Starting An Online Grocery Delivery Marketplace: Business Models, Features, Challenges with Solutions

Enamored by technological advancements, old-fashioned commerce has transformed to eCommerce, garnering much attention in the grocery retail landscape. The convenience offered in this new age of digital is unparalleled and consumers are thoroughly enjoying it. In fact, numerous online grocery marketplaces are springing up where shopping online is the new norm and going outside to buy groceries is a thing of the past.

Grocery eCommerce Market Overview

The grocery eCommerce industry post-pandemic has managed to remain agile and has been experiencing significant growth. According to Statista, the grocery delivery industry is expected to display a compound annual growth (CAGR) of 12.74% between 2024 and 2028, resulting in a projected market volume of USD 1.271.00 Billion by 2028.

Another report by eMarketer states that digital grocery sales in the US will surpass apparel and accessories, accounting for 19.0% of US eCommerce sales in 2026.

Grocery shopping sales in the world


All of this highlights the impact of technological finesse and innovative solutions such as online grocery marketplaces, which have put the grocery eCommerce industry on an upward trajectory.

Market Leaders in the Online Grocery Industry

As discussed above, grocery retailing has been profoundly transformed with a rapid shift from traditional cart to the tap of the button. Adapting to this transformation, many players have risen to prominence in the online grocery industry. A few of them are mentioned below:

Popular Online Grocery Shopping Stores
  • AmazonFresh
  • Instacart
  • Shipt
  • FreshDirect
  • Peapod
  • Walmart
  • Kroger

Various Business Models for Starting an Online Grocery Marketplace

In order to meet the evolving needs of consumers, every online grocery marketplace uses a business model. A few of them are mentioned below:

Aggregator Model

In this model, companies partner with existing grocery stores or supermarkets to collect orders and then deliver them to the customers. This model is preferred by entrepreneurs as it reduces the cost of warehousing.

Store-pick up model

Consumers can order the grocery through the website and pick up the order from the store according to the preferred time. There is a scope for retailers to enter into the online-grocery space through click and collect model since it is less intimidating than door-to-door service.

Pure-Play and Warehouse-pick Model

This model is followed by those businesses that do not have a brick and mortar store, and neither work on the aggregator model. The grocery seller has to buy directly from the manufacturer or producer and store it in his warehouse.

Single Vendor Business Model

Using this business model, grocers can launch an online grocery store and exclusively sell their products to their target audience.

Multi-Vendor Business Model

This model facilitates seamless online grocery shopping by collaborating with multiple sellers and launching a multi-vendor marketplace.

Hyperlocal Business Model

This business model facilitates prompt delivery of grocery orders within a defined geographic area by basing a marketplace on a hyperlocal business model.

Build an Online Grocery Delivery Marketplace
Talk to Experts

Workflow of an Online Grocery Marketplace

Now that we have understood various business models, let us understand the workflow of an online grocery marketplace, which has three main users - the admin, the consumers, and the sellers.

  • The consumer registers on the online Grocery marketplace.
  • Selects the location where they want the groceries to be delivered.
  • Browse grocery items and add them to the cart.
  • Selects the payment method and the preferred date and time of delivery.
  • The seller receives the order. Post acceptance, the order is assigned to a delivery personnel.
  • Once the order is marked as completed, the seller will receive the payment, which will be transferred to their wallet after commission is deducted by the admin.
Multi-vendor grocery business model

Revenue Strategies for an Online Grocery Marketplace

For a business to sustain itself, revenue is important. In this section, we discuss the revenue strategies for an online grocery marketplace.

Commission : The first source for any marketplace owner is to collect commissions on each transaction. The commission rate can be finalized by the admin beforehand. When an order is placed, the amount is received by the admin after deducting the commission, the amount is sent to the seller.

Premium Membership : A membership plan can be offered to the seller who wants to list a certain number of products. Depending on the number of products listed, the amount will vary. Extra benefits may include - advertising their products on the homepage. Premium membership can also be availed by a buyer who wants quick delivery.

Advertising : Due to the hefty amount of traffic that a grocery marketplace experiences, a lot of brands would want to partner with it for advertising. Through display ads and PPC, the grocery shopping marketplace can enjoy a lot of revenue by redirecting the website traffic to relevant websites.

Subscription : This is another popular source of revenue generation where vendors are charged recurring fees by the admin to list, access and sell on the online grocery marketplace. The subscription can be monthly/annually. This particular revenue generating strategy is able to create predictable revenue streams and foster long-term relationships.

