Online grocery player Grofers sees enough space in the retail grocery market for multiple players despite rival BigBaskets' big ticket funding as well as ecommerce giants Amazon and Flipkart increasing their grocery focus.
Last month, Grofers raised Rs 4 billion from its investors like Tiger Global and Softbank in series E funding round while BigBasket raised around $300 million from Alibaba. Out of the Rs 65 billion online grocery market in India, Grofers has a gross merchandise value (GMV) of almost Rs 10 billion whereas BigBasket occupies almost Rs 20 billion worth of GMV. Global ecommerce giant Amazon has already forayed into the space while Flipkart is currently on its third stint in groceries. But with Walmart's reported interest in Flipkart, the scenario may soon change.
“The retail market is big enough to accommodate multiple players and we are all still quite small compared to the available market. Even for bigger ecommerce giants, their existing (distribution) scale doesn’t make much differece because the supply chain required for grocery is completely different,” said Albinder Dhindsa, CEO and co-founder, Grofers.
He adds that Grofers has figured out the exact value proposition for their target customers and new players are not likely to impact their strategy.
He also added that given the different customer base that each of the grocery players are targeting as well as the huge size of the retail consumer base in the country, Grofers hasn't seen any impact on their numbers due to ecommerce players.
Brick and mortar players like Future Group , with EasyDay stores, and Dmart with its new delivery model are also closing in the online-offline gap.
Grofers has currently increased focus on their private label products in a bid to reach their target "mass market” consumer who is seeking value for money with almost 75 per cent being women and 12 per cent first time internet shoppers. Currently Grofers has over 600 private label products and the company is investing heavily in further product development.
“Over the next few months you’ll seen more private labels in food categories like muesli, ketchup, jams and beverages. This is an extension of our program to take small manufacturers in certain regions and give them national distribution channel,” said Dhindsa.
He added that at present private labels constitutes 20 per cent of the revenue share for Grofers. The small manufacturer program adds 20 per cent revenue as well. The inhouse product development program is clearly focused on creating value for money rather than upscale gourmet products.
Dhindsa adds that Grofers is in no hurry to expand beyond their existing 13 cities. Grofers is currently in the process of adding additional warehouse space across Mumbai and Delhi. The company is focused more on reaching scale and also operational break even by improving their reach in existing cities. Currently Grofers has reached such scale only in Delhi.