1. Grofers clocks Rs 24 lakh loss per day; CEO Dhindsa says worse is over

Grofers clocks Rs 24 lakh loss per day; CEO Dhindsa says worse is over

Online grocer and delivery player Grofers is clocking losses of R24 lakh per day, according to the firm’s CEO Albinder Dhindsa, report Anushree Bhattacharyya and Hita Gupta in New Delhi.

By: and | Updated: July 21, 2016 10:03 AM
Grofers clocks 20,000 orders a day at an average ticket size of Rs 750. It generates 85% of its orders from the top 11 cities. Grofers clocks 20,000 orders a day at an average ticket size of Rs 750. It generates 85% of its orders from the top 11 cities.

Online grocer and delivery player Grofers is clocking losses of R24 lakh per day, according to the firm’s CEO Albinder Dhindsa, report Anushree Bhattacharyya and Hita Gupta in New Delhi. Dhindsa told FE the business is reporting revenues of Rs 16 lakh a day.

The CEO observed that while acquiring customers had been an expensive proposition till last year given too many players were chasing the same universe of customers, the situation had improved.

“A lot of that has changed now with some businesses shutting down,” he said. At the current run rate, the business is losing Rs 7.2 crore every month on revenues of Rs 4.8 crore.

Currently, Grofers clocks 20,000 orders a day at an average ticket size of Rs 750. It generates 85% of its orders from the top 11 cities. In Gurgaon alone, 74 delivery boys service 800-1,000 orders a day.

Earlier this year, the e-grocery firm shut down services in nine cities including Ludhiana, Bhopal, Kochi, Coimbatore and Visakhapatnam and now operates in 17 cities.

The bleed arises largely out of unused capacity. “In Mumbai, for instance, if we have the capacity to deliver 100 orders, we are currently delivering only 50,” Dhindsa explained. At the same time, there are cities where the firm has been able to optimise operations. For instance, in Gurgaon it operates at 75% capacity on weekdays and 90% on weekends.

With a freeze on fresh recruitment the firm this year will focus on upgrading technology, which accounts for 50% of costs. “We want to automate more on every front whether it’s payments or remittance on the app used by merchants. Technology is going to play a big role in how we do our business,” the CEO said.

As such, Grofers has ramped up the IT team, which has some 150 people. After the recent layoff of 200 people, the company now has 750 staff members apart from 2,000 delivery boys employed in a third-party entity.

The e-grocery firm, which follows a hybrid business model — a combination of inventory and marketplace — currently has 10,000 merchants on its platform.

In 2014-15, Locodel Solutions, Grofer’s parent company, reported a loss of Rs 3.9 crore in its first full year of operations. The company recorded revenues of Rs 86.37 lakh and expenses of Rs 4.76 crore for the year ended March 31, 2015, according a filing with the registrar of companies.

  1. S
    Shabaz
    Jul 22, 2016 at 5:38 am
    Numbers are completely wrong. What capacity is company talking about. How much more firing they want to meet numbersWorst company with dumb brains running the show.
    Reply
    1. A
      Abc
      Jul 22, 2016 at 9:07 pm
      Exactly...u should see the way they make their employees slog... and at the end of it all they get is a layoff... I agree with you point there r donkey's running the show... specifically in Mumbai...Mr CEO get your facts in place and act against these donkey's that have actually created the damage for you.
      Reply
      1. K
        khodsal
        Jul 24, 2016 at 9:49 am
        I agree with shabaz and Anonymous
        Reply
        1. P
          Piyush
          Jul 21, 2016 at 6:14 am
          20,000 orders seem to be incorrect as maths do not adds up. It should be 2,000 with average ticket size of Rs 750 to result in ~ 4.8 crore monthly revenue.
          Reply
          1. R
            RK
            Jul 21, 2016 at 3:39 pm
            Piyush- 750�30�20000 = 75 cr is their GMV and I ume 4.8 cr revenue they are reporting is earning from commission and as per this math , it's average 7% income from commission and according to this math, they need to have 16% commission as % of GMV to break even or they need to achieve high scale and better effeciency to achieve break even point.
            Reply
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