Just over a month after online grocer BigBasket raised $300 million funding from Alibaba, another homegrown online grocer Grofers has finally managed to raise $65 million (~ Rs.400 crore) in a fresh Series E funding round led by Japanese conglomerate SoftBank Group. The funding came after a long wait of 27 months. Grofers last raised $120 million from Softbank at a valuation of about $400 million in November 2015. Prior to that it had raised $10 million from Tiger Global.
Other investors such as Tiger Global and Apoletto Asia also participated in the funding round. With this, the total funding raised by the startup is now $226.5 million.
IndianWeb2 had reported last month that Grofers would raise $65 million to further boost the private label with its entry into segments such as home care.
The fund will be utilised by Grofers to further ramp up its private label products and enhance supply chain. A significant amount of investment will go towards building infrastructure and technology and efficient supply chain management to achieve deeper penetration in existing Grofers cities.
“This fresh round by our existing investors is a vote of confidence and trust in the turnaround at Grofers. We took some hard decisions to fix parts of the business that were not scaling well. Our efforts have clearly contributed in making sure we have a clear path to profitability as well as the largest market share in the online grocery segment; having grown four-fold in the last one year for monthly sales in excess of Rs.100 crore,” Albinder Dhindsa, Co-Founder and CEO, Grofers, said to a business daily.
The above development was first reported in Money Control.
Notably, Grofers runs three private label categories called Savemore, FreshBerry and Best Value. While Savemore is for home care items such as cleaners, soap, phenyl and towels, FreshBerry is for fruits and vegetable and Best Value for staples. The company currently gets about 30 percent of its sales, from its private label brands in the food category including Freshberry and Best Value.
Grofers currently clocks an average of 25,000 orders a day with an average order value of Rs.1400. With its major portion of the business coming from North India, it claims to have turned operationally profitable in Delhi NCR on a per-order basis.
The fresh funding has in fact prevented Grofer from nearly getting shut down its operations a few years ago after scaling down its business significantly. Grofers had earlier reported a whopping loss of Rs 225 crore and a revenue of Rs 14.3 crore in FY-2016 while its biggest competitor BigBasket, operated by Bengaluru-based SuperMarket Grocery Supplies Pvt Ltd., revenue for same financial year had tripled to Rs 563 crore.
Moreover, in last one year, Grofers has explored sale talks with bigger rival BigBasket as well as Paytm, said a Live Mint report, citing a person familiar with the matter.
The Grofers funding will now heat up the already hot online grocery market in India, where investors across the globe especially China and Japan are showing keen interest. According to a report, the online grocery market in India is projected to grow at a CAGR of 55% during 2016 – 2021. Easy availability of a wide product range at one place and improving logistic services offered by companies are anticipated to fuel the country’s online grocery market over the next five years.
According to the Forrester’s the Indian Online Retail Market report, India is the fastest-growing online retail market in the world. As per the report, e-commerce sales in India will reach $64 billion by 2021, growing at a five-year compound annual growth rate (CAGR) of 31.2%.
To recall, last November, it was reported that Reliance Jio, a wholly owned subsidiary of India’s biggest business conglomerate Reliance Industries, is also planning to make entry into India’s online grocery market.
Prior to that, Adani Wilmar, the company that markets ‘Fortune’ brand of food products in India, also announced its plans to enter the online grocery sales business with a new e-commerce portal and app called ‘Fortune Online’.
Flipkart too has launched its grocery delivery app called Supermart, as a pilot in Bengaluru, in November 2017.