Buyout offers coming, but we're well-capitalised: Grofers CEO Dhindsa

E-grocery is a very different business, compared to e-commerce and food delivery, he says

Grofers has been in the news for alleged acquisition talks by companies such as Zomato and Paytm Mall. Albinder Dhindsa, co-founder and chief executive officer of the online grocery platform, tells Samreen Ahmad that even though the SoftBank- and Tiger Global-backed start-up firm keeps getting approached by players who want to get into the e-grocery space, it does not have any plans to sell itself right now. Edited excerpts:

E-grocery has seen a flurry of activity of late. While several new players are getting into the segment, there are a few already planning to wrap up. What does it take to survive in the e-grocery segment?
 

E-grocery is a very different business, compared to e-commerce and food delivery. It’s a supply side-heavy format where you have to figure out how to create supplies to serve customers. Only players who are able to build the supply side of the equation will be able to scale up.
 

In India, the perception is that if you have traffic on your site, you can put another icon and start supplying groceries. Evidence points to the opposite. Even a player like Amazon has been trying for six years but has been insignificant in this category.

There are players that came and failed — whether it’s Flipkart or Paytm Mall, because it has to be built as an own business with intricacies.

There are reports which point out that players like Zomato and Paytm Mall are in talks with Grofers for acquisition. What are the triggers? Is there any stress on the business?
 

People keep approaching us because they are looking for presence in the segment. But there has been no trigger from our side; we are very well capitalised. We are profitable as a business now. We are not really burning any money. We don’t need the capital right now. If we need capital, we have existing investors who are supportive of the business.
 

Are you seeing any pent-up demand after lockdown?
 

Since the lockdown began, we served nearly 2.5 million families. This month, we have added half a million more households. There has been no pent-up demand, as groceries have always been open. But since operations are fully open, we have the ability to fully serve our customers.
 

Which categories are seeing the highest traction? What is Grofers betting big on?
 

The larger categories, such as cleaning supplies, personal care, and grooming, saw traction during lockdown. Packaged commodities are the biggest growing category now, as people are more conscious about not buying unpackaged staples. We are constantly adding stock-keeping units (SKUs) around household items, such as table cloths, mats, runners, and foot mats. We have added 400-500 SKUs for general merchandising. In the past two months, we have also been building a unique supply chain for fresh fruit and vegetables.

What kind of growth are you seeing in private labels?
 

Private brands already form half our overall sales as the prices (of these goods) are low with good quality and there’s more availability. Over the next six months, we are looking at increasing the contribution of own brands to 60 per cent of the business. We maintain a balance between products that we sell directly from manufacturers and those that we sell directly from brands, as we keep limited SKUs of up to 1,800. We have been helping our manufacturer partners with working capital to keep them in business.
 

Will you look at any expansion this year?
 

During the lockdown, we opened three (warehouse) facilities, while work is underway to open two more — in Bhiwadi and Lucknow. We are looking at adding 10-15 more facilities by the end of this year. We are waiting to see how the pandemic progresses and then we will look at expanding into several tier-II and tier-III cities this year.
 

What will be Grofers’ growth strategy?
 

We will continue to run lean operations, so that we are able to do better for our end-customers. Now that we are profitable, we continue to keep expanding our network to more cities. We now won’t have to spend as much on marketing as we used to.