How to start an online food business? A complete guide

How to start an online food business? A complete guide

The food and eateries business- has always been an object of charm for many. With our country and culture revolving around the kind of food consumed, it is an attractive line of business to venture in. With people becoming acclimatized with technology and preferring to order online rather than visit eateries physically, the online food business has the potential to reach significant highs. But before starting your online food business you must keep the following things in mind-

Requisites of starting an online food business

The following criteria must be fulfilled to ensure that your online food business becomes a sustainable business venture-

Identification of the market niche

The basic criteria for the online food business start with the germination of the idea. It includes the process of deciding the business setup, the establishment of the business module and the strategy that is required to be implemented to improve the popularity of the business. Along with that, it is highly critical that we identify the market segmentation in which the food will have acceptability and easy accessibility. We must understand the demands and requirements of the consumers in the market. For example- if through a survey it is found that customers in South Delhi Cantonment prefer Indian Food being supplied to their doorstep, then it is judicial to establish an online food business focusing on Indian dishes. 

How to Start an Online Food Business (Step-by-Step) (2021)

Sourcing Ingredients

The next step in the process of setting up an online food business is to identify the mechanism to source the necessary ingredients. The concept of supply chain logistics and distribution channels is associated with the process of sourcing ingredients. We need to understand the avenues through which raw materials can be acquired. For example- if you set up a bakery, you should do it in such a location where the transportation facilities are easily available. Then the raw materials like flour and other baking ingredients can be moved easily from one place to another. 

Purpose and dimension of food production: commercial kitchens, home-based businesses, and manufacturing facilities

The production and manufacturing facilities for the online food business must be assorted first. The facilities would depend on the kind of establishment setup you desire for your business. If you want a home-based business, then the investment would be less as you would be able to perform the cooking operations from home. However, if there are bulk orders for supplying to commercial establishments, then you would need to set up a bigger production unit. That would require significant investment. 

Packaging, branding and labeling

Now we come to the most important part of the process of establishing an online food business. Packaging refers to the processing of assimilating the finished products and readying them for transportation to the retail market. In the case, of the online food business, the absence of retail markets is compensated by household consumption. Labeling refers to acquiring certifications and hallmarks that verify the quality of food being supplied. Branding is the process of popularizing the brand name of the food product through advertisements and other digital mediums. Therefore these three integral concepts are the foundational pillars for any successful online food business model globally. Following are examples of some of the global labeling resources:

  • FDA US food labeling, ingredients, and packaging information (US)
  • FDA Food Labeling Requirements Ebook
  • FTC Fair Packaging and Labelling Act (US)
  • CFIA food labeling requirements (Canada)
  • Canadian food packaging manufacturer directory
  • US food packaging manufacturer directory

The Path to Private Label Innovation | 2019-12-09 | Packaging Strategies

Also read: 7 Ways to Combine Traditional and Digital Marketing Strategies

Determining the pricing strategy

Another important part of the process of establishing an online food business is to determine the pricing strategies of the finished food products. For this, we need to understand the two pricing approaches that are adopted- Market Skimming Pricing and Market Penetration Pricing. Firstly through Skimming Price, the online food business looks to establish a favorable position among the elite section of the society by keeping a high price range and high profit margin. In the case of penetrative pricing, the prices of the food products are kept low so that it reaches a larger segment of the consumers. Although the per-unit profit margin is low, more consumers prefer the food products distributed using such pricing strategies. 

Monitoring business growth and development

A regulatory body should be set up to monitor the growth and development prospects of the online food business. Proper utilization of information resources is very important in this case. Continuous monitoring is necessary to identify the areas where the business can be further expanded. Moreover, at times these online food joints adopt a conservative approach and shirk away from moving beyond their comfort zone. The analysis would reveal whether such a mindset would be helpful in the growth and development of the online food business joint or not. 


Therefore a thorough analysis is necessary before you venture out to start your business. However, the appetite for loss and the risk to move away from a comfortable position and try something new is something that differentiates between the small and risk-free players and the large risk-taking market players. However, capital must always be utilized judiciously. Therefore only after making a conscious evaluation should a person move towards taking a business risk of expansion. 

If you are looking for the right solutions for your small or medium business, we are willing to provide a good mentorship with an appropriate process to lift business click here

Also read: How to write a perfect business plan: A comprehensive guide

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