With the recently concluded Series F round of funding, online grocery delivery startup Grofers has entered into the exclusive Indian unicorn club of startups. The $ 200 million Series F funding round was led by SoftBank Vision Fund, with existing investors Sequoia Capital and Tiger Global also investing. KTB, a new investor, also entered the deal in this round. SoftBank invested $ 60 Million in this round of funding, taking its stake in Grofers to 42%. Tiger Global and Sequoia Capital invested $ 19 Million and $ 1.8 Million respectively.
Before this round, this Gurugram based startup had raised around $ 301.8 Million in several rounds from Tiger Global and Sequoia Capital. Founded by IIT graduates Saurabh Kumar and Albinder Dhindsa, Grofers is operational in 13 cities and offers delivery on products across several categories including grocery, vegetables, fruits and more.
According to Albinder Dhindsa, Grofers is already a profitable company in Delhi, within 6 years of its launch in 2013. As he was quoted as telling Bloomberg, “Grofers had a top line of $ 400 million and posted 8x growth just in the last two years”. Grofers ended the financial year 2018 with a total revenue of around $ 13.5 Million, and the projections for financial year 2019 are already said to be $ 34 Million. The company also plans to introduce more than 500 SKUs (Stock Keeping Units) in order to boost sales. January 2019 was the company’s highest performance month so far, with reports saying that Grofers recorded sales of roughly ₹ 310 crores, crossing the monthly mark of ₹ 300 crores per month. The company also claimed that 250k new customers had been added to the Grofers platform in January.
A few steps that Grofers is taking to streamline their operations and boost profitability are –
- Expansion of private labels selling food and non food item to roughly 250 products
- Stopped purchasing fresh products and focus the energies on private, exclusive labels
- 50% contribution to meet the FY19 targets are expected to come from private labels of Grofers
- While investing in technology and supply chain, Grofers has changed focus and is now concentrated on establishing a strong presence in Delhi NCR.
This investment in grocery space carries on the recent trend that is being seen in the industry. While 2015-16 was a time where there was a noticeable drop in funding in the customer service market, the last few quarters have seen an upturn in the fortunes of these companies. Bigwigs like Flipkart and Amazon are spending major amounts in trying to get a foothold in the space, while foreign investors like SoftBank, Tencent, Alibaba and Temasek continue to invest in different companies in this space. Following are a few developments that have taken place in the customer service industry.
- BigBasket raised $ 150 million to close its Series F round and enter the unicorn club in May 2019
- Milkbasket, a Gurugram based hyperlocal delivery platform, raised $ 2.86 million in a debt funding round in April 2019
- Earlier in May 2019 it was reported that Flipkart in discussions with Namdhari Fresh, a Bengaluru based grocery chain
- Amazon acquired a majority share in More, Aditya Birla’s retail chain, in September last year
According to a recent Goldman Sachs report, the Indian online grocery market is primed to grow beyond $ 40 million in FY19, growing at a CAGR of 62%. If this trend keeps up, then expect a lot more activity in the industry in the coming days.