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How to Start an Online Grocery Store?

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Yuri Musienko
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In this article, you will learn about the key rules and features you need to know to open your online store. We will tell you about the laws and the choice of a niche, list wholesale suppliers, help you determine the corporate identity of the company and the best place for your storefront.

Studying profile laws

Jennifer Irvine, the owner of the online health food store Balance Box, recommends you to immediately contact Environmental Health Administration. Let them come, see everything and tell you what needs to be done in order to comply with the law. Sources: boemagazine.com, balancebox.com
Laws and regulations controlling online grocery stores vary by country (and state). For example, in the United States, you must comply with the Cottage Food Laws, which is the collective name for all regulations controlling the sale of food by delivery. Again, they may differ from state to state, but the main points are the same:
  • annual inspection of the premises by the health department;
  • zoning and related permits from local authorities;
  • correct storage of cold and dry food;
  • ban on the free movement of animals;
  • government business licenses.
If you are planning to open an online grocery store in the European Union, the rules will be slightly different there. They are indicated in the  Food Law General Principles.

Choosing a niche and trade list

JK Gourmet is a good example of a niche online store. It sells grain-free products for people who need help treating ulcerative colitis, a disease that affects 1.6 million Americans. Source: Facebook
In the case of grocery products, the choice of a niche and a specific range depends on the method of delivery, since in most countries there are special conditions for the transport and storage of perishable goods. These norms are enshrined in laws.

Therefore, when choosing a niche, you have two options:

  1. Sell, including perishable products, but only within your city (region). In this case, you will be limited in the choice of goods for sale, but you will be able to create your own delivery app like Deliveroo.
  2. Sell only products with a long shelf life: pasta, cereals, tea, coffee, canned food, jerky, dried fruits, dry biscuits, etc. This way you won't be limited to consumers in your city.
In the first case, your niche will be your city and its immediate surroundings, and therefore you will be forced to sell what the locals like. You can understand what exactly they like by studying the statistics of sales in local stores.

It will also be helpful to conduct a survey with local residents to find out their preferences for what products they would buy from a local online store. Perhaps this is how you can detect unfulfilled demand for some product groups. This often happens in small provincial towns, where people see something tasty on TV screens, but cannot find this product in their store. As a rule, these are foreign spices, sauces, fruits and vegetables.

If you focus on products with a long shelf life, your online grocery store's reach will increase, so you have the opportunity to find a narrower niche. Like did JK Gourmet, that only sells grain-free foods for people with ulcerative colitis.

There are several ways to find such a niche. For example, using Google Trends, which tracks the dynamics of Google searches by region. In addition, you can also search for products on SaleHoo Market Research Labs, Sell The Trend, Jungle Scout - sites that track the price, demand and competitiveness of individual products. And there also is the Amazon Best Sellers listing, which will tell you what foods are most often ordered on this online marketplace.

Choosing food suppliers

The Hudson Valley Harvest Food Supplier Labeling tells you everything the store and end customer need to know. A source: mfgtec.org

It is best if you buy food from local farmers, but this is not always possible, so you need to look for suppliers. This can be done at sites such as SaleHoo, Wholesale Central, Oberlo, Buyer Zone, Global Sources or Food Master if you plan to cook something for sale.

When analyzing a specific supplier, pay attention to its specialization, location, delivery time, product labeling and, most importantly, the presence of certificates, licenses and permits that confirm the quality, ethics and environmental friendliness of the goods (in the USA and EU, this is more important than low prices and delivery speed).

A good example of a supplier that fits all the requirements is Hudson Valley Harvest. They used to supply food to highly rated restaurants in New York, but now they also work with shops and delivers groceries to your home (minimum order - $ 750).

