SoftBank-backed Grofers achieves break-even in Delhi NCR, Kolkata

SoftBank-backed Grofers achieves break-even in Delhi NCR, Kolkata
Photo Credit: Reuters
19 Dec, 2019

Grofers India, which operates an online grocery platform, has achieved break-even in two of its biggest markets, Delhi NCR and Kolkata, the Gurugram-based company said in a statement. 

The SoftBank-backed company claimed that it will break-even in several more markets over the next quarter. It said that it had been able to reduce last-mile costs and increase revenues significantly and achieve the milestone. 

"This milestone came on the back of a best-in-class supply chain and distributed network that empowers a complete variable cost model generating the lowest delivery cost per order of less than 10% of sales in the industry," the statement said.

The company expects to close 2019 with a GMV (gross merchandise value) at Rs 4,000 crore, with Delhi-NCR contributing Rs 1,800 crore.

In the financial year ended March 31, 2019, Grofers saw its losses widen nearly two-fold on account of burgeoning expenses, notably in discounting charges. The company’s losses for the year stood at Rs 448 crore against Rs 258.3 crore in the previous year. Total expenses stood at Rs 531.63 crore, compared to Rs 311.77 a year earlier.

In today’s statement, the company said it is working with over 6,000 local store partners, which has helped the company improve densities in key localities and leverage the partner network to reduce last-mile costs to less than Rs 50.

“At Grofers, our aim has always been to build infrastructure that enables us to bring the best quality products to consumers at affordable price points. Today, to be able to break-even in two of our major markets is a significant achievement for us.  Now that we have a template to achieve profitability, we can make even more cities break-even next year," said founder and CEO Albinder Dhindsa.

Grofers had around 20 lakh annual transacting customers in Delhi-NCR, 5 lakh annual transacting customers in Mumbai and 4.2 lakh annual unique transacting customers Kolkata in 2019. 

The company offers products across various categories such as staples and kitchen ingredients, FMCG items, personal hygiene products like soaps, shower gels, face wash, household needs like cleaning products, furnishing items to name a few. 

Founded in 2013 by Dhindsa and Saurabh Kumar, the company last raised $20 million in November 2019 from media conglomerate Bennet Coleman & Co via a warrant issue.

In the heavily-funded grocery ecommerce segment, Grofers competes with Alibaba-backed BigBasket. Horizontal ecommerce majors Flipkart and Amazon are also significant players in the grocery market.