mobile Commerce (M-Commerce). Therefore, having a smart Mobile application for your online grocery store is equally important. Customers surf and do app hopping but prefer an app that gives them the convenience, ease and variety to choose from.
The application should be mobile friendly. In other words, the website pages should open in record time as customers hate to wait. It should be tested on various mobiles and platforms and it should be impressive in its look and feel.
Send Notifications - Daily Deals & Offers
Sending regular notifications to your customers has multiple benefits. It enhances engagement, shows them the value in the deal. One can learn from online biggies like Amazon and Flipkart. Whenever they launch special offers on select days, they send notifications prior to the D-Day and it results in increased volumes and sales.
Show Deals & Offers
These deals should prominently appear on App and Web homepage or Pop-up. Loyal customers wait for deals and offers. It helps them to derive more value per transactions on your website and enhances your store’s profitability. Therefore, deals and offers should be really exciting and customers should really feel that what you are offering to them cannot be availed anywhere else.
Be regular in promotions and sending notifications. Own a chunk of their mind share and eventually a share of their pocket by the right and timely promotions.
One Click Reorder
The mantra is customer should be able to reorder quickly. Ease of purchasing & repurchasing on the website is very critical to the success. Once the particular item has been purchased, reordering should be done by single click. The whole idea is that repurchasing experience should be hassle free and as simple as calling offline store and getting it delivered at your doorstep.
Order Status Notification - SMS, Email & App
Well, all three options should be availed so that your customer is not left unaware of the ordering she has done on your website. Moreover, communicating with customers reflect transparency of the website.
Engage Customers with Reward Points
More value per transaction makes your customers happy. Afterall, you make them feel like a king! Loyalty programs should be personalized, varied and for long term. Personalized program should be smart and add value to the profile of customers.
It depends how well you have captured the preferences of the customer when she visited and purchased items from your website. These days, predictive marketing tools are applied to engage with customers. You need to have complete customers profile so that you can offer them reward programs basis their shopping preference.
Moreover, the reward program should have variations. Generally, variations are two- fold; Earning and Redeeming. Lastly, Long term programs result in long term association with customers.
Plan your delivery
The answer to this question needs to be thought upon based on the logistics of geography and type of Product. Geography here means the point of pick up to the point of delivery. Consumers like to have a product experience that matches or even exceeds the offline buying. The buyers will not compromise on Quality, Quantity and Speed of Delivery. Therefore, the philosophy in delivery time should be never fail on your commitments.
The Supply Chain needs to managed with due diligence. Some strategic points that need to be considered
Who are my suppliers?
Where are they based
What are the pin codes that seller can supply to?
Do I need to have a separate delivery radius for different product types?
Do I need more localized suppliers to cater to different pin codes for certain category of products?
What kind of safety (pilferage proof) packaging I need to consider for delivering my products?
What are the details that I need to capture while taking the address of my customers?
What is the mode of transportation that I may need to hire?
Do I need to charge for / waive off delivery fee? If so on what conditions?
Ideally, you should focus on locality of the area and going forward, move beyond it. Once the store closes the teething issues, delivery region can be extended.
Payment convenience is one of the most defining levers in the success or failure of any online grocery store. Customers prefer to have easy, but safe and secure options of making online payments.
Payment options should have easy integration, online onboarding, feature filled checkout and best in class performance. Before COVID 19, Indian customers preferred cash or swiping the card at the time of delivery over online payment. However, post COVID UPI or wallet-based payment options have increased.
Plan your marketing
In this hyper competitive scenario, online marketing promotions and campaigns have catapulted to higher levels. Marketers want to reach to their actual customers so that efforts and resources are optimally utilized.
Predictive marketing has come as one of the latest techniques. It is a new way of thinking about customer-relationships, powered by new technologies in big data and machine learning, which is called as predictive analytics. But there are other tools also.
These small online grocery stores create various WhatsApp Groups of their customers and send them deals and offers about their products. They also create an offer for 1st purchase and circulate message using WhatsApp groups.
Pamphlet Distribution in Delivery Area
This is the most traditional, yet one of the effective ways of doing local area promotion. The pamphlet should be well designed, should contain all the relevant information and should be distributed among the correct target audience. Though pamphlet distribution is economical, it has very less life but it serves the purpose.
This is one of the most widely tools these days. Platforms like facebook, Instagram or linkedIn are widely used these days to promote online grocery products. However, the promotions and campaigns run on social media require the proper customer segmentation and proper tools should be applied to gain the maximum out of it.
This is really effective when you are just a new kid on the block. If your existing customer is satisfied by your products, she will definitely promote in her closed or open groups. People tend to believe their friends and acquaintances. Referral marketing is one of the most cost-effective and highly result oriented business strategies.
In simple words it means customer gets customer. There are various studies that suggest that customers won through Referral Marketing have
A 25% higher lifetime value (LTV)
Their Net Promoter Score is 15 points higher
They have 20% higher average order value
Their churn is 18% lesser than normal.
Therefore, the anyone who is a new e-retailer should devise genuine and referral marketing campaigns to win customers. A few tips can be
Devising Personal Referral Codes
Getting Referral through social media
Earn Points and win Rewards
Feedback and Reviews
There is always a scope for improvement and that can be worked only if there is a mechanism of feedbacks and reviews. Acting on voice of the customers is very important to have excellence in the business-model. Therefore, feedbacks and reviews play an important role.
The online grocery store should be as localized as a typical nearby departmental store and as global as Starbucks. The ease of the purchase, wide inventory, secured and easy payment options, strong loyalty programs are the differentiators in the game.
Online shopping experience is happy and repetitive in nature if and only if the buyer’s expectations are met. The gap between expectations raised and expectations met has to minimize. This happens when a seller starts thinking and acting from the buyers’ perspective. We all love to buy, but none of us like to be sold. As a seller, we need to know what will excite a potential online buyer to shop on his online store, and what will ensure that he keeps on coming back to the same seller.