Next to the ride-hailing and food delivery apps, the grocery apps are on its way forward to revolutionize the on-demand industry due to the rising demand. People are finding it extremely convenient to purchase the needed groceries online rather than visiting grocery stores.
We have seen grocery stores deliver the list of items demanded by users upon request over a phone call. Times have changed, and the system has evolved to apps where users can choose the items themselves and place the order.
Businesses like Grofers, Instacart, Bigbasket, etc., understood these changing business trends and launched their own on-demand grocery delivery applications. You can also step in this sector by developing your app like these existing businesses.
Business Model: How these apps work?
- Users will navigate through the app and add the groceries they need to the cart.
- Once they add all needed groceries, they will proceed with check out, along with providing location details and pays through the available payment mode.
- The orders will be sent to shoppers, and they will start collecting the items mentioned in the orders.
- Shoppers pay the grocery stores through the prepaid debit card provided by the grocery app business.
- Shoppers then deliver the collected groceries to the location specified by the users.
This is how a grocery delivery business functions and you can modify it to an extent to suit your business idea.
Revenue Model: Ways to monetize grocery delivery apps
Delivery fee
You can collect delivery fees from users who place their orders through your app. You can pay a part of the delivery fee to shoppers and keep the rest as a charge for your grocery delivery service. The delivery fee can be calculated based on the percentage of the order value placed by the users.
Membership fee
Offer monthly or yearly membership programmes for users to opt for free delivery throughout the membership period. You can collect a standard subscription fee for the same.
For instance, Instacart offers its annual membership programme under the name ‘Instacart Express’ where the users will have to pay a subscription fee of $99 (approx.).
Markup prices
Grocery stores listed on your application will offer their products for the same price as in-store prices. You can add a markup price to the actual price, which will be added to your revenue directly.
For instance, you can add a markup price of 10% percentage to the product listed on your app. Once users purchase it, they will pay the in-store price plus 10% markup price. The in-store price goes to the grocery stores, and the markup price is for you. You can use a part of this revenue to pay your shoppers who execute the delivery process.
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