How to Start an Online Grocery Business: The Complete Guide

If your passion is a jewelry and you are looking to sell your hand-embroidered bracelets online, market entry is still within your reach. However, with groceries and food in general, safety is always a concern. National and regional government organizations closely regulate and monitor the food business to ensure public safety, while the merchant must follow the rules and be constantly concerned about quality.

Additionally, be aware that running a food business also involves complex inventory management to avoid spoilage and waste, which usually results in additional costs for a new business.

That said if your business idea looks particularly promising, and you’re up for the challenge, get ready. We are here to help you succeed. From production to shipping, in this guide, we cover all the key topics to show you how to get your food business online.

Note: Each country has different laws and licensing requirements for the food business. In addition, certain categories of products, such as dairy products and alcoholic beverages, may be subject to additional laws. Be sure to consult a lawyer and your local authorities for information relevant to your business. In this guide, information and advice are general, unless otherwise stated.

Food products to produce and sell: finding your niche

Market research

In many cases, the best ideas for selling online derive from a passion or a hobby. If you already have an idea, test its viability. Is there a market for your potential product? If it’s a saturated market, how does your product differ? Is there a niche or sub-audience that has unmet needs? Also, consider how easily your product can be sold online and shipped — consider legalities (e.g., with alcohol), fragility, and shelf life (e.g., need for refrigeration). .)

Food Trends

If you don’t have a product idea yet, you should consider the following starting points:

• Browse food trends for ideas.
• Use Google Trends to discover trends and see how they are changing.
• Study the search volumes of relevant keywords.
• Study the competition.

Ideas for selling food products

Does your idea fit into an existing niche category? Here are some types of categories to consider:

• Personalized products, novelties,
• Gourmet, artisanal, small batches,
• Dietary restrictions: allergen-free, gluten-free, nut-free, etc.
• Certified organic, natural, fair trade,
• Ethical and religious: vegan, vegetarian, kosher, halal.

Ideas for beginners

Explore ideas for selling food products that require low investment, accessible production materials, ease of shipping, and no legal restrictions.

Here are some examples of food products you could sell:

• Candy,
• Packaged Snacks,
• Canned and pickled products,
• dried herbs,
• Kits for meals to prepare at home,
• Oilseeds
• Culinary preparation ingredients (flour, etc.),
• Resale of selected food products,
• Coffee and tea.

Produce or resell products?

The majority of the information presented in this guide applies to business owners who manufacture their food products, whether at home, on a large scale in a commercial kitchen, or in collaboration with a third-party manufacturer.

If you are looking to select existing food products to resell them, for example by launching an online delicatessen, go directly to the section devoted to setting the selling price.

Traceability of ingredients

Food lawyer Glenford Jameson stresses the importance of being informed when sourcing ingredients. “Trace the supply chain,” he advises, to fill in the right information on your packaging and make sure you’re working with trusted companies.

If you plan to make a product that will be labeled organic, make sure your supplier has the appropriate certification before claiming it on your packaging.

Food production: commercial kitchens, home production, food manufacturing plants

When starting your business, you have several options when it comes to production:

Home production: Some food products can be legally produced and sold directly from your kitchen. You should, however, review the regulations regarding the product you have chosen.

Shared commercial kitchens: Many establishments offer shared kitchen space that can be rented by the hour or month, depending on production needs. You can thus benefit from reduced costs and simplified formalities since the establishments are already registered as commercial spaces.

Setting up your own commercial establishment: contact your local health authorities to find out about the formalities required to register a commercial establishment that complies with the regulations in force.

Working with an established food manufacturer: This is an ideal option for entrepreneurs who are more interested in the sales aspects than the production. It’s also a great option for those new to the industry, as established manufacturers are already familiar with the various aspects of food regulations and safety.

Packaging, branding, labeling

Selling food online is particularly complex since consumers cannot taste your product before buying it. This is why the brand image is particularly important. The packaging design, visual, website, product page, and content should all tell your story while helping potential customers imagine what your product tastes like.

Because packaging is especially important when selling food, consider hiring a designer to create the desired result.

In addition to the visual appeal of your packaging, each country imposes its own labeling requirements, which may relate to expiry dates, nutritional information, warnings indicating the presence of allergens, and the country of origin. If you plan to ship your product internationally, including to retailers, be sure to study the labeling regulations of the destination country.

🗒️ Useful resource:

• Classification, labeling, and packaging of products (European Union).

How to price your food products

Since there are different models (which we have described above), the costs to start a food business can vary greatly.

One thing is certain, regardless of the product chosen, setting the selling price is complex. Ultimately, there is no magic formula for setting the ideal selling price. You need to have a thorough understanding of your costs and keep adjusting margins until you get the most profitable price.

