Grofers eyes $2.5 billion in revenue by 2020
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SoftBank-backed Grofers aims to garner $2.5 billion (approximately Rs 17,500 crore) in revenue by 2020 as it scales up its private label offerings in the country and focusses on expanding repeat purchases in its platform. The company, which has recently completed five years of its operations, has a revenue run rate of $360 million (about Rs 2,500 crore) currently.
Grofers Co-Founder and CEO Albinder Dhindsa said Grofers has been witnessing over 30 percent month-on-month growth.
“While we do not sell gourmet products that usually offer higher margins, we have been able to create a set of dedicated customers that usually promote our brand as well… We will continue to ramp up our business and we aim to clock $2.5 billion revenue by 2020,” he said.
Outlining the expansion strategy, Dhindsa said about 40 percent of the selection on its platform now comprises of private label products.
“There are a number of local manufacturers, who have great products but can’t compete with the FMCG giants and therefore, their products often don’t find shelf space in retail stores…we continue to grow the number of manufacturers that we work with,” he said.
He further explained that putting these private labels on its own platform has helped the company provide aspirational products like muesli, peanut butter at more affordable prices.
These private labelled products are also making their way on retail shelves at Grofers’ over 1,500 partner stores, which the company aims to ramp up to one million in the next two years.
“Outlining the expansion strategy, Dhindsa said about 40 percent of the selection on its platform now comprises of private label products.”
Asked about competition, especially with Walmart-backed Flipkart and Amazon expanding their presence aggressively in the online grocery segment, Dhindsa said the company is not worried.
“Grocery is not the same as books and electronics. We may carry a smaller selection but the focus for us is on affordability. Consumers are very conscious when it comes to the grocery buying and that is what we want to ensure for our customers,” he said adding that Grofers is focussing on further enhancing its coverage of the cities it operates in.
In March 2018, Grofers had announced raising Rs 400 crore in funding led by SoftBank, Tiger Global and Apoletto Asia. It has raised funding of $226.5 million till now. Its average daily order volumes were over 35,000 per day in June this year.
Grocery segment accounts for a significant portion of the unorganised retail segment in the country. With people becoming comfortable buying even milk and bread online, the online grocery segment is projected to witness a strong growth over the next few years in India.
As per the estimates, e-tail is just 0.5 percent of the total grocery market in India, which is pegged at $400 billion or 70 percent of all retail.
In a recent interview, Flipkart CEO Kalyan Krishnamurthy had said grocery is one of the key focus areas for the company currently and, the segment will play an important role in getting access to the next 200 million customers.
Amazon India, too, has been aggressively ramping up selection and focussing on speedier delivery to consolidate its position in the segment. In February this year, Grofers’ competitor Bigbasket had raised USD 300 million led by Chinese e-tailer giant Alibaba and others.
Questions & Answers
Q.How does Grofers plan to achieve its revenue target by 2020?
How does Grofers plan to achieve its revenue target by 2020?
Grofers aims to reach its revenue target by scaling up private label offerings, focusing on expanding repeat purchases on its platform, and increasing the number of manufacturers it works with for private labels.
Q.What is Grofers' current financial performance, as detailed in the article?
What is Grofers' current financial performance, as detailed in the article?
The company currently has a revenue run rate of $360 million, which is about Rs 2,500 crore. It has been experiencing over 30 percent month-on-month growth recently.
Q.How are Grofers' private label products distributed beyond its own platform?
How are Grofers' private label products distributed beyond its own platform?
These private label products are also being sold on retail shelves at Grofers' more than 1,500 partner stores. The company intends to increase these partner stores to one million within the next two years.
Q.Why is Grofers not concerned about competition from Flipkart and Amazon in online grocery?
Why is Grofers not concerned about competition from Flipkart and Amazon in online grocery?
Grofers believes grocery differs from books or electronics, prioritising affordability and consumer consciousness in buying. It focuses on offering a smaller selection but at competitive prices, enhancing coverage in its operational cities.
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