How To Start An Online Grocery Delivery Business In The UK

The UK is at the forefront of the global online grocery revolution, with the increasing consumer demand for convenience, variety, and instant delivery. 

Statista’s insightful data revealed that a compound annual growth rate of 7.11% is expected in the online grocery market from 2025 to 2030. This is anticipated to result in an estimated market volume of US$44.17 billion by 2030. Additionally, the number of users in the online grocery delivery market is continuously increasing and is expected to reach around 34.3 million by 2030.

These statistics are encouraging aspiring entrepreneurs to enter the online grocery delivery market. However, this online market in the UK is highly competitive, with established players dominating the market, making it difficult for new entrants to match their pace. 

How can an entrepreneur create a marketplace to compete in this industry? The answer lies in exploring a detailed step-by-step process on how to start an online grocery delivery business in the UK, covered in the blog. 

Additionally, the blog will help them gain insights into the benefits associated with the same. 

Benefits of Launching an Online Grocery Delivery Business in The UK?

The rise of online grocery delivery marketplaces has changed the face of the online shopping experience, making it a must-have for entrepreneurs. It offers benefits that meet the growing demands of end users, fuelling the future of this industry in the UK.

• Reaching new clients

Through an online grocery business, owners can reach clients who live in different regions and have diverse shopping habits.

• Doorstep Delivery and Convenience

Modern UK consumers, particularly working families and professionals, highly value convenience and time-saving solutions. The ability to order groceries from anywhere, at any time, and have them delivered to their doorstep is a powerful driver.

• Data-based Decisions

Once entrepreneurs start grocery delivery business, they can access invaluable data on customer preferences, purchasing behaviour, and market trends. This data can then be used to optimise the products and services offered and refine marketing strategies.

• Sustainability Focus

Growing consumer preference for eco-friendly packaging solutions and ethical sourcing presents an opportunity for businesses to differentiate themselves and build a strong brand image.

• High-End Security

Cyberattacks are common and are increasing day by day. A secure platform is what buyers often look for, guaranteeing customer data security and ensuring a safe and trustworthy shopping experience.  

Leading Online Grocery Delivery Business In The UK

The UK online grocery market is a dynamic arena with strong players. Analysing their strategies offers valuable blueprints for new entrants.  

1. Tesco:

It is one of the leading players in the online grocery delivery industry in the UK. The brand offers a wide range of products such as fresh produce, bakery products, pet products, household items, and more. It also provides convenient delivery options for buyers such as direct-to-door delivery and click and collect service.

Founded In: 1919

Founder: Jack Cohen

Total Revenue: £69.9 Billion

App Downloads: 10,000,000+ downloads

Monthly visitors: 27.24 Million  

How Tesco Makes Money:

Tesco earns revenue through loyalty programs, providing offers and discounts, and its very own Clubcard membership offering lower prices on the products for members as compared to average shoppers. Additionally, they focus on retail partnerships for generating revenue.  

Key Features:

• Various products are available on the website, such as groceries, household items, clothing, and more
• It offers a search bar making it easy for buyers to search items.
• Tesco has its own Clubcard membership for rewards and discounts
• Tesco offers multiple payment options for consumers

2. Sainsbury’s:

Another leading marketplace in the online grocery industry is Sainsbury’s. The company continually invests in its platform, including products and services, to meet the evolving needs of the online grocery shopping industry. Additionally, it offers same-day delivery for consumers’ convenience.

Founded In: 1869

Founder: John James; Mary Ann Sainsbury’s

Total Revenue: £32,238 Million

App Downloads: 1,000,000+ downloads

Monthly visitors: 19.2 Million  

How Sainsbury’s Makes Money: 

Sainsbury’s earns revenue mainly through paid advertising and direct sales, along with providing a loyalty program in the form of Nectar Card membership for consumers.  

Key Features:

• It offers product categories providing a range of organic and eco-friendly products
• Offers buyers to book a delivery option of their choice available only for a 4-hour flexible saver slots
• Sainsbury’s provides a Chop Chop app for 60-minute grocery delivery
• Overall the website is easy to navigate and has a user-friendly interface

3. Asda:

Among the top preferences for grocery delivery platforms is Asda. It is widely known for its affordable prices and extensive product range. It offers everything from fruits, vegetables, meat, pet food, and accessories, health and wellness products, and more.

