Locodel Solutions, which operates hyperlocal grocery delivery start-up, Grofers, has decided to concentrate on three large markets – Delhi-NCR, Mumbai and Bengaluru to reverse its fortunes in 2017.
Locodel Solutions, which operates hyperlocal grocery delivery start-up, Grofers, has decided to concentrate on three large markets – Delhi-NCR, Mumbai and Bengaluru to reverse its fortunes in 2017. In 2015-16, the company had shut down operations in nine cities due to lack of business and laid off 200 employees.
“We are looking at an aggressive growth in top three cities which includes our home market of Delhi-NCR, Mumbai and Bengaluru, our third largest market. In Mumbai, we are seeing good traction in customer orders and want to achieve 12,000 orders per day. In Bengaluru, we are a couple of months away from expanding our operations in a big way,” Albinder Dhindsa, CEO, Grofers told FE.
He said the company is setting up a supply chain comprising of cold chain and logistics network in Bengaluru to meet additional orders.
Currently, it is witnessing around 3,000 orders per day in Bengaluru, which it plans to gradually increase to 5,000 and then take it to around 10,000 per day. To coincide with the setting up of infrastructure, Grofers also plans to launch a multimedia campaign including a television commercials in local language, he said.
“We want to set up supply chain for high quality fruits and vegetables in Bengaluru, which will be ready by end of May. Our aim is to achieve an order size of 10,000 per day,” he said.
Currently, Grofers gets an average 13,000 orders per day mostly in Delhi-NCR region as against 9,000 orders per day a year ago. The average order size has also gone up to R1,100 as compared to R600 per order in the previous year.
Dhindsa said the company has brought down its monthly burn rate by 60% compared to January last year as it closed down operations in nine cities. This was possible as it achieved 20% reduction in cost of delivery to R120 per order from R150 earlier by taking several cost optimisation measures. It is now aiming at reducing it further to R100 per order as it scales up operations in the next six months in these cities. Its revenues per order are in the range of R200 in NCR.
Grofers competes with AmazonNow and Bengaluru-based BigBasket, which has reported a loss of R277 crore on a revenue of R563 crore in FY16.
Dhindsa said the company has increased the number of next day deliveries to about 90% of its total daily deliveries in the last few months. The company is now putting in place its own warehouses across major cities to improve the delivery timings, he said.
All these measures, he said will result in bringing down the losses. For the year ended March 2016, Grofers reported a net loss of R61 crore as against R4 crore, a whopping jump of 1,425%. Its revenues declined 33% to R58 lakh during the period compared to R86 lakh in the previous year.
Founded in 2013 by Albinder Dhindsa and Saurabh Kumar, Grofers has so far raised $165 million from Softbank, Tiger Global, Sequoia Captial and a few other investors.