Shubham Saroj
Introduction – Grofers is an Indian online grocery delivery service. It was founded by Saurabh Kumar and Albinder Dhindsa in December 2013 and is headquartered in Gurugram. Grofers was coined after combining 2 words. The 2 words were “Grocery Gophers”.
A customer can order groceries online by using their mobile application. Grofers employees then secure the items from their warehouse and deliver them to the customer at the desired time slot. The customers can schedule the delivery for any time of the day.
As of now, grofers is present in more than 27 Indian cities and have a network of over 5,000 partner stores that enable the company to run a fast and lean supply chain that covers manufacturers till the end consumer. Grofers utilizes its efficient supply chain to deliver over 25 million products to customers every month.
During the pandemic in 2020, Grofers along with Amazon India and Big Basket were among the few online grocery platforms that continued to operate in India.
All of this information is good but where does grofers stand after the pandemic? We will answer this question in this blog. Read on to find more about grofers.
Early Days – Grofers initially started as a B2B startup but later changed their business model to B2C. According to the CEO, the turnaround happened as they focused on insights into consumer behavior and a bespoke supply chain model.
Grofers started when Albinder Dhindsa was in the US working in Cambridge Systematics and he met Saurabh Kumar. Both later co-founded grofers. Unlike other Entrepreneurs, he had no intentions of getting into the Entrepreneurial Bandwagon. He came out as an accidental entrepreneur who saw a big gap and potential in logistic industry and decided to solve it with his unique and effective business idea named One Number.
Both co-founders saw a huge gap and could sense a huge untapped opportunity in the delivery industry. Most of the transactions between consumers and merchants in the hyper-local space were still unorganized and only few merchants or shops delivered goods. The deliveries were few as a local merchant or shop usually delivered just 50-60 deliveries in a day that too within 3-5 kilometers range.
Although the local merchants had a solid customer base but they lacked the necessary infrastructure and logistics services to scale up the business model and make it huge. Initially they were aiming at restaurants, groceries and pharmacies but they later focused only on groceries.
Later they changed the name of their startup to Grofers and decided to fill the gap to become a one stop solution for online deliveries.
Marketing Strategy – Grofers have run various ads where they focus on the convenience a customer will have once they opt for them. They promote their ads focusing on time saving, effort saving and the fact that they are more affordable than a supermarket as they buy directly from the manufacturer, leaving the middle men behind.
Their ad campaign had a tagline named “Super Savings ka Super Market”.
User Base & Valuation – Grofers android app has been downloaded more than 10 million times on Google play store. Their average volumes were over 35,000 orders per day in June 2018. But these orders shot up to 90,000 orders per day during the pandemic in 2020.
Their user base is set to grow as they are adding 1-2 new cities every month and are planning to expand its services to over 50 cities by June 2021 from 27 at present. They have a valuation in the range of $650-$700 million but it might go up after if they receive more funding from SoftBank.
Funding – Grofers have received a total of $607.4 million in funding over 12 rounds. Their latest funding was raised on November 18, 2019. Grofers is funded by a total of 13 investors, 8 of which are lead investors.
The major investors are as follows:-
- SoftBank
- Sequoia Capital India
- Abu Dhabi Capital Group
- Tiger Global Management
- KTB Ventures
- Bennett Coleman and Co Ltd
- Apoletto Asia
According to reports, Grofers is all set to raise over $55-60 million in funding from SoftBank once again. SoftBank is the largest investor in Grofers and has a stake valued around 46% of the entire company.
There could be more funding from existing investors such as Tiger Global Management and KTB Ventures. They could invest a total of $30 million.
Revenues & Losses – In the financial year 2018-19, SoftBank has a loss of Rs 448 crores. While their income rose by 56% from the previous year, the company was still in loss. The company had posted a net loss of Rs 258.3 crores for the year ending March 2018.
They saw its total income grow by over 56% to Rs 83.62 crores in 2018-19 from Rs 53.47 crores in the previous financial year.
Their revenues are expected to grow as a lot of people are now using Grofers for online grocery delivery. This increase in customer base is clearly because of the pandemic and lockdown restrictions.
Acquisitions & Partnerships – So far Grofers has acquired 2 organizations. They acquired MyGreenBox on April 10, 2015 and Townrush on October 27, 2015.
Controversies – In 2016, Grofers were in a controversy after it revoked 67 offer letters.
Students from various top institutions such as NIT Karnataka, BITS Pilani and Goa campus among others were promised job Grofers but were shattered after the company revoked their offer letters citing market conditions and changes which is impacting their business, as informed HR Head of Grofers in an e-mail to the students.
However, this did not end here. Grofers received legal notice from several students, those who were revoked from joining the company.
“I had already booked an apartment in Gurugram and had even paid the deposit. I felt completely cheated because just a week ago, I and 7 others from my college had communicated with Grofers about the joining details and nowhere did they mention that they’d be revoking the offer”, said one of the students who was offered a job.
Grofers responded to the Legal Notice by stating, “It is commonplace for candidates to be issued letters of intent, which by their nature are legally not binding on either party.
While your client may have been shortlisted by the company as a part of the recruitment process followed by it, until acceptance of the offer by execution of the Company’s “Appointment Letter”, there exists no employer-employee or other contractual relationship between your client and the Company.
As such, either your client or the company may have chosen not to proceed with the offer made until the contractual relationship was made.” Grofers had further informed students to withdraw the legal notice within 14 days.
Present Conditions & Future Goals – Grofers is actually doing well after the pandemic as demand for online groceries have increased multiple folds. In April 2020, they hired more than 5,000 people to fulfill the demand. They are planning to become profitable by the end of 2021 and want to have an IPO by 2022 but it could be delayed if they fail to meet certain performance criteria.
The company is also in the process of hiring 3,000-4,000 people in the supply chain over the next 6 months. They are also expecting its gross merchandise value (GMV) to grow four times to around ($4 billion) Rs 30,000 crore by 2022.
Conclusions – Grofers started small but now they are growing in size with each passing day. The pandemic in 2020 was the reason because of which many businesses were closed but not Grofers. The pandemic actually helped them to increase their order per day and revenues.
With the promise of fresh funding, growing revenues, becoming profitable in the future and a possible IPO in 2022, they are looking strong.
