How To Build a Successful Grocery Delivery Business Plan in 9 Easy Steps?

The global grocery delivery services market is expected to grow revenue by over $630 billion by 2024. So, it’s the best time for you to start your own grocery delivery business.

The first thing that you need to focus on is preparing a perfect business plan for your business. But, it’s a very challenging task as you need to do proper market research, obtain funding, analyze your competitors, track what they are doing, perform legal formalities, and develop marketing strategies.

To help you with building your own grocery delivery business plan, we have important steps that you can consider.

Essential Steps To Make a Perfect Grocery Delivery Business Plan

Whether you are starting a grocery delivery business from scratch or planning to take your brick-and-mortar store online, all you need to do is create a business plan. Even if it is just a bunch of home delivery business ideas that you are exploring, you will need a strong plan for that.  So, let’s give a quick look at these mentioned steps.

1. Conduct Market Research

   Before starting a new grocery delivery business, the first step you should take is to analyze the current market scenario. Detailed marketing research will help you in many ways like:

   • You will get a better idea of current marketing needs
   • You will get to know the customer’s pain points and expectations
   • You can quickly make better decisions to include service offerings of what your competitors’ lack 

   With the increasing customer expectations, the demand for selling groceries and delivering them on time will increase. So, your target market should not be limited to just a few people or companies within your business location, but even households, restaurants, hotels, motels, fast food restaurants, assisted living homes, and camp houses.

   Plan quickly, deliver faster, delight customers and get home early.

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2. Obtain Funding To Get Started

   To start a food delivery business from scratch, it’s apparent that you need to spend some money.  In your grocery delivery business plan, you need to decide on appropriate planning for your finances. Generally, there are three costing parameters that you have to consider.

   Average startup cost

   The startup cost entirely depends on your business goals and objectives. Common startup costs include vehicle maintenance, employee’s salary, marketing strategy, and even setting up a new office or renting a grocery store.

   First, you need to decide on whether to include app development or not. 

   If you consider starting with a small grocery store without app development, the average cost will be around $1,500. On the other hand, the average cost of a grocery store with app development will be approximately $7,000.

   Full cost breakdown

   To start your own grocery delivery business, you need to keep in mind the following costing parameters:

   • Website/Email/Domain = $200-$300 
   • Business & legal formation = $500-$700
   • App Development (optional, depending on your service) = $2,000-$4,000
   • Reusable bags and sustainable measures: $700-$2,000

   Average labor costs

   If you plan to include shoppers in your grocery store, you need to consider their costs, including workers’ compensation. On average, it will cost $12-$15 per hour.

   So, if you are planning yearly, you should expect $99-$200 per person per year.

   It helps you to scale the revenue potential of the grocery delivery business quickly. Once expanded into more cities, revenue growth is accelerated rapidly.

   Let’s say you don’t have any funding on an initial level; you should apply for a bank loan or take a loan from your friends or family members. You have to visit a Small Business Administration (SBA) source and can help you qualify for the money you need.

   It will be tricky for you to search for customers that can easily cover all your expenses in the initial phase. So, you need to be ready to fill the gap to fulfill your budget criteria.

3. Identify Your Competitors

   The next thing that you have to concentrate on is searching for your competitors. You have to analyze what they are doing, which grocery delivery services they are offering, and what they do to include more customers in their business?

   When searching the list of competitors, you need to check for the factors that provide the best customer service. Generally, there are two types of competitors that you need to look out for:

   • The one that has been in the industry for a long time
   • The others that usually conduct their business and the results they have achieved over the years

   So, before starting your new business, you need to be very careful about identifying your competitors.

4. Decide for Franchise or Start from Scratch 

   For your delivery service business plan, you have to make a decision on whether you want to start your own business or need to go for a franchise.

   If you have the potential to easily maintain all your business operations, then going solo is the best option for you. On the other hand, if you do not want to undertake any risks and are not interested in dealing with the trial-and-error process, the franchise is a perfect choice.

5. Name Your Business

   The next essential thing that you need to work on is deciding the name of your grocery delivery business.

   Remember that the name must be catchy and something that makes your customers get attracted to use your delivery service by seeing your name. In addition, you must try to search for a business name having a common domain name on the website and isn’t similar to most businesses.

6. Perform the Legal Formalities

   To operate your business legally, the first thing that you need to perform is selecting the business entity.  Generally, there are four types of legal entities that you need to select as per your business needs:

   • Sole proprietorship: If you are completely ready to manage your business by yourself.
   • Partnership:  This suits you the best if you feel that you want to do a strong partnership with someone whom you trust more and who will help you to enhance your business.
   • Corporation: Two types of the corporation: S-Corp and C-Corp, both are intended to deal with more leg work.
   • Limited Liability Company (LLC): You can use it to grab the opportunity for protection against various business operations

   Now, whatever business structure you select, each comes up with its pros and cons, including liability exposure, costs, and administrative requirements.

   You need to take care of all the due diligence and laws for any business type you select. It entirely depends upon the state where your business locates as different states have different rules to follow.

   Along with the business structure, it is mandatory to have business insurance policies and a business bank account for your grocery delivery business.

7. Choose a Suitable Location For Your Business

   Now is the time to decide on the location of your business. 

   But trust me, it’s the most crucial decision you need to take as it affects your income, expenses, and even the company’s success and failures. You need to consider the following factors while selecting the business location:

   • The population and the working area must be large enough to support the business
   • The current scenario of the business economy
   • The overall impact that business influence the demographic factors
   • The value of your company in the competition

8. Hire Employees for Your Technical and Manpower Needs

   In the initial stage, you can efficiently start your grocery delivery business from your home. And once your business grows and you feel that your home is not sufficient to work as a business, you need to hire employees in your business. 

   But, once your business grows, it becomes quite challenging for you to handle multiple customers at a time. So, you need to include more employees in your business to make your work easier and smoother. 

9. Develop Marketing Strategies

   Now, it’s time to bring new customers to your business, and it is made possible by including marketing strategies in your business plan.

   To market your business effectively, word-of-mouth and customer referrals are the best options that help you enhance the traffic to your company. You can opt for marketing activities like:

   • Using social media platforms
   • Direct mail promotions
   • Print advertisement
   • Word-of-mouth
   • You can also use online marketing on leading sites like Facebook, Craigslist, Yelp, and even Angie’s List.

   The most crucial step to increase customers in your grocery delivery business is building a perfect marketing strategy.

Revenue Model For Your Online Grocery Delivery Business

A revenue model helps you in many ways to make your online grocery delivery business profitable and scale it. Please note that all these methods have their own set of advantages and conditions. 

So, let’s talk about revenue generation. The commission is by far the oldest and the most preferred revenue model for all marketplace owners. 

There are two key aspects that you need to be more reliable: one in creating a business plan and another in generating revenue models for your business. And we have highlighted both the points in a more detailed way. Still, if you have any questions about the same, just read the frequently asked questions in the next section.

Conclusion

Having perfect business planning is an essential aspect as it defines the clear way on how you are going to make your grocery business a great success. The steps mentioned in this article include all the essential metrics that are very important for your business, from conducting marketing research to developing marketing strategies.

Now, it’s high time to start and enhance your grocery delivery business productivity by including a grocery delivery app. This delivery app is beneficial to you, your customers, and even drivers. With the help of this app, the drivers deliver the groceries to the customers. But what happens when there is heavy traffic, diversions, and even other obstructions in their delivery route.

You need to include route planning and optimization software like Upper Route Planner that helps drivers quickly and safely deliver the groceries to the customers. This routing software easily tracks the driver’s status and provides proof of delivery on completing the delivery.