Updated: Aug 30, 2022
More and more people are shifting to online shopping to fulfil their needs. So it doesn’t come as a surprise that groceries and household items, which are a constant part of everybody’s lives, would also shift to the online sphere.
A large potential market and the success of several startups in the grocery delivery industry, such as InstaCart, have spurred entrepreneurs and business owners to join the mix. This article serves as a blueprint for building a grocery delivery application highlighting all the challenges and opportunities this innovation brings.
The Business Model
How It Works
An online grocery delivery system may be Single or Multi-Vendor. For the purposes of this article, we will be focusing on a Multi-Vendor Platform.
This sort of system follows a simple five-step process that enables customers to buy and receive their desired grocery products at the push of a button.
Customers log onto the app and place an order.
The concerned Merchant receives the order and begins packing it up.
Once the order is ready, the Merchant notifies a nearby Courier to pick up the order.
The Courier picks up the order and completes the delivery.
After the Customer has received the order, the payment is made (manually by the Customer or deducted in-app from a linked account).
How It Makes Money
Coming to the revenue streams for such a business, there are primarily three:
The platform service provider charges a portion of the Merchant’s revenue on each sale made through the platform.
Delivery Service Charges
Delivery charges are added to the Customers’ orders based on the delivery distances, traffic environment and general demand conditions.
The platform allows Merchants & other businesses to promote their products on the platform for enhanced visibility and outreach; it charges advertising fees for this service.
Before we jump into technicalities, it is best to ensure that you have analyzed your needs in conjunction with the market and validated your idea. Some things to consider are:
It is vital to segment your market and make sure you are focused on the right audience. You need to have a strategy in place, ready to execute.
User Interface & Experience
Consumer-facing applications are especially vulnerable to customer churn because of overly complex interfaces and designs. It is essential that the applications are designed with the needs and sensibilities of the users in mind to ensure a smooth customer experience.
With many system elements, a grocery delivery application that deals with Customers, Merchants, Vendors and Admins have to be robust and scalable. You can’t have the system breakdown when the User is in the middle of shopping.
As discussed in the previous section, a Grocery Delivery Application has four kinds of users that interact with each other and the system.
These four users: Customers, Merchants, Vendors and an Admin require four separate applications that come together to make a single whole.
Some key features need to be implemented for these apps, without which the system would not work. These include but are not limited to:
OnBoarding & Profile Management
Customers should be able to sign up and sign in to the application by providing their personal details. After that, they could customize their profiles by providing additional details. This process is further simplified by allowing customers to link their social network profiles like Google & Facebook to the application.
After the Customer’s Account is set up, they can browse the catalogues of the listed Merchants and their products. Alternatively, they could search for specific products or merchants and refine their search results using multiple filters.
Order Placement & Tracking
The Customer may add their desired products to their cart and checkout when necessary. This process must be smooth and secure to ensure maximum conversions and avoid cart abandonment. Once the order is placed, the customer can track it throughout the delivery process.
The app should support multiple payment options, including online payments by debit/credit card or cash on delivery (COD) to customers.
Notifying customers regarding their orders (status, reception intimations, etc.) and sending them personalized suggestions or promotions can help you build a loyal customer base that loves to use your product.
Reviews & Ratings
Any service provider cannot function without appropriate feedback, and the customer application must ensure this by allowing them to provide product/merchant reviews and rate their shopping experience.
Custom Delivery Options
Users could also opt to pick up items themselves or make custom pickup and drop-off points to deliver small packages allowing a flexible shopping experience.
Onboarding & Profile Management
Couriers could sign up and sign in to the application the same way as customers by providing their personal and vehicle details.
The application should allow Couriers to view serviceable orders in a given radius as well as the option for accepting or rejecting delivery requests. Once a courier is selected for a job, they could be notified regarding all aspects of the order. Additionally, providing couriers to view their delivery history and upcoming deliveries in case of multiple orders would greatly aid them in managing their jobs.
An earnings screen where couriers can go and track their financial history is also a must-have feature.
Merchant Admin Panel
Onboarding & Profile Management
In the same way as Customers and Couriers, the Merchant should be able to build and manage their profile as desired.
All aspects of the Merchant’s catalogue should be available, including the ability to add, remove or edit any product and/or category they wish. The option to add or remove discounts on specific products or categories would also be great.
The Merchant should also be able to manage the different aspects of customer orders, including upcoming orders’ details, courier details, delivery options, order status, etc. This is an essential part of their business, and they should be able to go about it without a hitch.
Payments & Earnings Reports
Making money is the goal of any business. As the name suggests, the ability to view their earnings and payments history is a central part of the Merchant’s panel.
The application should also notify the merchant regarding any and all essential business processes through system notifications.
Super Admin Panel
Analytics & Reporting
The Admin should be able to see all the main stats on their dashboard like total orders, a number of accepted orders, cancelled orders, the number of orders by week/day/month, earnings by week/day/month and total revenue, etc.
Onboarding of Merchants & Couriers
The Admin should also be able to generate pin codes for merchant signup and approve drivers' signup requests after completing the required due diligence.
Manage Merchants & Couriers
All properties of Merchants and Couriers should be available to the admin to view, add or remove from the system, allowing end-to-end control over all stakeholders.
The Admin should be able to configure the payout cycles, after which users' credit cards will be charged and manage courier and merchant payments.
The panel should be smart enough to allow the Admin to configure their business process like adding and editing delivery charges, commissions on orders, service charges etc.
Because such a system is sure to experience large amounts of traffic and user activity, an effective tech stack is necessary for its structural stability. The selected technology must foster scalability and boost performance while ensuring efficient load management and consistent technical compatibility. We here at On-Demand Startup have curated the best tech to allow your business to grow without you worrying about something breaking in the process.
NodeJS, MongoDB, Redis
Amazon Web Services
Depending on the features you are willing to add to your application, you can end up with a hefty bill at the end of the night. The costs for the discovery, planning, design, development, deployment and maintenance of a custom application may fall anywhere between $30,000 to $70,000 or maybe even more
That doesn't seem feasible for someone venturing into a competitive industry. Our turnkey solution customized to your business needs would be a better option with a much smaller price tag of $15,000 and an accelerated development period.
It may seem simple enough, but building and running an online grocery delivery business is no easy task. Market challenges, consumer behaviour and technical complexity, must be addressed when embarking on such a project. However, if you have a strategy in place and can procure the technical expertise, it is certainly a lucrative endeavour.
Now that you have a strong understanding of what it takes to build a grocery delivery application let me introduce you to our services. With 15+ years of experience in the software industry, we can help you bring your vision to reality. With an off-the-shelf configurable grocery delivery application, we can help you get to market in a quarter of the time it would usually take without breaking the bank and ensure your competitive advantage. Book a consultation now and allow us to build your online delivery system!