Grofers to Invest US$ 15 Million In ‘Own Brands' Over the Next Year
Progressive Grocer|September 2020
OVER THE LAST SIX YEARS, GROFERS HAS DEALT WITH A RANGE OF EXPERIENCES LIKE EUPHORIC HIGHS, TEMPORARY SETBACKS, AND A LOT MORE SATISFYING COMEBACKS. WHILE SOME PART OF IT IS FORTUNE, THE BRAND’S TEAM WAS ABLE TO FIGURE OUT WHAT LURKED BENEATH THE SURFACE AND EVENTUALLY WHAT IT TOOK TO OPEN UP ONLINE GROCERY TO MIDDLE INDIA, EXPLAINS GROFERS FOUNDER, SAURABH KUMAR IN A FREE-WHEELING CHAT WITH PROGRESSIVE GROCER…
Charu Lamba

Grofers, one of India’s largest low price online supermarkets in the grocery space, uses its in-house technology platform to manage a network of over 5,000 partner stores that enable the company to run a fast and lean supply chain – from manufacturers straight to customers in 27+ cities.

The brand utilizes its efficient supply chain to deliver over 25 million products to customers every month. A majority of these products belong to the company’s 8 in house brands namely Grofers Happy Day, Grofers Happy Home, Grofers Mothers choice, Grofers Happy Baby, G Fresh, O’range and budget brands Savemore and Havemore.

“Over the last six years, we have dealt with a range of experiences like euphoric highs, temporary setbacks, and a lot more satisfying comebacks. While some part of it is fortune, our team was able to figure out what lurked beneath the surface and eventually what it took to open up online grocery to middle India. It happened to us when we moved to an inventory led model in 2017,” says Saurabh Kumar, Founder, Grofers.

“After realising that the consistent areas where we generated the highest customer loyalty were home to the lower middle class and middle-class consumers, who were dependent on savings, we decided to serve these price-sensitive consumers without making them compromise on the quality of products,” adds Kumar.

Shifting to an inventory-led model was also an important decision for Grofers to strengthen the supply chain capabilities, and over the last two years, the brand has grown at a staggering 800 percent to be on path to profitability.

In a candid conversation with Progressive Grover, Kumar shares the journey of the brand, product and categories, strategies and learnings, impact of COVID-19 and the future course of action.

Excerpts from the Interview:

What is the USP of Grofers?

While others in the category work on a hyperlocal model, we work on an inventory-led model to cater to a large number of audiences who make planned purchases. The inventory-led model helps us to strengthen our supply chain capabilities and keep pace with the growth.

With our grocery specific supply chain built over the last six years, we aim to provide value to our customers through savings and value for money, lowest prices and quality items across various categories. We also have a wide portfolio of our ‘own brands’, which include quality household products across multiple categories such as staples and kitchen ingredients, FMCG items, personal hygiene products like soaps, shower gels, face wash, household needs like cleaning products, furnishing items to name a few. Close to 90 percent of our users are already using our ‘own brands’ (G-brands).

Tell us about your market presence. How many pin codes are you serving currently? Any plans to increase this number?

We are currently operational in 27+ cities namely Agra, Ahmedabad, Aligarh, Allahabad, Asansol, Bengaluru, Bhiwadi, Chandigarh, Chennai, Delhi, Durgapur, Faridabad, Guwahati, Hapur, HR-NCR, Hyderabad, Indore, Jaipur, Kanpur, Kolkata, Lucknow, Meerut, Modinagar, Moradabad, Mumbai, Panipat, Pune, Rohtak, Sonipat, UP-NCR, Vadodara and Zirakpur. During the lockdown, we began serving 3-4 new cities and have plans to expand in concentric circles in the locations where we have strong warehousing capacities.

What is your warehouse capacity?

We have 48 warehouses in over 27 cities. Our warehouses store approximately 3,000-4,000 items.

Tell us about your proprietary initiative, BrandFarm.

Grofers has introduced BrandFarm, a proprietary initiative, with small and local businesses in order to support and promote them. The company is already working with 800 MSMEs under the BrandFarm initiative and is providing support and financial assistance to the small manufacturing ecosystem and partners. With this initiative, the company has deployed more than Rs 50 crore as working capital support and advance payments to support its small manufacturing partners recently. The identification of the potential products, which can be a part of BrandFarm is initiated once a quarter. BrandFarm also helps in expanding share and improving profitability of a particular product during its initial 90-day launch phase.

With players like Jiomart, Flipkart, Amazon entering the business, what steps are you taking to combat competition?

This is a tipping point for online grocery. We are witnessing new players venturing into the grocery segment. However, we find ourselves in a unique position. Having built a grocery specific supply chain over the last 6 years, we are ahead of our competition and foresee increased capital allocation in online grocery.

PRODUCTS & CATEGORIES

What is the range of products that you offer? Which is the fastest moving of these? How many SKUs do you have on offer?

We offer products spread across categories like kitchen staples, FMCG products, personal hygiene products, and household needs. We currently hold 1,800 SKU’s pan-India. We are also adding approximately 400-500 SKUs in general merchandising, including tablecloths, mats, runners, and other household items. The top-selling products are staples such as atta, chawal, dal, detergent, shampoo, and soaps.

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