Grofers’ modified delivery model sinks losses & boosts revenue; Here’s how

https://techcrunch.com/2016/01/05/indian-hyperlocal-delivery-startup-grofers-pulls-out-of-9-cities/ 

Grofers is a leader in the online grocery industry along with its rival BigBasket. The etailer’s revenue shot up in July this year but unfortunately so did its losses. To keep from continuing down its loss making path the online grocery company decided to change its delivery model. The announcement about this change was made by the etailer’s CEO Albinder Dhindsa.

Bring down losses by 30%

Four wheelers have replaced two wheelers as a mode of delivering orders. This move has helped elevate delivery capacity by 10%. In Gurgaon, the firm has only 20 delivery persons driving around in four wheelers to make daily deliveries. In July 74 delivery persons would take on 800-1000 daily orders.

So the simple switch helped bring down losses by 30%, Albinder claims. Until July this year Grofers was making losses of up to Rs.7.2 crores. Now, the losses have reduced to Rs.5.1 crores per month.

Increase in profit margins

“Our margins too have increased to 18%. Also the average order value which till July was R750 has gone up to R1,000 now,” Albinder says.

For Grofers on a daily basis it receives around 13,000-14,000 orders a day with an average ticket size of about Rs.1,000. And, the top 11 cities contribute to 85%of its orders.

A few more tweaks

From now on the e-grocery company’s CEO plans to focus on developing its delivery capacity in the different localities it caters to.

The online grocery company has ended its same day delivery facility for most orders. In its place consumers can apply for following day delivery. At the same time an express delivery service is available to Delhi, Mumbai and Bangalore city dwellers.

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