Grofers has achieved break-even in Delhi and Kolkata, two of its biggest markets. The SoftBank-backed digital grocery startup has claimed that it is the market leader in most markets including Delhi NCR where it has 20 lakh annual transacting customers and 4.2 lakh in Kolkata in 2019.
The break-even has been due to a vast network of over 6,000 local store partners that helped it reduce Grofers’ last-mile costs to below Rs 50, the lowest delivery cost per order of less than 10% of sales in the industry.
Albinder Dhindsa, CEO of Grofers, said, “A lot of it was economies of scale. By increasing our store network and density of orders, we were able to reduce costs. It did not, however, include marketing or technology spends.”
The firm, which competes with BigBasket, Amazon Pantry, Flipkart Supermart, has 5 lakh transacting customers in Mumbai as well.
“Over the last three years, we have been working on building a lean supply chain from manufacturers and brands to consumers. Now that we have a template to achieve profitability, the team is confident we can make even more cities break-even next year,” Dhindsa added.
The company has scaled up the number of orders in Delhi and Kolkata, drawing in 45,000 orders in New Delhi at an average ticket price of Rs 1,350 and 11,000 orders a day in Kolkata.
Grofers said that it will break even in more cities in the coming quarter, amid mounting losses and expenses. The company is on track to end 2019 with a gross merchandise value (GMV) of Rs 4,000 crore, of which Delhi alone would contribute Rs 1,800 crore.
Dhindsa stated, “Lucknow will be the next city, but right now it is a smaller city, order number wise. The aim is that we get to a place where we can, say, pay for Bangalore’s losses with our earnings from Delhi and Kolkata.”