How to Start an Online Grocery Business in the USA?

The online grocery industry has seen an explosive growth trajectory in the USA, especially in recent years. According to Statista, the grocery delivery market in the United States is anticipated to reach a US $ 257.50 billion revenue by 2024. It is expected to reach US $ 455.20 billion by 2029, growing at a CAGR of 12.07% (2024-29). This booming sector offers lucrative opportunities for entrepreneurs, driven by changing consumer habits and technological advancements. 

As more Americans turn to online platforms for their grocery needs, the demand for convenient, efficient, and reliable grocery delivery services has never been higher. For entrepreneurs looking to tap into this vibrant market, starting an online grocery business could be both a profitable and rewarding venture. We have compiled all the essential information in this blog to guide individuals interested in starting their own online grocery business. But first, let’s know what is the scope of starting an online grocery business in the USA. 

• Around 22% of consumers prefer online grocery delivery services. (Source: driveresearch.com)
• The use of grocery delivery services has risen by 56% in 2024 compared to 2022. (Source: driveresearch.com)
• Over the next five years, online grocery sales and growth are anticipated to bolster up in-store grocery sales in the USA. (Source:grocerydive.com)
• Use of grocery curbside and pickup services has risen by 100% in 2024 as compared to 2022. (Source:grocerydive.com)
• The digital grocery market is anticipated to reach $253.89 billion in the USA. (Source:emarketer.com)
• Online grocery delivery sales have grown 18% from the previous year reaching $2.9 billion from $2.5 billion in 2024.  (Source:digitalcommerce360.com)

These insights suggest that individuals are highly inclined towards online grocery shopping in the USA, and starting an online grocery business proposes lucrative business opportunities.

Next, let’s know the reasons why you should start an online grocery delivery business in the first place.

Why You Should Start An Online Grocery Business?

Starting an online grocery delivery business presents many lucrative opportunities for entrepreneurs. Let’s know about them.

High demand: A growing preference for online grocery shopping and home delivery shows increased consumer demand. Capture this demand by starting your own online grocery business. 

Expanded customer base: With an online presence, you can enable customers from various regions access to a wide range of grocery products. An online grocery delivery platform can help you expand your market reach far beyond traditional physical grocery stores.  

Customer convenience: The primary reason behind the fast adoption of online grocery delivery and shopping is the convenience and flexibility it offers. According to the reports, 70% of US shoppers were buying their groceries online in 2022. Shoppers prefer to browse and purchase than to travel to a physical store. By starting your online grocery business you can cater to this rising demand. 

Operational efficiency: With an online grocery shopping and delivery platform you can easily manage the operations involved in running a grocery delivery business. An online grocery platform also reduces extra operational costs and improves profitability. 

Launching an online grocery platform offers a myriad of benefits that can significantly boost your profitability. However, before launching your online grocery platform you should gain knowledge about popular players in the industry. In the next section, let’s know about popular online grocery platforms in the USA.

Key Online Grocery eCommerce Platforms In The USA

Here are the top online grocery e-commerce platforms in the USA:

Instacart

Instacart is a popular and most successful online grocery shopping platform in the USA. The company reportedly generated $3 billion in revenue in 2023 and had an estimated 14 million active users. This platform offers a convenient and flexible user experience, increasing its popularity in the industry. 

Amazon Fresh 

Amazon Fresh is another popular online grocery platform in the USA. Their online grocery sales are expected to reach US $ 40.5 billion in 2024. Approximately, 48 million people used Amazon Fresh to buy groceries online in the USA. Amazon Fresh is the fastest growing company in the US. 

Walmart Grocery

It is one of the renowned online grocery platforms in the USA. Walmart’s online grocery sales were estimated at USD 49.3 billion in 2023  and are expected to reach USD 58.9 billion by 2024. This platform is known for its millions of product range, and the safest delivery at the customer’s doorstep. 

Kroger

Kroger is a popular player in the US online grocery industry. Their current revenue is expected to reach $150.14 billion in the year 2024. This grocery delivery platform serves over 11 million customers on a daily basis. 

Next, we provide a step-by-step guide to start your online grocery business effortlessly. 

Step-By-Step Guide To Start An Online Grocery Business

Starting an online grocery business may seem a complex task in the beginning, however, with careful planning, the right knowledge, and advanced technology this can be done easily. Here are the steps to start an online grocery business. 

Step 1: Do Market Research and Competitive Analysis

Before diving straight into the online grocery business, thorough market research is essential. This involves understanding the demographics of your target audience, analyzing competitors, and identifying market gaps. Identify your target market and assess the preferences, and shopping habits of your potential customers in your region.

Moreover, analyze your competitors, understand their strengths and weaknesses, and implement those strategies in your business plan. 

Step 2: Determine the Business Model For Your Online Grocery Business

This is the most important step while starting your online grocery business. A business model defines your strategic plan of how your business will work and generate revenue in the future. Here are the popular business models for starting an online grocery business.

