Setting up an online Supermarket in your local area

If the headlines are to believed then most national supermarkets do not have the capacity to cope with demand for online deliveries.  Some supermarkets are only meeting 10% of demand so if your future prospects are uncertain setting up an online supermarket in your local area could be a good opportunity.

Social distancing is here to stay, and most people will want to avoid crowded places for at least the next year to eighteen months until a vaccination program is safely in place. In this respect, demand for online delivery capacity is likely to be consistent.  Building an online store needn’t be expensive and Sheer can offer excellent, scalable solutions from Shopify and WooCommerce. We can also deliver other important features such as click and collect for added convenience.

Getting Found

Local SEO is also considerably easier than trying to build a national presence. There are often far fewer competitors in a local radius and it is not hugely difficult to get on the first page of Google with your service. Equally, generating awareness via Facebook advertising in your local area will not create a large outlay. So, if you have some spare space in your garage, an estate car or a van, and are willing to learn about technology and digital marketing you could soon be the proud owner of a growing online business.

Inventory

Of course you will need to find suppliers for the products you will sell and there will be a cost to your initial inventory. A local cash and carry or wholesaler should be able to provide you with the goods you need, but obviously you need to carefully consider the products which are in most demand and the profit margins for those products. Perishable products are probably not a good place to start as they can require refrigeration with strict regulations around their storage, adding to the investment burden of setting up an online supermarket in your local area.

It is also important to ensure you have sufficient inventory each week. This is going to require constant monitoring in the beginning in order to understand which of the products you have chosen to sell are your best sellers. A 3-5 day pilot with a limited inventory investment should help reduce the risk of overstocks giving you sufficient data to more accurately predict demand for following days.

Profitability

Convenience stores often sell with higher prices for goods, so there is a certain amount of customer acceptance of a trade-off of convenience versus cost: 100%+ mark-up would be necessary to make it profitable. Deliveries should be timely, but this shouldn’t be difficult to achieve within a 10 mile radius. It should be possible for one driver to deliver to 30 – 40 customers per day.  In this regard, petrol costs, insurance (commercial and liability) will also need to be considered and it will be important to charge a delivery fee that at minimum covers these expenses.

Payment processing costs will also factor where profit margins are slim (important to shop around as some payment providers are offering highly competitive deals right now). It would almost certainly be necessary to specify a minimum order value to ensure each delivery is profitable.

Your first move

Conducting an assessment of the capacity of national supermarkets in your area, as well as other local convenience competitors is the first question to answer. Then a simple cashflow forecast based on variable costs and the price of an average basket of goods, along with transaction costs and taxation should help answer the question of whether this is is viable option in your local area.

If you want to know more about setting up an online supermarket in your local area then get in touch today on +44 (0) 20 7193 9819