Online Grocery Business – Challenges And Solutions

• Sasi George
• May 20, 2021

Online grocery business is deemed attractive, profitable, and a lucrative venture in any corner of the world.

Therefore successful conglomerates having business interests in multiple sectors choose to launch grocery delivery solutions and foray into the ecommerce landscape.

The Indian grocery market is worth $850 billion (January 2021), with groceries grabbing 65% of the overall retail share. The unorganized corner shops or also called “Kirana Shops” control 90% of the Indian grocery market as they provide affordable, personalized and localized service to clients.

The Tata Group’s enthusiasm, fueled by the success of online businesses, has given rise to the development of a super-app to support their wide-ranging portfolio across other domains. They have major plans for the ecommerce sector that is currently dominated by Amazon and Flipkart (Walmart), while JioMart (Reliance Industries) continue to broaden their horizon.

Table of Contents

• Top Online Grocery Businesses
• Online Grocery Business Dilemmas & Solutions
  • Complex Product Catalog
  • Data Utilization
  • Buyer Habits
  • Consumer Loyalty
  • Poor Margins
  • Unprofessional Delivery
  • Inventory Management
  • Storage and Delivery Expenses
• Takeaway Thoughts – Online Grocery Business

Top Online Grocery Businesses

Grofers, Amazon, JioMart, Swiggy’s Instamart, and Flipkart are among the top contenders in the grocery delivery realm that BigBasket is a part of. By 2025, the online grocery industry is projected to touch 3% of the overall grocery market that prides itself with a market value of $24 billion.

The competition regulator has nodded affirmatively in support of the Tata group’s stake in BigBasket (one of the leading online food portals) worth $1.2 billion. This gives BigBasket a $1.8 billion post-money valuation. Tata digital is also culminating a deal to purchase a lion’s share in the online pharmacy player 1mg.

Covid-19 pandemic has brought about the success of e-grocery, which can be classified as a critical goods supply ecommerce segment. The pandemic created a paradigm shift in people’s habits as now scores of them prefer to shop online from the convenience of their homes.

Online Grocery Business Dilemmas & Solutions

Complex Product Catalog

Shoppers don’t enjoy a hard to perceive and complicated product catalog when it comes to online shopping. Time shortage, over-load of unwanted information, data restrictions, stress, and poor communication can sometimes infuriate and cause a user to exit a confusing site.

It is imperative to utilize a logical and clear structure while developing an online grocery store. The design needs to be simple and the user should be able to easily choose between categories, product-lines and sub-categories. Clients prefer websites that has better search functionality, is organized, lucid, and user-friendly website.

To overcome this predicament: Study competitor websites, research customer habits, check out products with highest sale, trending product categories, visualize site hierarchy, and conduct a keyword study to set up advanced search options.

Data Utilization

Data is the new oil for businesses. Grocery sellers can gather a lot of data. Not only should they ensure all the information is kept out of the hands of competitors but use it to develop their business and increase profits. Retailers using third-party marketplaces do not have control over this data. They cannot access it nor do they own it. This could hurt them on the long run.

Not all online grocery sellers have the resources, time, or technology to benefit from the data collated or to fathom client behavior. But if not inculcated, then consumers would have to put up with an archaic system that could lead to them leave such establishments and search of better shopping experience.

Solution

A data-driven and customized approach enables retailers to utilize consumers’ data and buying habits information to provide personalized shopping experience.

Online grocery stores can recommend goods based on previous shopping patterns and provide detailed/in depth information on goods that are being sold. Businesses could also provide necessary inputs to enhance new purchasing habits as per latest marketing trends.

Buyer Habits

There are some people who still prefer to shop for groceries from a brick and mortar shop even though there maybe innumerable online grocery stores offering ease of shopping and the convenience of online purchase. The choice of physically picking your own stuff – especially when you have time on your hands is cathartic, this is human mentality.

Share of various goods in the online domain

Solution

Businesses can try and merge offline and online buying experience to a certain extent, as in:

• Consumer initially visits an offline store, but later order goods via online facility. The goods are then delivered to their location.
• Consumers check product details and availability online before visiting a physical store. There they confirm the quality and purchase goods.
• Clients place orders via online portals and goes personally to pick them up from a physical shop.
• Self-checkout stores using reliable technology helps consumers avoid long queues and finish buying quickly.

Consumer Loyalty

When it comes to talking about the challenges in the online grocery business realm, consumer loyalty is an important factor. Poor customer loyalty is an imperative factor in grocery business.

Consumers mostly prefer to purchase from regular spots and are emotional regarding such decisions. They will not change loyalties due to minor demeanors. But if there could be a probable cause for customers who walk away, then they will not return easily.

Solution

Create a reliable relationship with your consumers. Remember communication is the key. Have reliable methods of consumer redressal and ensure to take all complaints seriously and resolve them. Implement consumer loyalty programs to create connections with clients and get more clients onboard.

Concentrate on choosing and identifying the right target audience and making proper connection with them. Allure them and retain them with the right strategy.

