Grofers’ revenue, losses shoot up; rocky road coming to an end?

Online grocery firm Grofers’ monthly revenue is Rs 4.8 crore, whereas the losses are Rs 7.2 crore. Yet, the founders feel that the worst is behind them now and better days are coming.

A month back the e-grocer was in news for withdrawing job offers without any justification or apology.

Grofers has now ceased new recruitment, and scaled down operations. Instead, the etailer wants to focus on profitable cities, utilizing capacity and improving technology. Fixing money-guzzling issues is their main priority to reach profitability.

“We want to automate more on every front whether it’s payments or remittance on the app used by merchants. Technology is going to play a big role in how we do our business,” said Grofers’ CEO Albinder Dhindsa.

Too many cooks spoil the broth

The Indian online grocery market got too crowded too soon. Sample this: the number of grocery companies founded in 2015 was 302. This is what led to the downward spiral, experts believe.

But now that new entrants are extra cautious and many start-ups have closed shops including Grofers’ rival Peppertap, existing players are hopeful that things might get better.

“With too many players, the cost of acquiring customers had increased manifold. Thus, either companies were forced to close down, or change the business model as most of them ran out of cash. But now after a few closures, e-grocery companies have become cautious in their approach when it comes to running the business,” asserted Dhindsa.

End of the rocky road or nowhere near the end?

Online grocery’s path hasn’t been a straight line; it’s a spiral road dotted with many shutdowns and losses. There’s a great potential, but it will take continuous effort to unlock that potential. It is a complicated and slow-growing business with low margins.

Will investors show interest and support e-grocers? Will the hyperlocal players like Grofers survive? Or only giants with inventory like Big Basket can thrive?