Grofers Looks At Acquisitions To Carve Out Profitability Ahead Of IPO

Online grocery startup Grofers is looking at acquisitions in the ecommerce technology space to enhance the customer experience and help boost retention, according to founder and CEO Albinder Dhindsa. 

As Grofers prepares for a public listing later this year, it is evaluating ecommerce-specific products that will help improve the efficiency of supply chains as well as customer experience in the areas of product discovery or recommendations and intangible benefits such as “convenience and ease of mind”, Dhindsa told Mint. 

The company, which claims to have added over 5000 local store partners during the lockdown and subsequent months to meet the growing demand, also said it registered a 60% increase in its gross merchandise value (GMV), compared to pre-Covid-19 levels. 

Interestingly, Grofers was reported to be an acquisition target in April 2020. After acquiring UberEats India in January 2020, foodtech unicorn Zomato was said to be in talks to acquire Grofers to consolidate its position in the grocery delivery space, which it entered just before India went into lockdown. 

But Grofers seems to have made the most of the demand surge and bounced back since then. The company opened 23 new facilities during the lockdown last year and made a significant amount of investment to meet the higher demand for essentials. Inc42 reported in April that the online grocery store was looking to invest $50 Mn to strengthen its supply chain and private label category over the next two years. 

Private labels currently form almost 42% of its revenue, according to Dhindsa. “Our focus will remain on our customers. In 2021, we will work towards making products more affordable for customers and look at making their shopping experience better,” said Dhindsa.

In November last year, Grofers was said to be in the final stages of raising $55 Mn-$60 Mn from Softbank, its largest investor, and other existing investors. Softbank has a 46% stake in the company. In 2019, Softbank led the $220 Mn Series F funding round for Grofers. In 2018, Softbank had led the $53 Mn-worth Series E round for Grofers.

A recent report from consulting firm Redseer and online grocery BigBasket said the total size of the e-grocery market in India was expected to grow from $1.9 Bnin 2019 to $3 Bn by 2020 and may reach $18.2 Bn by 2024.