Is Starting a Grocery Ecommerce Business Profitable in Today's Market?

In recent years, online grocery delivery has become a fast-growing sector of ecommerce. It took pandemic-era lockdowns for digital grocery shopping to really take off, and it’s been on the rise ever since. In the next two years, grocery ecommerce is expected to account for 26% of all ecommerce sales, making it the largest ecommerce category by 2026.

The demand for convenient and accessible digital grocery delivery services is very high, but this doesn’t mean every grocery ecommerce business will be profitable. Let’s look at the various factors and conditions that influence digital grocery retail and try to find an answer to the question, “Is grocery ecommerce  profitable?”

Understanding the grocery ecommerce landscape

For consumers, online grocery shopping is a massive boon. They no longer have to commute to a store, spend energy searching for products up and down dozens of aisles, and waste time in a checkout line.

Instead, they can source all their required household products from a convenient grocery Ecommerce platform.

This level of convenience has led to the rapid growth of grocery ecommerce . There were around 547 million global users of online grocery services in 2018, which has more than doubled to 1.4 billion by 2023.

But did all these new customers bring in double the profits with them?

The total revenue from digital grocery sales has also been increasing. By the end of 2024, it is expected to draw $257 billion in revenue from US sales alone. Major retailers like Walmart and Kroger have entered the grocery ecommerce  arena, too.

Unfortunately, making your grocery ecommerce  business profitable requires more than just healthy consumer demand. According to FMI, The Food Industry Association’s 2023 report, less than half (45%) of all online grocery businesses are profitable.

In the coming years, more and more consumers will prefer online transactions over physical shopping for groceries. If you want to ensure your grocery ecommerce store captures these shoppers and turns a healthy profit, you must prepare a careful strategy.

Challenges in grocery ecommerce profitability

While online grocery is a promising ecommerce category with significant scope for growth, business owners must be prepared to face several challenges.

Some of the biggest hurdles for online grocery stores to achieve profitability are outlined below.

Operational costs

Online grocery business owners have to bear high operational costs related to processes like unit handling, delivery logistics, and technological infrastructure.

Finding a way to absorb those costs without levying extra charges that drive away customers is a major challenge for grocery ecommerce businesses.

Thin profit margins

You might be able to cover your online grocery store’s operational costs by charging customers a convenience fee, but what if your competition waives theirs? You will, then, start losing customers to your competitors.

This intense competition, coupled with the minuscule profit margins on most grocery products and high overhead costs of inventory management, makes it difficult to set up a profitable grocery ecommerce model.

Customer acquisition and retention

All digital grocery stores need regular customers to be profitable, and building a vast consumer base comes at a price. Customer acquisition involves marketing costs, SEO building, and pay-per-click (PPC) campaigns.

You will also need to spend money to keep your existing customers happy by investing in your fulfillment and distribution operations and improving the overall customer experience.

Factors influencing grocery ecommerce profitability

To maintain a successful grocery ecommerce  business, you should understand the factors influencing your store’s profitability. This section examines the most impactful factors on an online grocery store’s profits.

Scale and volume

Profitability in grocery e-commerce often depends on scale. The global market trajectory underscores this: growing from $543B in 2024 to $655B in 2025 at a CAGR of 20.8%, and forecasted to hit $1.42T by 2029. In the U.S., online grocery sales reached $9.8B in June 2025, up 27.6% year-over-year. These numbers highlight that fulfillment is not just operational, it’s strategic.

Logistics and fulfilment

Efficient logistics and fulfillment operations are essential to managing costs and meeting customer expectations. Pickup and delivery models remain dominant, but scaling them requires accuracy and speed. In markets like India, quick-commerce surged from $2.3B in 2023 to $7B in 2025, and is projected to grow at 40% annually through 2030, showing how consumer expectations are pushing grocers toward faster, tech-driven solutions.

Technology adoption

Technology is no longer optional. From order management systems to AI-driven picking apps, digital tools make it possible to maintain accuracy, speed, and efficiency at scale. Grocers that fail to invest risk falling behind in an industry where margins are already razor thin.

Strategies for enhancing grocery ecommerce profitability

Embracing ecommerce platforms is the future of grocery retail. Whether your brick-and-mortar store is launching an ecommerce  site or you already operate online, these strategies will set you up for long-term success:

Diversification of revenue streams

Don’t focus solely on selling grocery products to your customers. There are many other ways your online grocery store can make money.

For example, selling ads, partnering with brands for paid promotions, and data monetization are ways to increase your revenue streams while retaining a focus on your core value proposition of convenient online grocery retail.

Focus on high-margin products

Take a close look at your inventory. To turn maximum profits from your grocery sales, consider stocking more high-margin products. These are good that yield a higher profit margin when sold, such as frozen foods, coffee, or cereal.

Personalization and customer experience

If your customers enjoy shopping from your online store, they will happily return for repeat business. Some ways you can ensure customers keep coming back is by maintaining a user-friendly shopping and purchasing interface, offering relevant and personalized recommendations, and delivering high-quality customer service for any issues they face.

Prepare to profit from grocery ecommerce

Despite the many challenges faced by business owners, like high overheads, thin margins, and fickle customers, online grocery is still a very lucrative field in ecommerce. As long as you have an efficient logistics model and can sustain operations at scale, you can build a winning strategy for your ecommerce grocery store.

Use the strategies covered in this article, like revenue stream diversification, selling high-margin products, and creating an unmissable customer experience to maximize profits from your online grocery store.

For ecommerce grocery business owners, Wave Grocery provides a comprehensive grocery ecommerce platform where you can control each critical element of your store. With an unprecedented level of control over the finer details, you will be able to watch your profits climb.