Grocery startup Grofers hits key milestone in Delhi NCR, Kolkata; claims leadership in ‘most markets’

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Updated: Dec 18, 2019 3:35 PM

Grofers, which competes with BigBasket, Amazon Pantry, Flipkart Supermart, didn’t disclose the break-even details but claimed it is the market leader in most markets where it operates.

Grofers had reported loss over 6 times its revenue for FY19.

SoftBank-backed digital grocery startup Grofers said it achieved break-even in Delhi NCR and Kolkata — two of its biggest markets. The company, which competes with BigBasket, Amazon Pantry, Flipkart Supermart, didn’t disclose the break-even details but claimed it is the market leader in most markets including Delhi NCR where it has 20 lakh annual transacting customers and 4.2 lakh in Kolkata in 2019. To be sure, Grofers had reported loss over 6 times its revenue for FY19. While losses stood at Rs 448 crore — 73 per cent up from FY18, operational revenue was Rs 70.14 crore, an increase of 135 per cent from Rs 29.83 crore in FY18, Financial Express had reported earlier this month based on the RoC filings sourced from business intelligence platform Tofler. The company’s expenses were also high at Rs 531 crore from Rs 311 crore in FY18.

Amid mounting losses and expenses, the company said in a statement that it will break even in more cities in the coming quarter. Grofers said the break-even has been due to vast network of more than 6,000 local store partners that helped it reduce its last-mile costs to below Rs 50 — the lowest delivery cost per order of less than 10 per cent of sales in the industry. “Everyday low pricing model and focus on its core markets has helped it grow at 800 per cent over the last two years,” the company said. Grofers is aiming at “record high GMV of Rs 4,000 crores with Delhi NCR contributing Rs 1800 crore.” The company has 5 lakh transacting customers in Mumbai as well.

Also read: Govt follows in Amazon, Flipkart footsteps to attract sellers on its e-commerce marketplace GeM

“Over the last three years, we have been working on building a lean supply chain from manufacturers and brands to consumers. Now that we have a template to achieve profitability, the team is confident we can make even more cities break-even next year,” said Albinder Dhindsa, Co-Founder and CEO, Grofers.

The company sells products “strategically priced 30 per cent to 40 per cent less than national brands to cater to the price-sensitive consumer segment,” while nearly 90 per cent of its users use the company’s private-label brands. The private label business is Grofers key focus for growth. The company had expanded from a hyperlocal grocery startup to an FMCG brand in July last year under the Grofers brand. It has also expanded its presence from 14 cities to 27 cities including Agra, Rohtak, Meerut etc. 

Grofers last publicly disclosed funding round was in May when it secured $220 million from SoftBank, Tiger Global, Sequoia Capital and KTB Ventures, according to data from Crunchbase. The digital food and grocery market in India is expected to become $10.5 billion by 2023, growing at 55 per cent CAGR from the current 0.2 per cent share of the overall retail to 1.2 per cent, according to a RedSeer report.

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