It seems Grofers’ latest measures are working in its favour. The company had earlier this year returned to its website after going app-only in 2015. Now the grocery delivery company has turned from a marketplace to a 70% inventory based company.
“We had hit our peak in April this year, then we decided the way we were doing things we needed to change that otherwise we would incur very high costs of delivery. It required us to make a lot of changes to our supply chain. When we hold inventory, our gross margins grow up. There is also a cost of holding the inventory but overall it is better bet because the cost is significantly lower.”
Calling out the encouragement of main investor Softbank, Dhindsa said,
“They have been our best cheerleaders in terms of asking us to invest in long-term infrastructure because it will be more of advantage in the longer-run. These guys are in no hurry.”
The investors had recently given $ 120 million, which included contributions from Sequoia Capital, Tiger Global Management, and Apoletto Managers.
The company cut costs, focussed on private labels and shifted to vans for delivery (from scooters). Dhindsa acknowledged leading contender,
“The biggest competitor in the market for us is only BigBasket. They have a lead of few years in private labels and setting up their own fulfillment and warehousing and we have lot of learning on the express (delivery) side of the things.”
Meanwhile with BigBasket….
The top name in grocery etailing is stating that things are going supremely well with them. Co-founder Vipul Parekh said,
“In the past year alone, we have seen over a 300% growth and continue to grow by 10% on a month-on-month basis. We hope to triple revenues to Rs 2,000 crore by March 2017.”
Stating that the demonetisation drive has only helped push sales, Parekh said that the key to their success is the inventory model. He has also said that the company has broken even in half the cities of its operations. Early this year, its losses were fairly high. It had announced its plans for inventory and private labels. Shortly after that it secured funding worth $ 150 million.
The online grocery industry has immense growth potential, but is plagued by financial problems and closures. However, the recent reports should certainly bring cheer to those operating in the industry.