Grocery Order Fulfillment: How To Make It Profitable

An online grocery store’s success is tied directly to how quickly and efficiently it can ship orders to customers.

Setting up an effective grocery order fulfillment process can be the difference between turning profits or facing losses.

In this article, we’ll look at why fulfillment is a critical part of your strategy and how to make it profitable.

What is order fulfillment?

Order fulfillment is the process of completing a customer’s order from start to finish. In grocery e-commerce, it typically involves 6 key steps:

1. Receiving

Accepting and organizing stock from suppliers. Online fulfillment begins even before customers complete a purchase.

The receiving stage refers to accepting and storing inventory in a fulfillment center, such as a warehouse.

This includes organizing fresh produce, frozen meats, processed foods, and other perishable items.

2. Picking

Selecting items from inventory to fulfill orders. Picking is the most resource-intensive part of fulfillment, responsible for up to 55% of total operating costs.

Inefficiencies here have the biggest impact on profitability.

3. Packing

The third stage of grocery ecommerce fulfillment is packing the products. The aim is to protect the goods during delivery and ensure the customer doesn’t receive damaged items.

For example, a grocery store could include extra foam wrapping around egg cartons or thermally sealed packaging for ice cream.

4. Invoicing

Once the order is packed and ready for shipment, the invoicing system generates a formal invoice. This invoice includes a detailed breakdown of each item, its price, the total amount, taxes, and shipping costs.

The invoice is sent to the customer via email or through their online account. It may also be included in the shipment if a physical copy is preferred or required.

5. Shipping

Once the order is packed, a shipping label is created, and it is ready for delivery. Whether your grocery store uses a third-party logistics (3PL) partner or makes in-house deliveries, having the correct information on the shipping label is essential.

6. Returns

If the customer is unsatisfied with their goods, the final step of order fulfillment is activated. You must collect the items and provide a replacement if needed.

For example, a customer may have received a different product brand than what was indicated in their order. The store must coordinate the pickup of the wrong item and delivery of the correct one.

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Models of order fulfillment in online grocery

Grocery order fulfillment is a multi-stage process that involves many aspects and departments of your online store. Because of its complexity, retailers use different ways to handle the process.

Let’s look at the four most popular online grocery fulfillment models:

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Site-to-store

Another name for this method is Buy Online, Pickup In-Store (BOPIS). It involves customers placing orders through an ecommerce website or app and completing the payment. The ordered items are picked and packaged in preparation for customer pickup.

Customers can simply collect their grocery orders from the curb or a designated area in the store.

Direct delivery

Data from McKinsey shows that customers’ demand for delivery over other methods has increased with each passing year. The convenience of receiving items at home without visiting a store is what draws many consumers to online grocery.

Store owners can hire delivery executives or partner with a 3PL company to ensure timely deliveries.

3rd party  delivery services

Not all grocery stores can provide direct delivery. These businesses can explore other options, such as third-party delivery services that service the local areas.

It’s worth evaluating the pros and cons of such an approach to grocery order fulfillment. A 2021 study found that nearly 60% of grocery store owners weren’t making a profit when using third-party delivery partnerships.

Micro-fulfillment centers

Micro-fulfillment centers can fortify your distribution network and streamline fulfillment. MFCs are small, tech-enabled facilities located close to customers.

They use automation to prepare orders faster and reduce last-mile delivery costs. Adoption is accelerating as the global online grocery market grows from $543B in 2024 to $655B in 2025, on track to reach $1.42T by 2029.

Major retailers like Walmart, Amazon, and Target are investing heavily in micro-fulfillment as a way to scale profitably.

Making online grocery order fulfillment profitable for your store

The wrong fulfillment approach can cost your store and make your online grocery business unsustainable. The fact is that fulfilling orders is undoubtedly more expensive for the store than when customers shop in a physical location.

Online grocery delivery is more costly, so owners must optimize their fulfillment processes to ensure profitability. Here are five practices all grocery store owners should adopt to ensure the order fulfillment process turns profits:

1. Deliver an omnichannel experience

A seamless shopping experience that spans multiple channels makes your store more accessible, encouraging customers to shop there more often. It also prompts shoppers to participate in omnichannel fulfillment methods, like BOPIS, which is the most profitable.

Consumers want options: curbside pickup, in-store collection, and home delivery. In the U.S., online grocery sales reached $9.8B in June 2025, with pickup channels still dominating volume.

Grocers that offer multiple channels build customer loyalty and spread fulfillment costs across models.

2. Prioritize the right products

Focusing on high-margin categories and private label products helps offset thin grocery margins. Highlighting these items in online storefronts can increase order profitability.

3. Accurately forecast demand

Forecasting demand is vital for profitability. For example, cookies and baked goods might fly off shelves during the festive season. Liquor bottles are more in demand over the weekend. You can drive sales by running promotions based on demand.

4. Adopt localized delivery models

Quick-commerce and hyperlocal fulfillment are reshaping customer expectations. In India, quick-commerce surged from $2.3B in 2023 to $7B in 2025, and is projected to grow at 40% annually through 2030.

Localized delivery reduces last-mile costs while keeping speed competitive.

5. Reduce costs with automation

Automation is no longer optional in grocery fulfillment, where net margins average only 1–3%. The more processes you automate, the more room you create to protect profitability.

Tools such as barcode scanning, real-time inventory mapping, AI-driven substitutions, and picker performance dashboards improve efficiency and reduce errors. Solutions like the Wave Grocery Picker App provide these capabilities, directly addressing the biggest cost drivers in order fulfillment.

Many tasks in the grocery order fulfillment process can be automated, from picking and packing to preparing orders for delivery. Delivery orchestration is another key area: driver apps can optimize routes and automate scheduling, while picker apps streamline order preparation by prioritizing tasks based on urgency, location, and driver availability.

Customer service can also be optimized. By implementing AI-powered chatbots, grocers reduce the time and cost of handling common queries while still delivering fast, accurate responses.

Despite the challenges of online grocery fulfillment, automation makes it possible to deliver a superior customer experience, helping your store stand out in a crowded grocery e-commerce market.

Final thoughts

Grocery order fulfillment is complex, but it doesn’t have to be unprofitable. By combining the right mix of fulfillment models, adopting localized strategies, and investing in automation, grocers can turn fulfillment into a competitive advantage, even in a low-margin industry.