How online grocery Grofers keeps vendors well-provisioned

TE Raja Simhan Chennai | Updated on August 06, 2019 Published on August 06, 2019

Online grocery retailer Grofers does not just source products from its vendors but also empowers them by providing funds, manpower assistance and R&D — a win-win for both the vendor and the company.

“Working with smaller manufacturers enables the company to acquire new consumers and to sell more with attractive pricing,” said Saurabh Kumar, founder, Grofers.

Grofers, which in May raised $200 million in a funding round led by SoftBank Vision Fund, advances money so that manufacturers can finance purchase of raw material, packaging material, set up R&D units and factories.

“We give revolving credit up to ₹5 lakh for eligible manufacturers,” Kumar told BusinessLine. Grofers has added value to a number of businesses. A Mumbai-based manufacturer’s turnover grew from ₹1.2 lakh to ₹1.2 crore after being associated with Grofers. Another manufacturer from Bengaluru saw its annual business grow four-fold and now sells units over ₹2 crore, he said. Some of the beneficiaries are food processing units, agri commodity processors, traders and vegetable farmers. “Our aim is to add at least 300 more small manufacturers to make our private label by the end of 2019,” he said.

Kapil Oberoi, a Mumbai-based small manufacturer and one of the beneficiaries, said, “In just one year of being associated with Grofers, I have made additional ₹1.5 crore just from Grofers’ business. I was also able to give employment to 30-35 people.”

Grofers uses technology platform to manage its 5,000 partner-stores and delivers over 25 million products every month. A majority of these products are sold under the company’s own brands like Grofers Happy Day and Grofers Happy Home.

Kumar said that Grofers has been associated with over 250 manufacturers across metros and smaller markets. The company helps small enterprises introduce their products to a wider consumer segment across India. Apart from financial support, the company also provides manpower assistance to help vendors find skilled workers for their factories.

On R&D, Kumar said that the company helps them understand industry trends and what’s working in the market currently.

With the increase in the business of small manufacturers, “over 2,500 people have been employed additionally across these 250 manufacturers’ factories, and over 100 manufacturing units have been added within a year,” said Kumar.

Published on August 06, 2019
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