There are several loyalty programs wherein the points garnered can be redeemed for goods and services from third parties in the form of discounts, cash back rewards, other wonderful offers, and encouraging membership.

Poor Margins

Consumers are not very keen on paying anything other than the bare minimum during grocery shopping. Any convenience fee or other charges to avail express / quick delivery could cause the downfall of an app. Taking care of this particular aspect can solve a lot of pain points for businesses and for consumers as well.

Online Sales Value & Forecast

Solution

One of the best possible solution’s to this pressing problem is to out-source this function. But many business owners consider the option of having an in-house work force to execute this functionality. But we have seen time and again that on the long run there are lots of unforeseeable issues that will crop up and could cause the downfall for your reputation / business.

It is really not worth investing in manpower and equipment to complete deliveries. It is better to leave this to a firm that has expertise in this line of business.

Unprofessional Delivery

Hassle-free delivery, well behaved delivery agents, wide ranging payment options and quality of goods are crucial factors that supplement a competent delivery system. Having a single delivery system does not do justice to hyperlocal multivendor services. These are times when the competition is trying to out-do each other.

Solution

The admin of online grocery stores should ensure that there is no delay in deliveries and the success rate of online grocery deliveries is maintained. Businesses should think of new avenues to enhance their presence using innovative strategies. Take a cue from Rappi the super app that has come with a new service at no added cost named as “Turbo” the 10 minute delivery service. This is their latest push to grab a large market share by setting up ghost stores all over the city to enhance delivery.

Payment Methods

Inventory Management

Inventory management is not an easy job. Sometimes automated systems can fail. An online grocery store app that often fails to provide correct results could cause the downfall of businesses. The issues that you could encounter could be goods not available when needed, expired goods, lack of products’ quantities, old rates, not enough information on products, alternatives, etc.

Solution

This issue can be resolved by imbibing the correct strategy. Solve this issue by having a recurring inventory handling schedule or go ahead and integrate an automated inventory handling system within the app to ensure success.

Ensure to have an able inventory management system. Having a great grocery shopping app entails you handle the inventory in the background for the products being offered.

Storage and Delivery Expenses

Storing and delivering perishable goods to consumers is also responsible for some critical online grocery business challenges. Perishable goods need higher investments in infrastructure for storage and delivery. Special delivery containers, augmented warehouses, and special delivery vehicles can ensure delivery of fresh perishable goods. This could increase capital costs and investment.

Solution

Just-in-time supply system in combination with top notch grocery inventory management API can optimize inventory expenditure. Partnering with proficient and experienced delivery service providers with the right kind of equipment can satisfy clients. It is imperative to use the right equipment and vehicles for such operations.

Takeaway Thoughts – Online Grocery Business

Grocery has lower online penetration compared to clothing and electronic gadgets. The COVID-19 pandemic has changed the equation by enhancing the segment significantly. The gross merchandise value (GMV) in 2019 was $1.9 billion while in 2020 that has increased to $3.3 billion. Businesses constantly endeavor to onboard more customers online and expand the segment.

Grocery-related online searches saw a growth of 184% till Feb 2021, which proves that the online grocery business is developing gradually. With the development of this sector, many challenges have also have come up. The booming online grocery segment has several challenges and concerns due to new technology, costs, and demanding users.

The online grocery sector experienced a massive increase in earnings from $1.6 billion in August 2020 to $8.2 billion in January 2021.

Grocery is a vital requirement for us all. Due to time constraints, people prefer online shopping and the pandemic is equally responsible for this shift. Therefore online grocery business provides the right dynamics for the current scenario.

Find pragmatic, people-friendly and technologically strong solutions to fix the issues of your grocery app after every stage. Check the challenges and overcome them if you want to grow your online grocery business.

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Offshoring During COVID Times To Keep Your Business Rolling

• Post author:Offshoring is the process of getting your work done in another country. Essentially, this model increases your output, enhances your working hours and improves your technical expertise.

Other than being located geographically far away, it’s pretty much similar to hiring locally. The process and cost of recruiting and paying staff is quicker and much lower. Even expanding your offshore team can be done easily and within reasonable time as compared to doing it in-house.

With offshoring, the administration, payroll, recruitment, accommodation, insurance, except final decisions is handled by the offshoring team.

What is Offshoring?

This sort of business process outsourcing is not a new fad; globalized companies have been utilizing this process of business work style for decades. With the introduction of high speed communication, better internet connectivity, and advancement in communication technology, offshoring has become an activity that is handy and an excellent tool for businesses.

Especially now during COVID times, offshoring is a good respite to continue business without too much hiccup.

Countries Reputed For Offshoring

India remains the leading country to outsource. There are 14 super cities listed by experts that have an enviable reputation for offshoring. These cities pride themselves as possessing top talents specialized in IT and software development.

India is the 3rd largest economy after US and China in terms of purchasing power party (PPP) and 10th in terms of nominal GDP. India has moved up prodigiously in the World Bank’s ease of doing business ranking due to multiple economic reforms.

