Grofers eyes over Rs 2,500 cr revenue in FY19
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Online grocery firm Grofers expects its revenue to cross Rs 2,500 crore this fiscal on the back of strong addition of new customers along with increasing cart sizes of existing users.
According to a report, The SoftBank-backed company, which competes with the likes of Alibaba-funded BigBasket as well as e-commerce majors like Flipkart and Amazon, currently has a monthly revenue run rate of about Rs 150 crore (translating into Rs 1,800 crore for the year).
“We had launched a loyalty programme — Smart Bachat Club (SBC) — earlier this year and that has given a strong fillip to out business. It’s a subscription offering, where the customer is paying in advance for special pricing on items and we have seen huge uptake for it, we have crossed half a million subscribers already. By December, we expect to reach one million,” Albinder Dhindsa, Co-founder and CEO, Grofers said.
He added that the frequency of shopping for SBC members is 2.5 times that of non-members, while their carts are 30 percent larger.
“SBC is playing an important role in our business and we will continue to focus on growing the membership as it also gives us predictability of demand… Overall, we expect to close the fiscal with a monthly revenue run of Rs 215 crore (which translates to Rs 2,580 crore on annual basis),” he further said.
Asked about competition, especially with Walmart-backed Flipkart and Amazon expanding their presence aggressively in the segment, Dhindsa said the company isn’t worried.
“He added that the frequency of shopping for SBC members is 2.5 times that of non-members, while their carts are 30 percent larger.”
“Giants have been there but we have been growing despite of that. We have been focussed on our performance, the categories we play in and in offering value to users. And so far, it has worked well for us,” he said.
He added that the company is focussing on enhancing its coverage of the cities it operates in rather than adding more names to the list.
In March this year, Grofers had announced raising Rs 400 crore (around US $62 million) in funding led by SoftBank, Tiger Global and Apoletto Asia. It has raised funding of US $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 estimates, e-tail is just 0.5 per cent of the total grocery market in India, which is pegged at US $400 billion, or 70 percent of all retail.
Earlier this month, Flipkart had said it plans to expand its online grocery service ‘Supermart’ to 5-6 major Indian cities by the end of the year. In May, Amazon India had re-branded its groceries service to ‘Amazon Now’ and has been aggressively ramping up selection and focussing on speedier delivery to consolidate its position in the segment.
Also, in February this year, Bigbasket has raised US $300 million led by Chinese e-tailer giant Alibaba and others. It had said it plans to use the money to build farmer networks, expand deeper into existing cities, and to hire new hands.
Questions & Answers
Q.What is the expected monthly revenue run rate Grofers aims for by the end of the fiscal year?
What is the expected monthly revenue run rate Grofers aims for by the end of the fiscal year?
Grofers anticipates achieving a monthly revenue run rate of Rs 215 crore by the close of the fiscal year. This figure translates to Rs 2,580 crore on an annual basis, exceeding their initial revenue target.
Q.How has the Smart Bachat Club loyalty programme impacted customer behaviour?
How has the Smart Bachat Club loyalty programme impacted customer behaviour?
The loyalty programme has significantly increased engagement, with members shopping 2.5 times more frequently than non-members. Also, their average cart sizes are reported to be 30 percent larger, indicating enhanced customer value.
Q.Does Grofers plan to expand into more cities soon?
Does Grofers plan to expand into more cities soon?
No, Grofers is not prioritising adding new cities at present. The company is instead focusing its efforts on enhancing its operational coverage and service within the existing cities where it already operates.
Q.How much funding has Grofers raised in total to date?
How much funding has Grofers raised in total to date?
Grofers has secured a total of US $226.5 million in funding up to this point. The latest round, in March this year, saw them raise Rs 400 crore (around US $62 million) from investors including SoftBank.
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