In recent years, we have seen significant growth in on-demand delivery services. For every business, there is an alternative online app. On-demand grocery delivery apps also have a huge demand.
According to reports, the on-demand grocery delivery app market is expected to grow to $94 billion this year. The demand for grocery apps is increasing as they provide customers with a solution and ease.
Earlier, grocery items were considered easily perishable. We can’t follow the same delivery system as in eCommerce. Now, the scenario has changed. Businesses came up with various plans to tackle the issues. Companies have developed numerous business models that suit grocery delivery requirements.
The article discusses the successful on-demand grocery delivery app business models you should know about. Which models are the best? And which business is best if you are developing a grocery delivery app?
4 Successful On-demand Grocery Delivery App Business Models You Should Know About
We compiled the most popular business model lists to help you establish a successful business. Choosing the right model is a crucial step for your business as it decides the future of your business.
For instance, some business models need initial investment, while others need better management. Therefore, you have to decide on a business model according to your resources and requirements.
Inventory Business Model
According to the Inventory Business Model, customers place orders through the delivery application, which uses the platform’s own warehouse to store and deliver the goods. Bigbasket and Fresh are using the inventory model.
The model helps the e-grocery firm retain the product’s high quality. The inventory model has a lot of benefits and drawbacks. Look over the list below:
- Improve forecasting
- Reduce costs
- It is expensive for small businesses
- A complex management system
- It requires a warehouse and additional setup
Inventory models are considered expensive for startups. The supply chain and the warehouse need to be set up even before the platform is released. This model is best for business giants like big baskets. It’s more likely to suit them.
The Multi-Vendor Business Model focuses on partnerships with multiple local vendors. Once an order is placed, an internal team manages transportation, and the item is delivered with the site’s logo.
Amazon and Magento are the companies that follow the multi-vendor system. Multi-vendor businesses for grocery apps will enhance early delivery.
Below is the list of pros and cons :
- Faster go-to-market
- It ensures quality
- The model is cost-effective
- decreased procurement effort
- Networking with multiple vendors
- Security risk is involved
- Managing contracts with multiple vendors are complex
Multi-Vendor Business Model fits the business with strong local connections in the management system.
Shopping business model
The shopping business model for grocery apps is the most widely used business model. The shopping business model is based on partnerships with local traders and offline shops.
The main difference is that clients are not given the option to select the store. Order management, delivery, and transportation are handled internally.
Instant is a successful grocery delivery app based on shopping models. There are many reasons why the model is well-liked. The benefits and drawbacks of providing apps are listed below:
- Fast Delivery System
- Quality is maintained as groceries are directly delivered from the vendor
- It is a win-win situation for both the customer and the vendor
- Connecting and partnering with multiple vendors is complex
- The network is difficult to manage
- Security issues exist due to the complex network
Till now, no other model has been able to compete with the ease of the shopping model. It takes time to build connections and network with other vendors. It would help if you had strong control over the management system.
The hyperlocal business
The hyperlocal business strategy links clients and nearby offline retailers. The hyperlocal model’s unique selling point is that it offers quick delivery. People receive fresh, wholesome groceries thanks to instant delivery. Below is a list of advantages and disadvantages of the hyperlocal model :
Below is the list of advantages and disadvantages :
- Efficient and effortless for suppliers
- Ensure fast delivery
- Ideal for the Grocery Market Palace
- Expansion is difficult in such models
- You have to pay an additional amount to the hyperlocal market
- Operations are irregular
Revenue Models for Grocery Delivering App
The primary goal of any firm is to make money. And when it comes to online shopping apps, there are numerous ways to earn revenue. Regardless of the model you pick, you can monetize the services in any of the following ways:
As we can see, most models are based on the patents associated with vendors. Platforms typically charge a percentage of the profit earned by vendors. You can think of it as a fee to bring the customer.
Subscription models are similar to online streaming platforms like Netflix and Amazon. In this model, people purchase a subscription to get a discount on their daily purchases. For instance, the weekly supply of fruits, the monthly supply of snacks, and daily milk/bread purchases.
Platforms charge extra fees to vendors who are not subscribed to a monthly subscription. This encourages subscriptions. If not, then you will earn an extra penny for every purchase.
How to choose the right business model?
As we can see, most business models need a strong network to start. Before starting a business, you should have a proper plan and strategy to execute. Consider the following points before starting Grocery Delivery System Development :
Consider your customer’s needs
The foundation of business is the customer’s needs. Firstly, focus on the customer’s pain point.
Research the market and competitors
The next step is to find the market size. Know the demand, revenue, and growth of grocery app development. To perform the extensive data, find out more about your competitors.
Learn about your resources and funds
Know exactly where you stand. What are the requirements? What are your funds? Are they enough to fuel business initially?
Consider multiple revenue streams
The last step is to find how you will monetize your business. Consider multiple revenue streams in the early days.
Consider all these factors and then go which model suits you the best. You can even consider multiple business models depending on the circumstances.