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Developing a business model to disrupt the retail industry

7 June 2021|Business Growth, Latest Posts, Launching a business

Developing a business model to disrupt the retail industry
Developing a business model to disrupt the retail industry

By Safak Erkol.   The landscape of the UK grocery is changing rapidly and over the past few years, consumers have been looking for options beyond what large supermarkets have to offer and have been increasingly exploring the different options e-commerce has to offer them. The events of the past year have only accelerated this change of attitude. In the wake of COVID-19, shoppers in the UK turned to grocery deliveries to avoid shortages and long queues at supermarkets, however many supermarket giants struggled to keep up with the demand with many of them having to introduce online queues and waiting lists for new customers. Meanwhile on-demand grocery delivery companies have entered the UK market offering grocery deliveries within minutes and a year on, and with consumers higher expectations, they are here to stay. 

With people shopping more often and increasingly online, developing a robust business model which embraces emerging consumer habits, enhances customer experience and has the flexibility to evolve will be vital in the grocery sector. Over the past year, our team has combined its technical and operational knowledge and experience to build an on-demand grocery delivery business model and here’s what we’ve learnt about launching into the UK’s up and coming, on-demand grocery delivery sub-sector. 

Pick the right area

During the COVID-19 crisis, on-demand grocery retailers were presented with a golden opportunity to expand in the UK market, however they all exclusively focused on offering this service in London. This gap in the market is how Fastbag was born. We wanted to solve an everyday problem for busy individuals and families living in areas outside of London, who are looking for great quality products at the supermarket process and retail prices without the need to leave their house. 

We introduced a service to an underserved part of the market and created demand for it, allowing us to build solid growth and a profitable model that can easily be replicated across different geographical regions. Differentiating yourself and filling the market gaps is important in launching and scaling a successful business. 

Meet your audience’s needs 

Driven by changing consumer habits and expectations, retailers in every sector are having to adapt in order to both survive and thrive and the grocery sector is no exception so it’s important to understand how consumer habits are changing moving forward. From our market research we have seen four key audiences which are prominent in the on-demand sector: customers topping up between larger shops, health-conscious but time-poor professionals, parents who need the convenience of an on-demand service but don’t want to pay over the odds and the ‘right here, right now’ shoppers who want to access groceries quickly and cheaply. Product range and delivery fees are also important for shoppers. On-demand grocery deliveries are becoming more and more popular among shoppers, so they should not be treated as a luxury with extortionate delivery fees. Moving forward this market needs to offer good value for money and cater for customers’ varied needs.

Manage the full experience 

Managing the full experience can enable you to optimise operational efficiency. As we own our own stock and warehouse and employ our own staff, we manage the full experience so we can ensure a high-performance execution that is also profitable. This also includes employing our own delivery drivers as opposed to gig economy workers as we believe the quality of delivery needs to reflect the company’s values and overall product quality. Technology plays a crucial role in the operational journey. As businesses seek opportunities to take full advantage of improvements in technology which will help them offer the best customer experience, those who own their tech stacks and have the in-house talent to develop and optimise new features will remain one step ahead of their competitors. Apart from the operational advantages such as inventory management and delivery schedule optimisation, they will be able to adapt and evolve to suit the needs of different territories and integrate customer feedback. In our experience of developing and owning our own technology stack and operating out of our own dark stores, we have found that we have the ability to improve every aspect of the business by maintaining a holistic view of it.

Evolve and optimise

Future success in the UK grocery sector is about putting the customer first, getting the basics right, embracing new ways of working and adopting the latest technology to cater for the changing consumer demographics. It’s all about offering great user experience in the most efficient way. This is a rapidly evolving market with new entrants and investors challenging the status quo on an ongoing basis so the retail industry needs to ensure that all elements of their business contribute to this new era of the industry, from sustainability in supplier relationships to meaningful customer engagement. Easy to use apps that also engage with the customer and offer an easy and convenient experience from the login stage to checkout is at the core of on demand delivery/e-commerce and the same applies to in-store as the experience is no longer an extra but what the customer expects as base criteria to choose a retailer over another one. This is a great opportunity to see the UK grocery market being shaken to its core for new more sustainable business models to emerge with customers in the driving seat. 

About the Author

Safak Erkol is the co-founder and Chief Marketing Officer of on-demand grocery delivery start up Fastbag. Safak has worked as a marketing consultant to fast-paced, high-growth organisations including Coca-Cola, Amex and Barclays honing her business acumen and commercial skills. Her strong entrepreneurial spirit and previous experience in start-up environments led her to co-found a unique business model for Fastbag, going up against major players in the online grocery delivery market.