Founded In: 1965

Founder: Noel Stockdale; Peter Asquith

Total Revenue: £5.o Billion

App Downloads: 5,000,000+ downloads

Monthly visitors: 31.23 Million  

How Asda Makes Money:

Asda’s revenue model is based on direct sales, retail partnerships, loyalty programs, and reward schemes.  

Key Features:

• It offers a mobile app which is compatible with iOS and Android devices.
• Offers home delivery and click-and-collect services to buyers.
• The website is user-friendly and easy to navigate.
• Provides regular promotions and price match guarantees

4. Ocado:

It is a pure-play online grocery business that has been on the rise over the past few years. Known for its efficient delivery system, it is celebrated for its fast delivery slots, real-time order tracking, and exceptional customer service.

Founded In: 2000

Founder: Jason Gissing; Jonathan Faiman

Total Revenue: £3.155 Million

App Downloads: 1,000,000+ downloads

Monthly visitors: 6.96 Million  

How Ocado Makes Money: 

Ocado’s revenue model focuses on earnings through retail partnerships, direct sales, and delivery service costs.  

Key Features:

• It provides delivery slot choices to customers.
• Mobile apps are available for its users.
• Offers their range of products such as food, drinks, beauty, household items, and more.
• Ocado offers a Smart Pass service allowing customers to save significantly on their favorite brands.

Roadmap To Start An Online Grocery Delivery Business In The UK

Business owners looking to enter the market may go through various challenges, making it unclear for them as to how they can proceed. The list below provides a helpful step-by-step guide that allows entrepreneurs to launch a marketplace easily. 

Step 1: Performing Market Research and Competitor Analysis

This foundational step is about understanding your target market and identifying your unique selling proposition (USP) to start grocery delivery business online.

• Define Your Niche: Decide whether to focus on hyper-local fresh produce, gourmet and specialty items, affordable everyday essentials, or perhaps cater to specific dietary needs (e.g., vegan, gluten-free)? A niche helps in targeted marketing and managing marketplace operations effectively.
• Identify Target Audience: Who are the ideal customers that are relevant for the online grocery business? Consider their demographics (age, income, location), psychographics (values, lifestyle), and existing shopping habits.
• Analyze Competition: Beyond the major players, research other online grocery businesses offering various features and functionalities to the users. Analyse their product ranges, pricing strategies, delivery models, customer service, and digital presence. What are their strengths to emulate, and more importantly, their weaknesses that can be targeted?
• Follow Legal and Regulatory Rules: Crucially, entrepreneurs must familiarise themselves with UK food safety and hygiene regulations and consumer protection laws. They must register the online grocery delivery business with the local authority’s environmental health department at least 28 days before commencing operations.

Step 2: Choosing a Business and Revenue Model

The online grocery business model and the right revenue strategy will define how the marketplace will function and generate income.

Business Models to Consider:

• Single-Vendor Model: As the business owner, can single-handedly source, stock, and sell all products directly to customers. It offers maximum control over inventory and quality but requires significant upfront investment or fees.
• Multi-Vendor Marketplace: Entrepreneurs can provide a platform where multiple local grocery stores or independent sellers can list their products, and as an admin, one can manage orders and deliveries. 
• Hyperlocal Delivery: Owners can go for selected regions, which means starting a grocery delivery business focusing on a small, defined geographical area for rapid deliveries, often partnering with local stores.
• Inventory-Based Model: The business owners/ admins opting for this model own and manage the inventory all by themselves. They can monitor the supply of goods, check which product is under process, and which ones are ready to be sold on the marketplace.
• Click and Collect/BOPIS: Click and collect or BOPIS model which stands for buy online pick up in store is a business model that entrepreneurs can deploy for providing convenience to customers.

Revenue Models to Consider:

• Delivery Fees: Admin can charge a standard charge per order from both buyer and driver on each delivery completed.
• Commission on Sales: This model allows entrepreneurs to charge a certain amount or percentage of the total amount of the sale from the vendors registered on the marketplace. 
• Subscription Plans: Using this model, entrepreneurs can charge certain fees (monthly or annual) from the sellers for listing their products or services  on the marketplace. 
• Advertising & Promotions: Entrepreneurs can charge sellers for the banner ad promotions, product promotions and more on their marketplace.

