Unique Business Models to Increase Your Grocery Delivery Business

The grocery industry has undergone a great deal of change over the past few years. Grocery retail is continually evolving in response to shifting consumer preferences. Today’s consumers prefer to have their groceries delivered to their homes rather than walking out to pick them up. In line with this trend, grocery delivery services are increasing in popularity.

Even during pandemic times, the grocery business has proven to be one of the most dependable. Despite the fact that the economy was at a standstill, the grocery industry prospered and increased at an exponential rate. The on-demand grocery delivery business is one of the fastest-growing e-commerce segments in 2020. In addition, online grocery start-ups have prospered from on-demand economies, attracting interest from industry investors. According to a Nielsen survey, by 2024, 70% of consumers will sell groceries online.

With the growing popularity of on-demand grocery delivery, it’s become essential to grasp the various grocery delivery business models and emerging opportunities in the grocery delivery industry. If you are considering beginning a grocery delivery service, you should first learn about the industry. An in-depth study of the online grocery delivery businesses will help you plan your on-demand grocery delivery business more efficiently.

Let’s take a look at the business model of an online grocery delivery business:

Inventory Model

The inventory model is the single-vendor model, which necessitates warehouse setup and is expensive. Under this model, the platform’s owner sources and stocks groceries as well as other commodities from various vendors. and distributes them to customers via in-house or third-party delivery agents. Regardless of the suppliers, orders are distributed to clients with the platform’s branding. The grocery platform owner is in charge of inventory management, customer service, and timely product delivery.

In a simple term, it’s an offline grocery store that goes online via a website/mobile application and offers home delivery. This model is commonly utilized in specialized and single-product stores for ease. For instance, daily milk supply, vegetable supply, and so on.

Inventory-based firms keep track of the compatibility of manufactured goods. Furthermore, when a company manages its supply chain wholly through direct purchase, profit margins are higher.

Grofers and Big Basket are two successful examples of inventory-based business models.

Multi-vendor Marketplace Model

The multi-vendor Marketplace business model offers a common platform for various sellers and buyers to engage in trade via a dedicated website. This model is very similar to the Zomato, UberEats, or Amazon model. Among grocery delivery start-ups, this is one of the most popular business concepts.

This model is also known as the “Zero Inventory Model” because the platform owner is not required to manage inventory on its own. In terms of packaging and distribution, either the sellers or the eCommerce platform oversees the logistics. The sellers pay a proportion of sales as a commission to the online grocery shopping website.

Peapod and Amazon Fresh are excellent examples of multi-vendor marketplace business models.

Shopping Model

When it comes to the worldwide market, the shopping model is the most popular on-demand grocery delivery solution. Almost every giant, in a single or hybrid form, adheres to this model. It works similarly to a multi-vendor marketplace model, except that consumers do not select the retailer from which they wish to buy the goods while ordering online. The platform runs its own delivery network.

When an order is received, the system sends the specifics to its employees. The employee will buy the things and deliver them to the consumers. It’s a great expansion since all you need is a solid distribution network and store partnerships. Hence, if you run a grocery store and want to increase your business, you can use this model to develop grocery delivery software.

Instacart adheres to this model.

Hyper-local Model

A hyperlocal grocery business model serves the demands of customers within a specific geographical area. The hyperlocal on-demand grocery delivery business model aids in matching out grocery needs with various supply choices in the most efficient manner. This model enables small offline stores to integrate technology and grow their businesses to new heights. Similar to the multi-vendor business model, the entrepreneur does not own a grocery store. Instead, they develop a grocery delivery App that allows retailers to manage their products on the platform.

This delivery model offers fast service as they are located in a closed area. Hyperlocal delivery ensures that the products that customers have ordered will be delivered within an hour.

Instacart is a prominent example, connecting consumers with individual shoppers to provide hyper-local on-demand grocery delivery.

Revenue Model

Depending on the business model, Niche offers a variety of revenue streams. The majority of its revenues came through well-established grocery supply and e-commerce multi-seller platforms. To boost your revenue, you can use a combination of the following methods:


Charge vendors a fee on every sale made via your platform. Multiple commission charges for different commodities and locations can be levied on them based on numerous criteria such as market and supply chain.


Allow consumers to subscribe to specific goods and receive them regularly without needing to place an order each time. Customers’ everyday items may be compatible with the model.


To entice clients to join, offer valuable perks such as lower charge, early arrival, and no shipping charges. You may also offer the store/partners a similar membership subscription to allow them to sell on your platform or receive additional privileges.

Service Charges

Charge non-member stores/partners a service fee for each sale they make. This will entice them to purchase a subscription plan to avoid paying service fees.


Enable stores to pay an extra charge in exchange for increased visibility on the main page or in relevant searches and display ad banners for vendors.


Start selling your own merchandise online. You may sell branded things as well as related items like reusable shopping bags, bottles, containers, tiny kitchen gadgets, and so on.

Buy Online Pick-up In-Store Business Model

This model combines brick-and-mortar and eCommerce forms of shopping. Under this model, consumers buy items online and then pick them up at their leisure from a physical store. It is the main kind of contactless delivery that has become popular in times of pandemic. This is an instance of an omnichannel retail approach in which customers place orders for grocery necessities online and then pick them up at the shop. This model is typically followed by grocery retailers or wholesalers who operate their own grocery shops.

How to Choose the Correct Model for Your Grocery Delivery Business

A business model is contingent on the size of your consumer base and the budget in use. If you’re unsure about the business model to use when beginning a grocery delivery service, keep the following considerations in mind.

  • Determine the market value of your product or service
  • Verify the viability of your service or product
  • Evaluate your network and your support approach
  • Connect with the industry’s top executive
  • Plan and carry out a local deployment
  • Prioritize collecting customer testimonials
  • Target your industry groups


An in-depth understanding of every facet of the grocery sector is required to start an online grocery business. As a business owner, make sure you pick a business model that fits your needs.

Hire the best-dedicated development team to develop on-demand delivery solutions or go with white label on-demand ordering & delivery app development to grow your food delivering business.


Mushahid Khatri is a Chief Executive Officer of Yelowsoft which is one of the leading grocery delivery app development. He believes in sharing his strong knowledge base with leaned concentration on entrepreneurship and business.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button