Grofers to focus on hiring, strengthening supply chain from new funds

Even with $62 million in its kitty, Grofers, one of the few e-grocers that managed to survive the two-year-long crisis in the sector, is planning to stick to the strategy that helped it wade through tough times.

 

The company, which just closed a fresh funding round led by SoftBank Group, is not planning to expand to new cities. Instead, it will utilise the funds for doubling its warehousing space as well as fresh hiring and increasing the number of private labels. The company is also planning to scrap its offline plans.

 

“We are looking more towards the supply chain and private label side, we are not planning to enter more cities. We will build more capacity to serve more customers in the cities we are in. We do not have any offline plans, we tried it in 2016 and were not really convinced. We are not looking at offline at all,” said Albinder Dhindsa, co-founder and chief executive officer of Grofers. During the two-year-long crisis in the e-grocery space, which started in 2015, companies including Local Banya, PepperTap, AskMe Bazaar shut shop.

 

Grofers, which last year got a nod from the government for 100 per cent foreign direct investment (FDI) on food-only retail, will take the plan forward only on its online platform. “We will be aggressive on our private labels; we want to make that business larger. Currently, 20 per cent of our business is private label and we want to increase it to 40 per cent by end of the year,” added Dhindsa.

 

The company has been scouting for real estate to set up more warehouses. “Finding space is an ongoing process, we are planning to expand our warehousing. We currently have 750,000 sq ft of warehousing space and plan to double that in the next year,” he said.

 

In November 2015, it had raised $120 million from SoftBank and Russian entrepreneur Yuri Milner, with participation from existing investors Tiger Global and Sequoia Capital. It raised $35 million more from Tiger Global Management and Sequoia Capital India in another round the same year. The Albinder Dhindsa-led company had also raised an undisclosed amount in seed funding from Sequoia and Zomato founder Deepinder Goyal in December 2014.

 

SoftBank has been hedging its bets in every Indian sector it has invested in. While it entered India with an investment of close to $1 billion in beleaguered e-commerce player Snapdeal, it later went on to invest in Flipkart as well as Paytm, cumulatively around $4 billion. It has also invested in Bhavish Agarwal-led cab aggregator Ola as well as global giant Uber.

 

While SoftBank has not directly invested in Big Basket, operated by Supermarket Grocery Supplies, the e-grocer recently raised $300 million in a Series E funding round led by Alibaba Group Holding. Big Basket is now closely working with Paytm Mall.

 

However, Dhindsa said his company had no plans of working with or later on merging with any of companies where SoftBank has invested. Flipkart, which is trying to launch a grocery segment, has been on a lookout for an e-grocer to acquire.

 

“Our investors do not actually interfere in our business. I think we have performed well over the last year and that is we have got this funding,” said Dhindsa.

 

The company operates in 25 cities and undertakes about 30,000 orders per day. It plans to increase its order book to 50,000 by end of this year after it scales up its operations.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel