Inside Grofers' big mistakes and learnings

Grofers had bitten off much more than it could chew, reports Tech in Asia

In April this year, Grofers ran a sale. The delivery start-up was still app-only, and the temptation of getting daily household essentials at cheap rates made droves of new customers come online and order.

The app broke.

The problem? Grofers had bitten off much more than it could chew. Logistics were broken, long packaging times angered customers, shops ran out of stuff to sell, and it was mayhem all around.

Tiger Global and Sequoia Capital-backed Grofers is an online-and-app based grocery delivery start-up, launched in 2013. It competes with Bangalore-based Bigbasket, but unlike them, believes in an inventory-light, aggregator model. That is, until April, when Albinder and team realised they needed to bring around some serious changes if the company were to get anywhere.

After the April awakening, Grofers made a ton of changes to how it handles business. 

"One of the things we did not know was how much supply-chain involvement would be required from our end. As we started scaling up, the merchants were struggling with demand. Then we had to start making a lot of supply chain investment, which is actually something we were trying to avoid when we started initially," Albinder Dhindsa, co-founder and CEO of the Gurgaon-based company, said.

So it fired about 10 per cent of its workforce, rolled back expansion, and stopped spending money on adverts. But more importantly, it started investing in a back-end supply chain. Albinder says the cost-cutting moves now help him save $4 million a month as compared to same time last year.

"After we raised $120 million, one of the first things we did was shut down six cities," Albinder says.

This is an excerpt from Tech in Asia. You can read the full article here