Online grocery shopping business idea

Online Grocery Shopping: The next big thing in the Middle East

Everyone wants to be an entrepreneur, wants to live with freedom and want to be own boss.

But a successful business idea starts from identifying a problem that can transform the lives of million. One has to keep working and fine tuning an idea that it become adaptable to the masses.

Lines between the physical and digital worlds are blurring.

Consumers are no longer buying completely online or offline, rather they are adopting the blended approach that suits them best. So, if you are looking for next big idea so here is the tip for you.

Online Grocery shopping: the next big thing in the Middle East. There are plenty of reasons to prove that the potential for this market is pretty high and above all the market online grocery is not saturated.

INTERNATIONAL  LANDSCAPE

Online grocery shopping is particularly popular in Asia-pacific.

According to Nielsen’s E-commerce and retail survey of Q3, 2014, 37% of the respondent said they are using order online for ‘delivery to home’. Whereas, 53% said that they are willing to use it in future.

While in the U.S, the online grocery trend is picking up the momentum to the next level. Recently Amazon, an online retail giant has expanded its online grocery subsidiary Amazon fresh in UK.

Another retail giant Walmart has also bought jet.com reportedly for whopping 3.3 billion dollars. Indeed a wise move towards the constant connectivity and the potential that they foresee in the online retail space.

If we look at the Indian online grocery market, which is growing fast and leading to a rise of middle-class consumers with disposable income.

Online grocery retailer such as bigbasket.com that has raised $246.76 million including $150 million recent funding from UAE based The Abraaj Group. One more noticeable player is Grofers, who has till date raised $165.5 million in funding.

MIDDLE EAST LANDSCAPE

Several online grocers already appeared on the radar in the Middle East such as El Grocerstrolley.ae, toDOORSTEP and many are still working under the hood, but it takes time for them to come into the limelight. As their main target market would be millennials (ages 21- 34) and generation Z (ages 15-20) as they are the most avid online shoppers and certainly this segment needs the awareness even though there are quite positive indications about e-commerce usage in coming days in the middle east.

And if we look at offline mode so there are couple of major players dominating the market along with thousands of small and medium-sized grocery retailers.

BRICK-AND-MORTAR vs. E-COMMERCE

As per the Google’s consumer barometer research 2014/15, respondents (41%) say in KSA that they buy products based on their past experiences whereas, the respondents (50%) respond the same in UAE.

Therefore, there is a huge room for the target audience that they can buy the products online. But there is a classification in the product that leads them to make choices between online or offline.

Stock-up items such as shampoo, dish wash, cosmetics have high affinity to be bought online. Price points will also matter as customer compares different sites for the best price and deals.

However, perishable products are the main concern for any customer as sensory feelings are required at the time of purchase. A Customer wants to touch, smell or see the product before purchasing. It includes frozen food, vegetables, fruits, meat etc.

online grocery shopping in uae

A Customer wants to touch, smell or see the product before purchasing. It includes frozen food, vegetables, fruits, meat etc.

How to start your business?

By understanding the market dynamics..

Do you know what drives the customer to buy grocery online and what stops them to opt for brick-and-mortars?

  1. Price points

Undoubtedly price is the paramount of any business. Other factors such as user experience on your site and quality of the products and service will decide where you stay in consumers’ mind.

  1. Product Selection

Perishable products such as meat, fish, poultry that are subject to decay or spoilage that customers want to touch, smell or see before purchasing. This product category is a big barrier enabler for customer to come to your online grocery store. It needs to be handled carefully by keeping in mind the full-service strategy that will help you to stay on top of your customers’ mind.

  1. Delivery time

Ordering and distribution management is a real challenging task. It can make or break your brand. Timely delivery of the orders could increase the trust factor in your customer’s mind.

When choosing a third-party distribution partner, all these factors should always remain in mind or you can also work out on other alternative options such as own fulfillment.

Certainly you have to make a business plan that includes all the aspects similar to any offline business model. Price and convenience would remain the prime reason to achieve success. But before jumping into this business, you have to clearly stand out with other online grocers and above all the traditional grocer. Customer would like to be convinced that why they should buy from you even though they have the freedom to buy it from the next door merchant. the initial margins are thin.

STRATEGIES FOR SUCCESS

Solid strategy should be in place to define your game plan.

Grass isn’t greener every time, as there several failure business stories available for online grocery shopping stores such as peppertap. They shut down their operations after raising $ 53 million in seed funding.

Above all, your core competition will be from the bricks-and-mortars and eventually you have to replace bricks with clicks.

People are adopting the online grocery shopping in the middle east

Online grocery shopping model is best for time-crunched consumers and provide an option of frictionless shopping.

You can start your business by partnering with any local grocers. Wherein, you will keep your focus on online and the other part of the business i.e. inventory can be easily managed with the help of your partner. But eventually you have to work on thin margins and customers will not be able to enjoy the big discounts.

To transfer big benefits to the customer, you should have our own inventory. By this, you can easily enjoy more margins and attract more customers on discounts.

GROWTH STRATEGY

You can start off your online grocery shopping business with one market or city, and gradually based on the trial and errors you can work out on the expansion strategy. Pricing will be the key factor that helps you to grow and give a reason to customers to come back.

As you know you need grocery items every month, and customer life cycle is short due to the frequency of purchase. This is your basic necessity and by keeping in mind you can also start a loyalty program, it encourages customers and give an additional reason to come to your store. This will also have an impact on retention strategy of the customer.

 

4 Comments

  • amber zara November 13, 2016 Reply

    If this will change for some thing in real, my biggest issue will be solved, as I am vegetarian and i am troubled with rotten vegetables on Sunday market, or the expensive and changing rates .

    • Omair A. November 27, 2016 Reply

      Hi Amber,

      Hope for the best 🙂

  • Ammar Yousef November 27, 2016 Reply

    Hi Omair,

    We are really glad that someone had picked on one of the most challenging topics. Online grocery has been a grave yard for a lot of startups .. the good thing is we are still alive and solving problems every day.

    Once again, thank you very much for your support and let us know if you need anymore help on online grocery topics.

    toDoorstep Team

    • Omair A. November 27, 2016 Reply

      Thanks Ammar, wish you tons of success in future 🙂

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