Step 3: Deciding on the Key Features

A successful online grocery platform is feature-rich, intuitive, and secure. Entrepreneurs can consider features such as:

For Admin:

• Auto order completion: Enterprises will be able to set the number of days towards automatically marking an order as completed.
• Delivery Management: Admins can manage deliveries by selecting from the two options available. They can either select to manually assign the order or broadcast it to the delivery staff.
• Product catalog: Entrepreneurs can use this feature to look after the proper management of products, categories, inventory, and more.
• Multiple Revenue Channels: Owners can opt for different methods of revenue, such as subscriptions, commissions, advertisements, and more.

For Vendors/Sellers:

• Vendor Dashboard: Admins get access to dashboards allowing them to set up and manage profiles, the number of orders, revenue earned, and more.
• Bulk Import/Export: Vendors/Sellers are provided with convenient import and export of large data files in CSV format, allowing for easy inventory management.
• Order Management: Entrepreneurs can easily view and manage seller-specific orders, including order status updates, refund requests, and adjustments.
• Delivery Slots Management: Sellers get an option to define delivery time slots for their respective marketplaces and product orders.

For Delivery Personnel:

• Dashboard: Delivery staff can get an overview of the assigned orders, earnings, and activities.
• Order Management: Allows the staff to accept/reject orders as per their schedule. The staff can also check the status of upcoming, active, and overdue deliveries.
• Route Navigation: GPS-enabled navigation to seller and buyer locations for order pickup and delivery.
• Push Notifications: Enables the staff to stay up-to-date on new order assignments and important information.

For Consumers:

• Multi-Cart Functionality: It allows buyers the freedom to buy from different stores in a single order with a single checkout. 
• Pick-up Management: Consumers can choose from pick-up in-store or schedule a delivery for their orders.
• Guest User Checkout: Online grocery delivery business software includes a feature allowing buyers to check in and check out as guests if unavailable to log in with an email.
• Multi-Currency: It allows entrepreneurs to establish marketplaces worldwide, making it easy for buyers to shop locally in their local currency.

Step 4: Selecting the Right Development Approach 

Choosing a development approach for the creation of the marketplace can take a considerable amount of time for owners, considering the complexities related to it. However, this important decision before launching an online grocery marketplace impacts your time to market, budget, and provides future scalability. Below are the two best options entrepreneurs can choose from.

• Custom Development:   In this development approach, a team of professional website developers and designers is either hired or outsourced by the entrepreneurs to build their marketplace from scratch. Building a marketplace from scratch allows owners to implement unique features tailored precisely to their vision. However, this is the most expensive and time-consuming route, with a development timeline of 6-12 months or more. This is best suited for large enterprises with highly specific, complex, and evolving requirements.
• Readymade Solution: Utilising a pre-built, grocery ordering and delivery software, a 100% white-label solution offers rapid deployment and significant cost savings. These solutions come with built-in features and functionalities for a smooth shopping experience. They often include ongoing support and updates. This approach is ideal for startups, SMEs, and individual owners who want to start grocery business online quickly without a massive upfront investment. Additionally, these software provide customization options to cater to the individual specifications of the owners. 

Online grocery ordering and delivery software like Growcer can help entrepreneurs looking for an easy and quick way to launch their marketplace.

Step 5: Launching and Promoting Your Business

Entrepreneurs, after selecting a development approach and creating a platform, are ready to show it to the world. Once the marketplace is launched and is visible, it is time to promote it. Opt for various promotion and marketing strategies as listed below.

Marketing Strategies:

• Keyword Optimization: Entrepreneurs can implement SEO services to optimise for keywords like “how to start an online grocery business,” “online grocery UK”. 
• Social Media Marketing: Use social media channels like Facebook and Instagram to share discounts and offers, product photos, and more to connect with audiences.
• Paid Advertising (Google Ads): Create engaging geo-targeted ads to reach customers in specific areas and drive high-quality paid traffic to the marketplace.
• E-mail Marketing: Build email lists and send newsletters, welcome series, and more to update customers about the products and services.
• Local SEO: Business owners must optimise for local searches if the marketplace is operating in a specific area.
• Content Marketing: Create blog posts on healthy eating, recipes, local produce, etc., to attract and engage the buyers with your marketplace.
• Partnerships: Collaborate with local producers, restaurants, or community groups.

Step 6: Monitoring Your Grocery Marketplace Performance

Continuous monitoring and analysis are among the most important steps to consider after entrepreneurs start grocery delivery business in the UK for continuous growth.