Food company profit margins also depend on many factors, including what products are sold and how they are sold.

If you believe in the value of your product, price it accordingly.

Expiration dates and stocks

Some brands develop preservative-free products that contain only natural ingredients. This is why it is important to maintain small stocks, and to ensure that the turnover of these stocks is rapid.

TIPS:

• Explore the tools available in the Shopify App Store that integrate with your store.
• Use batch numbering and barcodes to organize your inventory.
• Train your team in the inventory management practices you follow.

Food products and regulations

By conducting exhaustive research, obtaining the appropriate licenses, and putting in place a meticulous follow-up, the probability of finding yourself in legal trouble decreases drastically. However, if this happens, the consequences can be very serious.

If your product has particular complexities, or falls into a set of categories that require additional licensing (eg meat, fish, agricultural products), consult an experienced food lawyer. While these legal consultations may incur additional costs for a new business owner, they can avoid even more costly consequences in the long run.

“However, you have to understand that there is a very broad regulatory framework ,” adds Glenford. Here are some good practices to follow if you want to manage the regulatory aspect on your own.

Tips:

• Handle and store food following health and safety rules.
• Carefully follow the supply chain.
• Ask questions of your suppliers, ask about their reputation, and ask them to provide you with references.
• Work with a lab that tests your products. Laboratory tests help you identify potentially allergenic substances.
• Take out liability insurance.
• You must be covered if a consumer becomes ill while consuming your product, or if a fire accidentally breaks out in the space you use to manufacture your products.

Ethics and transparency

Beyond legality, poor ethical and transparency decisions can ruin a brand. This applies to all businesses, and therefore also to the food sector. Glenford says the best companies ask themselves ethical questions about their actions, their suppliers, the way they treat their employees, and their impact on the world. “When these companies approach these points from this angle, they are often in a better position to maintain a respectful and caring relationship with the community in which they operate, as well as with their customers. »

Shipping and Delivery

Shipping is one of the most common issues faced by business owners.

And unsurprisingly, shipping food comes with additional challenges, especially when shipping internationally. “If you are going to export food products, be aware that there are a series of foods whose export is regulated”.

Also, consider any restrictions that may apply to your product in the destination country. Technically, once products enter the shipping stream, the end customer becomes responsible for them. However, a poor customer service experience can hurt your business. You can mitigate this risk by familiarizing yourself with the applicable laws of the countries to which you are shipping your products.

Also, to avoid red tape, you should consider working with a fulfillment service if a significant part of your business is selling internationally.

Collection of orders and local delivery

If you’re selling an item that just can’t be shipped the traditional way, consider alternatives that might still allow you to sell it online. Offer customers who pre-order your product online options such as point-of-sale pickup or local delivery.

During the lockdown imposed to curb the COVID-19 pandemic, many businesses have pivoted their strategy to establish their business online and implement pick-up options for drive-thru and in-store orders.

Creation of a website

As is the case with branding and packaging, your website design plays a major role when it comes to persuading your potential customers to buy a food product without tasting it first. The design of your site also includes photography. While you can handle your photoshoots yourself and produce eye-catching product shots, you also have the option of hiring a professional food photographer who is proficient in lighting and staging. Take photos of your product, view textures and colors in close-up, and showcase your product in an eye-catching way.

Use product page content to fully describe the taste and texture of your food product, and include full ingredient and allergen information. To keep the product page clean, take the time to create an in-depth Frequently Asked Questions (FAQ) page to answer any additional questions customers may have about ingredients, dietary information, and production methods.

Even if your website is not your only sales channel, it is important to think of it as an environment that brings you closer to your customers and tells your story. If web design isn’t your forte, you can choose from Woocommerce or  Shopify’s ready-to-use e-commerce themes, or hire a Shopify Expert for custom rendering.

Marketing and content

Promoting your online store is another topic we’ve covered before on the Shopify blog or other platforms, and the same rules apply when it comes to promoting your food product. Since it is not possible to taste before buying, potential customers must relate to your story.

Offline Marketing

Even if your business plan does not take into account a marketing strategy in physical points of sale, it is still very important to meet potential customers in person to present them and let them taste your product. :

• Generate excitement in your city by participating in markets,
• Open a pop-up store,
• Collaborate with restaurants and complementary brands as part of the organization of a tasting event,
• Organize a private dinner with influencers,
• Regularly invite customers to your food-making workshop (for example, a chocolate factory tour),
• Launch your brand during a food show open to the general public.

Thanks for reading this entire article, future food business owner! In closing, know that starting a food business is a huge topic to cover. Although the food business is a challenging market, you can make it profitable if your passion takes over and you are willing to learn the legalese.