The global food & grocery retail market size was valued at $11.7 trillion in 2019, whereas, the global online grocery market in itself was valued at a whopping $189.81 billion. At the same time, smartphones are becoming inseparable parts of our lives; from booking movie tickets to streaming TV shows, smartphones have found their application in almost every facet of our life. And the same goes for purchasing groceries. 

People are increasingly using mobile applications like Instacart and FreshDirect to get on-demand groceries, thus, suppressing a great deal of brick and mortar grocery stores. 

Instacart-like on-demand grocery application is a lucrative business model that can provide you with an excellent return on investment. But before jumping straight into business, it is crucial to address other factors such as market, competition, business model, and of course, the cost of development. 

Here is a detailed guide to getting an on-demand grocery application for your business. 

How does an On-Demand Grocery App Work?

Firstly, you’ll need to choose a business model. For instance, Instacart works on a pickup and delivery service model. Customers can choose the desired grocery products from their favorite grocery store, and an Instacart rider picks those items and delivers them at the doorstep of the customer at a certain specified time. The same model is followed by other applications like FreshDirect and Shiplt. 

There is another Walmart-like model, which can come in handy if you already have a brick and mortar grocery store. You can simply bridge the gap between online and offline shopping by allowing your customers to place orders from an application. Once the order is received, you deliver the items at the customers’ address.

The benefit of the Instacart model over the Walmart model is the choice you provide to your customers. They can order from the local store they trust the most instead of being restricted to order from only one outlet.  

Customer Segments or Client Groups

To stay on top of its service, Instacart works in a collaborative manner with three customer segments: consumers, shoppers, and stores. And to ensure synergy and synchronization between these parties, you will need to define and provide the right incentives. Let’s take a look at these client groups in detail.

Consumers: Consumers or customers are users of your app. They place the initial orders, and your goal is to provide them an app that offers seamless order and payment experience. You incentivize your customers by giving them a convenient way to purchase groceries, along with providing coupons and discounts. 

Shoppers: These include delivery agents or riders who receive the order, pick the required items, and deliver it to the desired consumer. Shoppers have a different app, which enables them to track order details and income. You can incentivize your shoppers by providing them flexible schedules, regular salaries, and incentives on working over-time or completing on-time deliveries. 

Stores: Stores are local outlets where your customers can place orders. You will need to establish partnerships with local retailers in your area and offer them benefits like brand visibility and additional income. 

Business Model: How can you make money, and how much?

A typical online on-demand grocery business can make money in the following ways:

1. The margin on prices for partner stores

2. Delivery fee for delivering orders

3. The membership fee for providing extra benefits

The next big question is: how much money can you make with a local grocery delivery app business? Well, there’s no specific answer to this question, and your earning potential depends on the pricing scheme and business model. 

Let’s discuss the business model of Instacart to better understand how much money you can make. For instance, Instacart is a free app with now fee or installation/registration/signup costs. And it is crucial to keep your app free of cost to attract more users. 

That being said, Instacart has three streams of income:

Price markup: The prices displayed on Instacart for specific stores are higher than what offered by the store. Instacart takes this margin as commission. 

Delivery charge: Instacart charges a delivery fee of $7.99 for two-hour delivery and $9.99 for one-hour delivery for orders under $35. For orders of $35 or more, the delivery fee reduces to $3.99 and %.99 respectively. 

Membership fee: Instacart offers an annual membership of $99, which can help you get rid of delivery fees. 

Another popular way to generate revenue from your grocery shopping app is by doing paid promotions. For example, Grubhub offers paid advertisements to restaurants to appear on the top of search results. Therefore, once you get a full-fledged delivery app, scaling and earning opportunities are endless. And in case you are doubtful of the ability to make money, keep in mind that Instacart is currently valued at $ 3.4 billion. 

How Much Does does it Cost to Develop a Grocery Delivery Application?