• Key Performance Indicators (KPIs): Track metrics like customer acquisition cost, customer lifetime value, average order value, delivery times, customer satisfaction, conversion rates, and repeat purchase rates.
• Customer Feedback: Actively check and respond to customer feedback through surveys, reviews, and direct communication.
• Operational Efficiency: Analyse delivery routes, picking times, and inventory turnover to identify areas for improvement.

How can Growcer Help in Launching a Grocery Business?

Growcer is an online ordering and delivery grocery eCommerce software, helping entrepreneurs create an online marketplace to suit the various needs of their clients. It comes with built-in features and functionalities to provide an end-to-end solution for your online grocery delivery business needs, accelerating the time-to-market.

Top Specifications Of Growcer:

• A 100% white-label software
• Self-hosted, Readymade software
• Customizable and scalable
• Caters to 10+ Niches and  5+ Business Models
• Offers a lifetime license
• Mobile apps for iOS and Android
• Pre-integrated payment API’s
• Complete source code ownership
• No recurring payments
• 6-12 months of free technical support (based on packages)
• Zero transaction fees
• System documentation provided
• SSL installation provided (free)
• Secure and GDPR compliant

Growcer’s Clientele Across the World:

Below are some of the entrepreneurs who have leveraged Growcer to launch their marketplaces successfully.

• Dhalmart

Country: USA

It is an all-in-one online grocery shopping marketplace based in the USA. Dhalmart uses the platform to cater to the various requirements of its users related to the marketplace. It includes features such as inventory management, delivery staff management, integrated payment APIs, and more. Additionally, they provide convenience to buyers and delivery staff via mobile applications. This marketplace caters to small businesses, cooks, farm sellers, and more.

• Go Baqala

Country: UAE

Based in Abu Dhabi, UAE, it is an online grocery ordering and delivery platform catering to the needs of the customers in the region. Go Baqala ensures a seamless shopping experience for its users using features like product catalog system, advanced reporting and statistics, commission management, order tracking, cart management and more. This allows them to offer high-quality grocery items and affordable grocery delivery services.

• Lokal Kart

Country: Philippines

It is an online grocery marketplace, located in the Philippines, offering groceries to consumers at their doorsteps. This marketplace works on a hyperlocal delivery business model, which helps them successfully connect local producers and farmers with buyers. Lokal Kart is functioning smoothly by incorporating features such as multiple payment options, diverse revenue streams, advanced analytics, and more.

Conclusion

The online grocery delivery market in the UK is in the race for continuous expansion, driven by evolving consumer behaviors and technological advancements. For entrepreneurs, startups, and local vendors, this presents a base ground to start grocery delivery business. The blogs covered the essential steps for entrepreneurs and business owners to study and understand the nuances of entering the online marketplace.  As the industry grows, business owners are rapidly switching to online software, especially readymade ones, in order to save time and provide convenience to the buyers. For these entrepreneurs, there are grocery eCommerce platforms like Growcer, built with features that provide a smooth shopping experience.

FAQ’s

Q: Can I start grocery delivery business in the UK without owning a physical store?

Ans: Yes. Many successful online grocery businesses operate without a traditional physical storefront, particularly pure-play online grocers like Ocado or those utilising a multi-vendor marketplace model. You would focus on efficient warehousing/inventory management and delivery logistics.

Q: Which business model is most suitable for a new online grocery startup in the UK?

Ans: For a new startup, a Multi-Vendor or a Hyperlocal business model is often recommended. The multi-vendor model reduces the inventory risk and expands product variety, while the hyperlocal model offers rapid delivery of orders to the buyers. Readymade solutions such as Growcer often support both. 

Q: What are the key technological considerations for building a scalable online grocery delivery business platform?

Ans: Key considerations include a strong backend infrastructure, secure payment gateway integrations, real-time inventory management, efficient order processing, optimised delivery management systems, and more for all users. Choosing a proven, readymade solution like Growcer can provide these features out of the box.

Q: How much does it cost to start grocery delivery business in the UK using Growcer?

Ans: The cost of building an online grocery marketplace using Growcer completely depends on the various business requirements of the entrepreneurs or local vendors and the level of customization they require. Compared to the cost that needs to be invested in a custom development, grocery delivery software such as Growcer is a cost-effective and time-saving readymade solution for launching a marketplace. Growcer offers multiple packages, however, owners can start by choosing a basic package starting at $499.