Sadar Bazaar, Delhi’s iconic wholesale market, finds a mention several times during a conversation with Grofers founder Saurabh Kumar. The old Delhi market embodies what Kumar says is the latest avatar of the Gurugram-based e-grocery. Just like Sadar Bazaar, a mecca for discount-seekers looking for anything from groceries to household supplies, Kumar wants Grofers to be the go-to destination for value-conscious shoppers online.
While “value” has different definitions for different people, Grofers is clear on its definition—pricing. It is targeting bargain hunters, those looking to save a few bucks on their monthly groceries. For those keeping score, this is only the latest in a number of pivots from the six-year-old Grofers. Experts feel that e-grocers in India are still unsure of what works and what doesn’t and are, therefore, trying out various things. And Grofers is prolific at this.
The startup, founded by Albinder Dhindsa and Kumar, began with a hyperlocal marketplace model, a la US-based Instacart. When that didn’t work out, Grofers followed its larger rival Bigbasket’s lead—it moved to an inventory-led model in 2016. In the same year, it also flirted with the idea of offline retail and was even in talks to supply produce to large grocery retail chains Reliance Fresh and Future Group-owned Big Bazaar.
Grofers penchant for pivoting and experimenting shouldn’t be written off. The company struggled during 2015-16, as the unit economics of its marketplace model wasn’t working out. The company was losing Rs 24 lakh ($34,500) per day. There was even talk of a possible acquisition by Bigbasket a year later. But the company is still chugging along in 2019. It even raised $60 million in fresh funding from Japanese behemoth SoftBank in March. With a post-money valuation of around $425 million.
Survival in itself is something of an achievement in India’s online grocery space, which is littered with the corpses of failed startups. The likes of Localbanya, PepperTap and, most recently, Zopnow. For some, the business model didn’t work; others found it difficult to raise capital.
Grofers will be hoping that its latest, quite literally, value proposition is where it will finally realise the potential that investors have thrown money at. The company has so far raised $225 million from venture capital investors.
If Grofers wanted to be Instacart back in 2014, it now sees itself as an online version of German-based value retailer Aldi. Kumar does not expressly say as much, but mentions Aldi as the only real parallel for what Grofers is doing. Aldi is a hardcore adherent to the idea that value drives volume. It runs small, no-nonsense stores, offers prices lower than other retailers and stocks a large number of its own labels. This approach has led to Aldi controlling a respectable 6.9% share of the UK grocery market.