Similar to earning potential, there’s no specific amount of money required to develop a grocery delivery app. It depends on your business model, type of application, choice of platform, extensions, and required features. The costing also depends upon whether you hire in-house app developers or outsource it to expert mobile app development companies. When outsourcing, you can either choose a monthly subscription model or pay on a per-project basis. Let’s talk more about these factors in detail. 

Choice of the Platform

You can pick one or more of the following platforms to form your grocery delivery business: Android, iOS, and web. Choosing the right platform can be a crucial decision. While native iOS app development can provide you with better looks and performance, Android powers more than 60 percent of smartphones in the world, and not targeting Android users clearly means missing out on more than 50 percent of the customers. 

Contrarily, if you want to only target desktop users, you can also opt for web development. However, the best bet will be to go for cross-platform mobile app development, along with a similar website. This way, you’ll be able to target users on all platforms. 

Features

The features you provide will play a critical role in determining the success of your grocery delivery app. You should keep in mind the features specific to consumes, shoppers, and stores/merchants. 

For Consumers:

1. Account registration

2. Multiple Payment Options

3. Discount Vouchers & Coupons

4. Delivery Tracking

5. Order History

6. Help & Customer Support

For Shoppers

1. Delivery Requests: accept & reject

2. Turn-by-turn Navigation

3. Delivery Time Slots

4. Earning & Reports

5. Delivery Time Slots

For Vendors

1. User Management

2. Driver Management

3. Order Management

4. Commission Management

5. Payment Management

You can get more creative and add features of your choice to provide a unique experience to your customers. 

Benefits of Having a Grocery Delivery App for your Business

The world is changing, and mobile services are coming to the mainstream. From shopping to lifestyle, people are increasingly using mobile applications to make their lives easier. And the same trend is being witnessed in grocery shopping as well, with more and more consumers shifting from brick and mortar stores to online alternatives like Instacart. 

Here’s how your business can benefit from launching a grocery delivery app

Digital shopping

With more than 96 percent of Americans shopping online, digital shopping is no longer an exception but a mainstream trend. Needless to say, sectors or companies that do not offer online shopping experiences already lack behind. While grocery stores are one of the late entrants into the field of digital shopping, they have significantly changed customer preferences, with Instacart, Amazon Fresh, and Walmart being the market leaders. 

Endless options

Most grocery apps that provide at-home delivery services primarily focus on individual stores. This restricts consumers to only one store, and they don’t get the option to choose the best deal. You can bridge this gap with an on-demand grocery app. Consumers can pick the store and items of their choice instead of forced to choose from what a single provider offers. This business model is easily scalable as all you need to do is establish a partnership with local stores and outlets. 

Delivering deals becomes easy

Having a grocery delivery app allows you to send the latest deals and offers to your customers via in-app alerts and notification, thus, eliminating the need for printing brochures or using other traditional, costlier marketing tactics. 

All-for-one functionality

With the help of a fully-featured mobile app, you can include various elements like sale notifications, coupons, shopping lists, automatic reminders, and more to provide a complete, seamless shopping experience. 

Multiple income streams

As discussed before, a full-fledged grocery delivery app enables you to make money from various methods. You can earn commission on every order, charge delivery fees, or provide annual subscriptions. Even when you are not selling anything, you can make money by promoting stores and outlets. 

Better relationships with customers

Digital communication enables you to engage with your customers directly. You can run surveys, contests, ask for their feedback, and more to improve user engagement. Furthermore, it helps you collect more data without being pushy or “salesy”. Collecting information directly from people enables you to make more informed business decisions and predictions. 

Final Word

With millions of consumers switching from visiting brick and mortar stores to purchasing grocery online, the future of grocery delivery business looks bright and promising. And while the market is getting more competitive, it is far from being saturated and still offers a lot of opportunities for new businesses and startups. 

Therefore, if you are looking for an app-development idea for your business or startup, on-demand grocery delivery could be the ideal pick. However, with so many features, demands, and market fluctuations coming into play, developing a local delivery app may seem like a challenging task. The key here is to find the right app development company that understands your needs and works in order to help you achieve your business objectives.