Essential Features of an Online Grocery Marketplace

Features are the backbone of an online grocery marketplace as they define its capabilities and competitiveness. Mentioned below are the essential features:

Cart Sharing & Multi-cart Checkout : The entrepreneur should understand that groceries are standard items that can be purchased by different people in a household. Cart sharing and multi-cart checkout gives the freedom to the customer to share the cart with loved ones and checkout together.

Delivery Scheduler : The website should allow customers to schedule the delivery of their groceries according to their time preference.

Repeat Order : The website should allow customers to repeat their orders in just one click so that they do not have to select the items again and again.

Catalog Management : There are several categories with base products and specifications. Make sure that the online marketplace platform that you choose has a catalog management feature.

Review and Rating : This feature can enable customers to leave reviews and ratings for the product they purchased.

Buy Online and pick up in store: - One of the immensely popular and fairly popular functionality of online grocery websites. The customer can order items online via the website and pick up the order from the store or a pick-up point. This way the customers get the grocery timely and the website owner can save the delivery costing.

Multiple Payments : Customers want choice when placing an order, and they want the payment option which they prefer. An online grocery shopping marketplace must have various payment options, including COD.

Product Return : Some products can be returned and a whole list of products that cannot be returned as they are perishable. Adding returnable or non-returnable options with the product will help streamline the process.

Membership : An online grocery shopping marketplace should be able to earn revenue by premium membership option. Additional benefits can be given to premium members like free delivery, quick delivery, bonus points, extra discount, etc.

Reporting and analytics: Reports and analytical data should be present for the admin and seller to check to devise a plan for the coming months or to set goals for future. The sales count, visitor count, revenue increased, profit margin etc. to be showcased on the homepage of the admin / seller panel.

Smart Recommendation : for grocery shopping there are some people who abide by the grocery list that they have created but there are quite a few customers who just like to shop. Smart recommendations will help target these customers to buy more and more products through the website.

Multilingual Functionality : If you are planning to launch your online grocery shopping marketplace in the global market. Then the multilingual functionality will help you easily expand to any country or region.

Order Cancellation and Adjustment : As an admin, using this feature you can allow the sellers to adjust/alter the order with a related grocery item, rather than canceling it(if the item is out of stock). Additionally, you can also view the details of the adjusted or replaced items.

Delivery Management : This feature allows the admin to manage order deliveries. The order can either be broadcasted or manually assigned to the delivery staff. Besides, the admin can also grant sellers the access to manage the deliveries.

Product Catalog Management : This feature allows effective catalog management, so that customers can browse through a wide range of products without any hassle. This feature also allows you to add product descriptions, images, categorization, and so on.

Commission Management : This feature allows the admin to easily define/edit/manage commission on products, which is charged from the seller and commission on delivery, which is charged from delivery staff.

Planning to Launch a Feature-Rich Online Grocery Marketplace
Learn More

Note: We have a Ready-made eCommerce Grocery Software - Growcer, which is designed specifically to cater to the needs of the online grocery industry. By clicking on the Learn More button, you will be redirected to our grocery niche specific domain i.e

How to Start an Online Grocery Delivery Marketplace?

The online grocery delivery industry is booming and this has made several entrepreneurs interested in starting their own online grocery delivery marketplace. To do the same, two approaches can be followed:

  • Custom Development
  • Opting for a Readymade Solution

Custom Development

This approach involves building an online grocery delivery marketplace from scratch to meet the specific requirements of the grocer or the entrepreneur as per the chosen technology. That said, custom development of an online grocery delivery marketplace will take significant time, resources and technical expertise, which will all increase the development cost significantly.

Opting for a Readymade Solution

On the other hand, opting for a readymade solution involves purchasing a solution that is specifically built for an online grocery delivery marketplace. The built-in features and functionalities are industry specific, allowing entrepreneurs and grocers to launch their marketplace quickly. Furthermore, a readymade solution is cost-effective as development time is not needed.

Key Highlights of Choosing a Readymade Solution

  • Quick Time-to-Market
  • Time and Cost Efficient
  • Industry Oriented Features
  • Performance Efficient
  • Time-Tested

Moreover, a few ready-made solutions like ours are white-label, fully customizable, scalable, offer mobile apps, are GDPR compliant and also come at one time-fee with lifetime license. For more information, get in touch with us.

