SoftBank-backed Grofers eyes Rs 10,000 cr GMV by March on heavy GOBD sales

The Gurugram-based firm is expecting its GMV to touch around Rs 30,000 crore by 2022 as the coronavirus pandemic has accelerated the shift towards online grocery

SoftBank-backed online grocery firm Grofers is expecting to touch Rs 10,000 crore in gross merchandise value (GMV) by March as the coronavirus pandemic has accelerated the shift to e-commerce. This is being supported by traction of about five million customers during its ongoing sale of Grand Orange Bag Days (GOBD).

The Gurugram-based firm, which competes with players such as BigBasket, Swiggy, Flipkart and Amazon has had about 3-4 times increase in volumes during its ongoing sale.

“The Covid-19 pandemic and the subsequent lockdowns have accelerated the shift towards online grocery,” said Saurabh Kumar, co-founder of Grofers. “The customers have seamlessly embraced online shopping as a mode of purchasing groceries and essentials.”

 

He said the demand Grofers witnessed during the GOBD 5 sale has been significant, with the basket size averaging to about Rs 2,500 from Rs 1,500- Rs 1,600 on normal days.

“We are expecting to hit Rs 10,000 crore in GMV in FY 2021 on the back of the high customer engagement witnessed during the GOBD 5 sale and are also on road to double our GMV every year,” said Kumar.

This edition of the sale for Grofers was bigger with over five million big and small items offered. The top categories for Grofers included grocery and staples, personal care, household items, beverages, baby care and home furnishing. The products ranged from power banks, headphones to pressure cookers and dinner sets.

The firm recorded high traction of customers from cities such as  Delhi, Ahmedabad, Bengaluru, Chennai and Mumbai. It also witnessed traction of customers from smaller cities and towns including Kanpur, Faridabad, Jaipur and Ghaziabad. During the first 2 days of the sale, the company witnessed over 4 million visitors.

Kumar said while the market size of e-grocery is relatively small, there will be an increase in the pie of the e-grocery in the overall share. The e-grocery category has already grown 75 per cent during the lockdown period and as consumers are shifting towards online shopping, it is further pegged to be at $18.2 billion by 2024. “These trends are well reflected in our growth this year,” said Kumar.

Grofers turned operationally profitable in July 2020 in over 27 cities where it operated then. This was ahead of its December 2020 target, driven by the huge consumer shift to online shopping during the pandemic. Since the lockdown, the company acquired 2.6 million new customers and witnessed 64 per cent, first-time online grocery shoppers. It locked in 20 per cent first time online shoppers. 

“From a market point of view, we have seen a spurt in demand from non-metro markets as online grocery has become a mass household phenomenon,” said Kumar. “We have witnessed an increase of 54 per cent in orders in smaller cities like Indore, Agra and Panipat.”

Grofers is expecting its GMV to touch around Rs 30,000 crore by 2022. Several online buying trends have emerged since the pandemic. One among them is the growth of private labels since they offer quality products to consumers at affordable prices. Grofers said it continues to remain bullish on its private-label segment and is anticipating private labels to grow to about  60 per cent of the overall revenue by 2022-23. For this year, it has earmarked an investment of $15 million for the private label category.

 

Grofers said since its products are made in-house and sold on the app itself, there are no commissions for middlemen. This is resulting in low product prices such as 30 per cent to  40 per cent cheaper than national brands. The firm is also investing in new product development and working with OEMs (original equipment manufacturer) to help them with capital needs. It has expanded the private label portfolio ahead of the fifth edition of the GOBD sale by making new additions. These include products such as honey, noodles,  toothbrush, spices, pulses, grains, salt and sugar. The other such products include oats, cookies, diapers and pads, conditioner, face scrub and face wash, shower gel and kitchen towel.

The company said it is increasing people in the workforce on a monthly basis in order to cater to the increasing demand. It added around 3,000 people in November-December last year.  “We are looking to add approximately 500-1000 people every month over the next 3-6 months,” said Kumar.

GROFERS: GOING FOR GROWTH

Rs 10,000 crore, the GMV that Grofers expects to cross by March.

Covid-19 pandemic has accelerated the shift towards online grocery.

Rs 30,000 crore, the GMV that Grofers expects to cross by 2022.

$18.2 billion, the overall online grocery business expected to reach by 2024