Huge youth population, high literacy rate, amazing English proficiency and government aid supports offshoring activities further.

Philippines is another popular outsourcing destination and holds the title ‘The BPO Capital of the World’. Being a former colony of Spain and the US helped them achieve cultural compatibility with the West. The country specializes in voice and non-voice-related outsourcing customer service roles like call-center or IT support.

To encourage this industry the Philippines government supports foreign investors to set up BPO companies in the country by providing incentives such as tax holidays, tax-free importation of equipment, and visa assistance.

One another region gaining traction in the off shoring front is Eastern Europe and in particular Ukraine. The country has been continuously receiving recognition from various institutions such as the Global Sourcing Association (GSA) in the UK, IAOP, and A. T Kearney. IT offshoring in expected to rise at the backdrop of COVID as developed countries look to offshore major activities so as not to lose pace which pandemic induced.

Types Of Offshoring

Production Offshoring

When a company establishes its manufacturing unit in a different country, to import the finished goods for selling it in the domestic market, it is termed as production offshoring.

Services Offshoring

A company looking for service offshoring sets up units in other countries to carry out service-related operations such as customer care, information technology, marketing, human resource, accounting, sales and more.

Benefits of Offshoring:

Today one of the main reasons companies look at offshoring isn’t cost alone, but availability of requisite man power. There are other benefits to offshoring and it isn’t limited to just reducing expenditure (as stated below).

Cost Reduction

One of the most crucial benefits of offshoring is cutting down labor cost and other operating expenses.

Cheap and Skilled Workforce

Offshoring provides competent and cost-efficient labor eager to prove itself in a developing nation.

Complete Assistance

The offshore team holds expertise in its field and will provide relevant solutions for issues related to offshored requirements.

Better Control

A company can ensure appropriate management and regulation of all its operations via offshoring.

Core Business

A firm that offshores its secondary services can now focus more on its core functions.

24/7 Operations

A company has a great advantage of carrying out 24/7 service which would otherwise not be difficult in their own home country.

Risk Mitigation

Offshoring business operations reduces risk of failure, as there are several options available.

Streamline Process

You are assured of a dedicated team that would be working on offshored services to complete the assignment efficiently, effectively and in time.

Tax and Other Benefits

Many developing countries provide various types of incentives like tax benefits, tax holidays, economic zones, necessary infrastructure to attract companies for foreign direct investment.

Offshoring Disadvantages

Offshoring is also a challenge if not handled in the right perspective.

While relocating business operations or utilizing offshoring to carry out necessary activities in a different country, firms should not overlook certain drawbacks or hurdles that could hamper future operations:

Language Barrier

Firms foraying into developing nations for relocating business processes could find language an irritating problem to overcome.

Communication Barrier

Difference in language, lingo, customs, slangs and comprehension, that organizations fail to realize at an early stage could curtail effective communication with the offshoring team.

Long Distance Locations

If the offshoring units are located in far off regions then it becomes difficult for the management to visit them often to get to know the ground realities.

Ethical Issues

If the firm pays low remuneration to the offshoring team or in any case if the facilities are run short of basic requirements, it could lead to ethical problems and negative brand image.

Socio-Cultural Problems

A company offshoring to another country needs to acquaint itself with the cultural and social environment or could encounter socio-cultural issues.

Geographical or Political Unrest

Geographical or political problems like riots, protest, shutdowns, political instability, etc. may prevail in the region where the company sets its offshoring which could affect productivity.

Process for successful Offshoring

Security and Safety Issues

A company’s offshoring unit could face threats of lockout and closure if the natives suspect that safety or security issues have not be handled in a correct manner.

Check-list To Select Offshoring partners

As the world continues to be in the throes of the pandemic that is disrupting scores of businesses all over the world, it undeniably opens up new avenues to conduct business – such as offshoring. This also creates new horizons for the technology sector.

Companies recognize that remote workers can be as efficient as the on-site ones so they turn to offshoring with more confidence.

Factors to be considered while selecting an offshoring partner:

1. Staff having strong educational background
2. A region with a stable economy
3. Good English proficiency
4. Cutting-edge technologies
5. Variety of outsourcing services inculcated
6. Smart and effective work environment
7. Minimal cultural gap
8. Acceptable time difference
9. High-security standards
10. Optimal pricing

Conclusion    

Why companies use offshoring is clear. However, the benefits – real and tangible business advantages of offshoring is worth considering even if there could be few negatives.

Offshoring is an extension of an idea when you have access to skilled developers whom you can easily find and afford, but just happen to live on another continent maybe. Scaling up a company is never as easy as it sounds.

Taking on new employees, especially skilled ones is a huge investment and presents a significant financial risk. Combined with lower costs and other advantages the idea of offshoring is a no-brainer.

Recruiting skilled employees requires expertise and time, but where there is an accessible pool of talent and manpower tailor made for your requirements, companies prefer offshoring which is not surprising at all.