Learning from Grofer's experience

Tiger Global and Sequoia Capital-backed Grofers, an online-and-app based grocery delivery start-up, launched in 2013, which took off as an app and before it could fly further crashed mid-way due to overload.

Yes, Grofer's app broke before it could deliver its customers' order, which they made online.

Here is the analysis for why the app broke, that ran a sale this April.

It broke because of the loop holes, which were ignored by the company founders such as the logistics were broken, long packaging times angered customers, shops ran out of stuff to sell and followed the chaos made due to all of these loopholes.

The loopholes were actually wells, which swallowed the company. It was competing with Bigbasket but with sheer ignorance towards an inventory-light and aggregator model.

Albinder Dhindsa, co-founder and CEO of the Grofer, said, "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."

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 USD a month as compared to same time last year.

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