Companies

Grofers turns profitable ahead of year-end target

Sangeetha Chengappa | | Updated on: Dec 02, 2020

Saurabh Kumar, Founder, Grofers

Start-up will allocate $25-30 m to in-house brands over the next 12-24 months

Grofers turned operationally profitable in July, ahead of its December 2020 target, driven by the huge consumer shift to online shopping during the pandemic. Consequently, the e-grocery start-up has started working towards filing for an IPO in 2021-22. It has allocated an investment of $25-30 million to in-house brands and supply chain infrastructure over the next 12-24 months.

“During the pandemic, Grofers morphed from an e-grocery store to provider of household needs,” a top executive told BusinessLine. It has added non-grocery categories including health supplements, fashion, general merchandise and home appliances.

“We have been operationally profitable since July across the 27 cities that we operate in. Monthly orders have grown from 17-18 lakh pre-Covid to 25 lakh, the average basket value during the festival season grew to ₹1,800–₹2,000 and has stabilised at ₹1,800 at present, compared to ₹1,300–1,400 pre-Covid,” said Saurabh Kumar, founder, Grofers.

Warehouse expansion

Grofers will investin new product development and work with OEMs to help them with capital needs.

“We have opened 12 new warehouses in the last six months, taking our total tally to 45 warehouses (10,000 sq ft – 1.5 lakh sq ft), hired 4,000 warehouse staff and plan to invest in warehouse automation too,” said Kumar.

The start-up’s eight in-house brands contribute to 40 per cent of its revenue, higher margins of 25-30 per cent more than national brands and lower price points for its customers.

With the launch of new house brands in categories including Nutrition, ReadyToEat very soon, its contribution to revenue is expected to increase to 60 per cent.

Home needs provider

Asked if Grofers was morphing into a horizontal platform like Flipkart and Amazon with the introduction of non-grocery categories, Kumar said, “We took a look at how Grofers can move from providing staples for the kitchen to providing for the needs of other rooms in a household. Usually when customers visit a hypermarket or a local store they buy a lot of other things like buckets, towels, bedsheets, winterwear and other general merchandise, that’s why we introduced non-grocery categories. However, we do not intend to launch consumer electronics like mobile phones, ear-phones etc, which are personal purchases, but will stick to functional household products like mixer-grinders, iron boxes etc.”

With five months of operational profitability, the 7-year-old start-up that has raised $472 million so far, plans to file for an IPO in 2021-22 and is all set to raise a fresh round of funds before that.

The start-up appointed Amit Sachdeva, former Wipro CFO for Digital Operations and Platforms, as its CFO last summer.

Published on December 02, 2020
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