• Multi-Vendor Business Model
• Single Vendor Business Model
• Inventory-Based Business Model
• Hyperlocal Business Model
• Direct-to-Consumer Business Model
• Click and Collect/Buy Online, Pick Up In-Store (BOPIS) Mode
• Instant Delivery Model
• Scheduled Delivery Model
• Business-to-Business Model

Select a business model that aligns with your goals, resources, and market demand. Further, read this blog to gain in-depth knowledge about different business models. 

Step 3: Finalize the Revenue Model 

After deciding on the business model for your online grocery business, the next step is to finalize the revenue model. The profitable revenue models for an online grocery business include: 

Commission: This is the most preferred revenue channel for business owners. There are two prominent ways to charge commission: 

• Commission on transactions: The platform owner charges a commission from the vendor/seller on every sale they make on the platform. 
• Commission on delivery: The platform owner charges a delivery fee from the buyer and shares the revenue of the driver after deducting a commission. 

Vendor Subscription Fees: In this revenue model, the vendors who are not comfortable with the commission model can opt for a fixed monthly or yearly subscription fee.

Banner Ads and On-site Promotion: In this revenue model, enable the vendors to promote themselves via banner ads on your platform. Moreover, the platform owner can charge fees from other businesses who are interested in promoting their services on your platform. 

Step 4: Choose The Key Features and Functionalities 

Now, the next step is to choose the key features and functionalities that would streamline the business operations and provide an intuitive user experience on your platform. Here are some of the important features for your online grocery platform:

• Intuitive user interface
• Easy sign-in and registration
• Seamless checkout 
• Multiple payment gateways
• Convenient product search
• Push notifications
• Multicurrency functionality
• Coupons, rewards, and loyalty programs
• Ratings and reviews 
• Order Scheduling

Know more about the features of an online grocery platform.

Step 5: Develop Your Own Online Grocery Platform/ Website

This is the most important step while starting your online grocery business. To establish your online grocery business in the market you need to develop an online grocery platform/website. You can develop your online grocery website/platform prominently in two ways: 

Development From Scratch: Custom development involves hiring a team of experienced web developers and designers. These skilled experts will create your online grocery platform from scratch that meets your requirements. This development approach requires significant time and investment. 

Choosing a Ready-made Software: An efficient alternative is to use pre-built software designed for online grocery businesses. This software solution comes pre-integrated with all the essential functionalities required to launch and successfully run an online grocery business. This approach accelerates the launching process and reduces the development costs. A ready-made software reduces the time-to-market providing you a competitive advantage in the industry. This is a fairly cost-effective option than opting for custom development. 

Growcer is one such popular ready-made software available in the market. It is a cost-effective and streamlined solution for entrepreneurs. This software offers a comprehensive suite of features specifically designed for online grocery businesses. Mentioned below are some of the features and benefits Yo!Growcer offers:

For Admin

• Auto Order Completion
• Delivery Management
• Product Catalogue System
• Commission Management
• Advanced Reports And Statistics
• Tax Management
• Admin Dashboard

For Buyers

• PickUp Management
• Single Item Cancellation
• Auto-detect User Location
• Guest User Checkout
• Order Tracking
• Multicurrency
• PWA
• Intuitive Mobile App

For Sellers

• Delivery Management
• PickUp Management
• Vendor Dashboard
• Reports
• Order Cancellation Requests Management
• Order Refund Requests Management
• Banner Ads

For Delivery Staff

• Define Radius
• Accept or Reject the Order
• Click and Call to Sellers and Buyers
• Route Navigation to Sellers’ and Buyers’ Location
• Convenience of Operating
• Order Cancellation at any time
• Push Notifications

Other Benefits Include

• White-Label
• Lifetime Ownership
• Customizable and Scalable
• Advanced Mobile Apps
• In-Built Marketing Features
• Pre-Integrated APIs 
• Free Customer Support For One Year
• No Recurring Charges
• GDPR compliance

Growcer is a ready-to-deploy software solution that allows you to start your online grocery business quickly and effortlessly, minimizing any technical hurdles and maximizing your focus on your business growth. 

Step 6: Launch and Market Your Online Grocery Business 

Now the final step is to launch your online grocery platform/website in the industry and make your target market aware of your business. For this, you need to effectively market your online grocery business. Following are the marketing strategies that you can utilize to promote your online grocery business:

• Social Media: Build the hype about your business on social media across various platforms like Instagram, Facebook, and others.
• Email Marketing: Launch an email campaign to promote your business.
• Ongoing Marketing: Utilize digital marketing strategies such as SEO, content marketing, and paid advertising to drive traffic and increase visibility.
• Customer Feedback: Gather and analyze customer feedback to continuously improve your services and platform.

Final Thoughts

The online grocery business presents a promising opportunity for entrepreneurs willing to embrace innovation and adapt to consumer trends. By following the steps outlined above, you can successfully navigate the complexities of starting an online grocery business and position yourself for growth in this expanding market. Whether you opt for custom development or choose a readymade solution like Growcer, the key to success lies in understanding market needs, implementing effective strategies, and delivering exceptional customer experiences. Embark on this journey with confidence, and you may find yourself at the forefront of a thriving and profitable industry.