Here are 10 more wholesale food suppliers that might suit your online store:

Development of corporate design for the company

Name of store. At this stage, you should already have a clear understanding of what and to whom you will sell after you start your online store. Since this is the only way to come up with a name that will be:
  • It will be strange if you call your online store "Milk Shop" and sell meat or dried fruits.
  • The name does not have to have a wow effect, but it should be such that it can be easily remembered and repeated. For example, JamShop or JamBox if you will sell jam.
  • Easy to write. If your customers find it difficult to write the name of the store, they will not want to search for it on the Internet and recommend it to friends.
  • Almost everyone is familiar with the Uncle Ben’s brand. This name was made up in 1943, and then (and for the next 70 years) most people perceived it normally. Now the situation has changed and the brand wants to change its identity due to the racial connotation in the name.
Your brand color. Color in marketing is not just a characteristic of a light wave, but an emotion. Therefore, the colors chosen for website design and packaging will evoke certain feelings in people, and this should be used. So, by choosing the right color scheme, you will be hot and passionate, bold and inspiring, cool and innovative, natural and caring.

Surely, when you were reading these adjectives, you already imagined what colors would correspond to them. For example, red is passion, green is nature, yellow is fun, white is calm. Associations of adjectives with flowers arise on a subconscious level, and these associations are transferred to the product and to the brand, so all large companies spend millions of dollars on their selection.

Packaging and Description. Most stores send goods to customers in packaging from a supplier or manufacturer, or in ordinary cardboard boxes - this is a big mistake, since for 70% of consumers, product presentation is one of the most important factors when making a purchase decision. If the packaging is beautiful, environmentally friendly and relevant to the content, then such a product will be bought more often, and its seller will enjoy a greater loyalty.

Here are some good examples of food packaging:

Vegancuts: vegan snacks and eco-friendly cosmetics.

Mantry: handmade products for men.

HelloFresh: healthy recipes with pre-measured ingredients.

Candy Club: sets of sweets - from marmalade to sour straws and chocolate.

Packing rules. Food packaging must contain the following information under the laws of the United States of America:

  • names of products, their quantity and weight;
  • the name of your store and suppliers;
  • a complete list of products and ingredients from which they are made;
  • date of manufacture and expiry date.

Choosing an online grocery storefront

Marketplaces. You can sell groceries on Amazon, eBay, or any other major marketplace. This option is suitable for those who want to quickly start selling and do not want to worry about developing a website and attracting traffic to it. In addition, this way you can immediately arrange the delivery of goods to your home.

E-Commerce-platforms. Cloud services like Shopify and BigCommerce allow you to start your online store site without any technical skills - you just select a website template, customize it, and start selling. The service provider is responsible for maintaining the site and developing the template, while you will only deal with sales and marketing.

Development from scratch. The best option in the long term, since only the development of an online store from scratch allows you to create a unique design, implement any marketing ideas and leaves the copyright for all this to you. Suitable for large platforms and those who are ready to spend more time and money now, so that later they do not pay for subscriptions and commissions.

Organization of production process

Staff. In order to properly organize the workflow, you need people who will be engaged in specific activities: receiving orders, collecting goods in boxes (delivery boxes), delivering goods to the postal service and / or home, management and finance (you can give them to outsourcing).

Receiving orders. Ideally, you should have a system for managing and tracking business processes, which, among other things, will automatically accept requests from customers and send them to sorters and further along the chain. There are a huge number of such programs, and many of them are created specifically for online grocery stores and are available for small and medium-sized businesses. The price is usually not very high - from 5 to 1000 dollars per month.

Packaging of goods. A program that will help you with business processes can also analyze orders and stocks, and then give the sorters a sorting plan (what to collect in which packaging).

Delivery of goods. If you will only deliver products in your city, then it is better to organize your own delivery service. It is enough to hire several people and connect to a common system that will form a route, tell you when to pick up the goods, and track the location of couriers.

Payment. Couriers should be able to accept payment on the spot in cash (that is, they need a supply of small bills for change) or using online payments, for example, via Apple Pay, Google Pay or their local equivalent.

How to Start an Online Grocery Store? key takeaways:
  1. Studying profile laws
  2. Choosing a niche and trade list
  3. Choosing food suppliers
  4. Development of corporate design for the company
  5. Choosing an online grocery storefront
  6. Organization of production process
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