Running A Successful Online Grocery Marketplace - Challenges With Possible Solutions

As discussed above, starting an online grocery business is the way forward, but there can be several challenges (specific to the industry) that entrepreneurs/grocers might face. In this section, we cover how to run a successful grocery eCommerce business, i.e., common challenges with possible solutions.

Poor Inventory Management :Inventory is the life of an online grocery business. And a well managed inventory is the foundation of a successful business. But online grocery businesses often fail to anticipate fluctuations due to seasonal variations or promotional events. Further, the “out of stock” message that is displayed after a product is added to the cart, results in a hampered user experience. Solution :You can launch your online grocery shopping marketplace with a solution that provides effective inventory management features, which may ease the job for the entrepreneurs and also offer a better user experience.

Delivery, Storage, and Operational Costs : The delivery, warehousing, and operational costs can significantly impact the financial landscape of an online grocery business. These include transportation, storage costs related to rent/lease of warehouse space, equipment for storage, and expenses associated with marketing, technology infrastructure, and so on. Solution :To address this particular challenge, get a leading grocery eCommerce solution that comes equipped with route optimization, automates repetitive tasks and operates on just-in-time inventory management.

Low System Security : An online grocery marketplace with compromised security is a very big challenge and poses threat to confidential data of users such as their payment related information. Solution :Addressing compromised security should be paramount to safeguarding sensitive customer information. Hence, you should always go with a grocery eCommerce solution that is SSL, GDPR, PCI compliant.

Poor Website Performance : Time is of utmost importance, so if an online grocery marketplace is taking a lot of time to load, then the consumer will shift to the competitor's site. This will directly affect the sales and will incur huge loss. Solution :The solution to this challenge is page speed optimization. This can be done by hiring various professionals, speaking of which, we have a team of professionals who have a proven track record of optimizing websites that have speed issues.

UX/UI Issues : An online grocery shopping marketplace should offer a seamless shopping experience to buyers. To make the marketplace visually appealing and functional is easier said than done, as users might still encounter UX/UI issues like inconsistent design elements, lousy navigation, and more. And, before you know it, the users might bounce in frustration to your competitor's website. Solution :User experience is crucial to the success of an online grocery marketplace. It will determine how well users can navigate through the marketplace and find what they need, which will ultimately lead them to a smooth checkout process. This can be achieved by opting for a ready-made grocery eCommerce solution that has a good UI/UX.

Overcome Challenges and Provide Great Customer Experiences With a Robust Grocery eCommerce Solution.
Get Demo

Other Tips to Succeed in the Grocery eCommerce Industry

As mentioned above, the grocery retail space is continuously evolving. And, with the rise of eCommerce, many businesses are seeking to thrive in the online retail space. Further, navigating the competitive landscape requires the understanding of challenges and opportunities inherent in selling groceries online, which we have already discussed above. Going further, we share a few other tips to succeed in the grocery eCommerce space.

Understand what drives the shoppers :Regardless of the price, experience, choice, quality, and convenience, understand what brings in the traffic that your website needs.

Add value through digital experience :People have become tech-savvy these days, and they can quickly determine if a brand can add value to their lives.

Consider channels holistically :Understand different channels and respect the difference between channels. Each channel should complement each other and drive sales.

Know your Shoppers :As marketing is going more towards personalization, the business has to keep a tab on what influenced the customers to make the purchase decision. Use this knowledge to create meaningful interactions throughout the website, fostering a deeper connection and enhancing the overall shopping experience.

Measure and Adjust :Monitoring customer behavior on the website is essential to yield maximum ROI.

Establish Credibility and Exceed Expectation :Check the concerns and resentment people have with buying products online. Such issues should be resolved by creating buyer-friendly policies.

Make it Easy :The website and mobile app should have a similar user experience, which allows a customer to add products in the cart quickly and checkout.

Understand the Market :Study the market thoroughly. There is no one size fits all solution, so entrepreneurs have to put extra effort in analyzing the market.

Kickstart your Online Grocery Marketplace
Get Started


Technology has undoubtedly disrupted and reshaped the way consumers shop, putting a spotlight on online grocery platforms. With the market projected to grow significantly in the coming years, it is evident that online grocery shopping is here to stay. Hence, as an entrepreneur if you are looking to start an online grocery business, this is the right time. Only by embracing innovation, understanding consumer behavior and addressing challenges head on, can you maintain a competitive edge and drive sustained growth in the ever-expanding world of grocery eCommerce.

Top Table of Contents
Facebook twitter linkedIn youtube instagram