The crisis and a locked room

Hari Menon recalls the exact moment the grocery game changed in India.

“When Grofers got announced with investments from SoftBank and Tiger Global. The two investors who, when they [invest in a company], literally [no other investor matters], right?” he says, adding, “And here we were, doing reasonably well, achieved our early goals,  got our convenience factor right, blah blah blah. It was a huge amount of money.” Menon is the co-founder and CEO of India’s leading online grocer, BigBasket.

The time period Menon is referring to is 2015. BigBasket was then a 4-year-old startup that had raised close to $90 million in funding and was seen as the market leader. Until Grofers, a new type of grocery startup, came along. Started just a year prior, the startup raised three back-to-back venture capital rounds in 2015, adding up to $165 million. Its leading investors were the scary trifecta of Tiger Global, Sequoia and SoftBank. 

Grofers promised to deliver orders in less than 90 minutes, usually by picking up the products customers wanted from nearby retail stores. It was what they called “hyperlocal.” In comparison, BigBasket often took 24 hours to deliver orders from their own warehouses.

Q: How did you cope with the big Grofers announcement?

“What do you do? Our board meeting was coming up in a few days, and this announcement just broke. But because we understand the space so well we had just this single belief, that if you don’t make gross margins of 23%, you can’t make this business work. 

“The highest cost is the cost of delivery, and runs anywhere between 7-7.5% of sales in e-commerce grocery when you’re doing well. That’s the number you’ve got to hit. But models like this run at 12-13% of sales. How do you make this business work when the retailer you’re buying from is not going to give you anything more than 5-6% as your gross? So we locked ourselves in the boardroom and sat for about 6-7 hours and said, “Let’s think. If someone’s putting so much money behind it, there’s got to be something behind it. But we are not getting it. And till we get it, we would stay there.”

“We didn’t get it. We didn’t get it for days. We tried everything that might work, tried all possible models. Will they deliver using cycles, walking, get Kirana stores to deliver? We discussed all the pros and cons. 

“At the end of 3-4 days, we said: “stay put.” We called the team into a room and spent 2-3 hours giving them our logic. We had unanimous – absolute unanimous support.

AUTHOR

Rohin Dharmakumar

Rohin is co-founder and CEO at The Ken. He holds an MBA from the Indian Institute of Management, Calcutta and an engineering degree in Computer Sciences from the R.V.C.E., Bangalore.

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 5 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.