After studying the situation, the co-founders found that the problem lay in the company’s fragmented supply chain which was creating problems in delivery consistency (as the company was using two-wheelers for delivery and the products had to be procured from different retailers). The co-founders thought that the problem could be resolved if the company established its own supply chain. They decided to change the hyperlocal delivery startup into an inventory-led model and came up with the idea of having Grofer’s own warehouse and supply chain management in 2016...

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GROFERS’ GROWING AMBITION

In June 2017, Grofers invested in building its general merchandise in the non-food category with a range of kitchen and bathroom utility essentials, plastic ware, cookware, and apparel. It also began selling products from food FMCG and non-food FMCG to durables. The company benefitted during the goods and services tax (GST) transitional phase in 2017 as there was low supply in the offline channels. This period proved to be a period of online grocery adoption, which in a way helped the company to gain consumers, according to Dhindsa. He said, “Post GST, we grew our GMV by 60% over the previous quarter. Our new user acquisition rates also increased by near 50% in the month after GST implementation,” ..

BUSINESS PERFORMANCE

Grofers pursued profitability through consolidation and focused on doubling its revenues by FY2020 (2019-2020). According to Dhindsa, “We have closed FY’19 with Rs 2,500 crore (Rs 25 billion) sales. At present our monthly sales have touched Rs 225 crore (Rs 2.25 billion), growing at 8.5% month on month. We expect around Rs 5,000 crore (Rs 50 billion) sales in the current fiscal.” ..

COMPETITION FROM OTHER PLAYERS

Bigbasket had been successful in the hyperlocal model with its GMV at Rs 30 billion as of 2019 and had been Grofers’ biggest competitor. According to Hari Menon, co-founder and CEO, BigBasket.com, “Despite a huge opportunity, the FMCG segment is still under-served as far as online grocery delivery is concerned in India..

FUTURE PROSPECTS

As of June 2019, Grofers had expanded its private label business with the launch of 250 food and non-food products such as tea, fruit jam, muesli, tomato ketchup, cornflakes, detergents, household care, oral care, kitchen tools and accessories, furniture, and storage. The company aimed to foray into the FMCG sector by 2020. .

EXHIBITS

Exhibit I: Funding at Grofers
Exhibit II: Grofers’ Competitors