Within 35 days of raising $10 million in Series A round, Mumbai based grocery delivery start-up Grofers raised $35 million in another funding round from Tiger Global and Sequoia Capital. With the new fund, the company plans to expand to Pune and Hyderabad and also add new categories such as pharmaceuticals and electronics. Grofers focuses a lot on quick delivery and claims to deliver orders within 90 minutes. On an average, it claims to clock 400-500 orders a day and around 1,000 orders a day on weekends.
Albinder Dhindsa, co-founder, Grofers, talks to Avanish Tiwary about the intense competition in the sector and the way forward. Edited excerpts:
What was the reason to raise another round so soon?
The big driver for raising this fund was our rapid growth. When we raised in the last round, we were doing close to 100-110 orders a day which has now grown to 700 orders a day. We don’t have the luxury to grow organically in this market because things are getting out of our control from the demand side. Since the orders are increasing, we have to increase our strength, build our operations faster and hire more. We realised we would be spending a lot to scale at this rate. We don’t want to raise money when the business is at a critical stage. Our investors said even $35 million is a small amount for the kind of business we are building.
A lot is happening in the online grocery delivery vertical in terms of investment and new players. Is this a good sign or a thing to worry about for you?
That’s a good thing more people are seeing value in this. People didn’t believe the hyper local grocery story when we started. They knew there was a market but they couldn’t believe it can be done in the asset like model and could roll out faster. But, we also realise that the competition is coming from Flipkart and Amazon, so that is what we need to prepare for. They have the financial muscle to really give us a fight. We have the leadership in this space now, but they have the financial power to outrun us quickly. We just have to run faster than them.
What will be the differentiator at the end?
Delivery is the backbone of the hyper local grocery business and we have been doing this for quite a while. Delivering orders in 90 minutes is something we know how to do, but I don’t think Flipkart or Amazon has cracked that yet. What we need to do is maintain that advantage of everything we have built in the past years.
How do you manage the 90-minutes delivery time?
We have stations all across the cities we are present in — six in Bengaluru, 16 and 12 in Delhi and Bombay, respectively. Whenever an order is placed, it goes to the merchant as well as to these stations. Somebody from the nearby station picks up the order from merchant and delivers. We have 300 people on ground for delivery across these cities.
Grofers acquired My Green Box recently. Tell us more about it and how the acquisition helps Grofers.
They are a mobile only delivery platform based in Gurgaon and one of the first ones in this space. The delivery network that we have can actually make their delivery time much faster. They were earlier working with players like Big Basket, where the delivery time was 3-4 hours. But we really wanted their expertise in the grocery space. They have partnerships with FMCG brands and were doing a lot of grocery-focused things. So we decided to buy them. We also partnered with FMCG brands to offer special discounts and offers to our users.