We are on track to become Ebitda and cash positive by March 2021: Saurabh Kumar, Founder, Grofers

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October 19, 2020 5:45 AM

Customers are making planned monthly purchases instead of going for top-ups. We have also seen an increase in demand for our private label products as value-driven products have become highly relevant in the current scenario.

We expect this trend to continue in the coming months as there seems to be a natural demand for groceries online.We expect this trend to continue in the coming months as there seems to be a natural demand for groceries online.

The pandemic has altered the way many Indian households shop, relying on e-grocers for their purchases rather than their neighbourhood kiranas. The transition has helped Grofers some 18 lakh new customers since the lockdown, about 64% of whom are first-time online grocery shoppers. Founder Saurabh Kumar tells Asmita Dey the company’s path to profitability has accelerated and that the firm aims to file for an IPO by the end of 2021. Excerpts:

How many new customers have you acquired during the pandemic? Are they making monthly purchases or using the platform only for top-ups?
Since the lockdown, we have acquired 18 lakh new customers and more than 70% of those who shopped with us in the first month of the pandemic are still there. About 64% of the new customers were buying groceries for the first time and 20% had never boughtanything online before. We expect this trend to continue in the coming months as there seems to be a natural demand for groceries online.

Customers are making planned monthly purchases instead of going for top-ups. We have also seen an increase in demand for our private label products as value-driven products have become highly relevant in the current scenario.

How far has the average basket size increased compared to pre-Covid? Have you spotted any noticeable changes in consumer trends?
There has been a 40% increase in basket size as compared to the pre-Covid period and the average bill value is around Rs 1,800, even after the near 30% discount that is usually available on Grofers. People are stocking up for essentials staples, laundry detergents, and snack items. Health, ayurvedic products and ready- to- cook meals have also shown a higher penetration than in the pre-Covid era.

Analysts say the rise in order bookings from small cities is due to the migration and it is yet to be seen if the trend persists. Your views on the same.
More households are gradually moving from shopping offline to buying online. We have seen a higher disruption in smaller cities like Lucknow, Jaipur, Agra, Faridabad, Panipat, and Indore and expect this trend to continue.

Given that online commerce is booming, it seems a good time to raise some money from investors…
Grofers is fairly comfortable in terms of capital and is operationally profitable. Right now our focus is to support the small manufacturing ecosystem which has been hit due to the pandemic. We have 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.

What is the financial outlook for FY21?
Our path to profitability has accelerated during the lockdown, and we are on track to become EBITDA and cash positive by the end of this year. We are observing market sentiments and aim to hit the capital market by the end of 2021.

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