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Grofers Plans $15 Mn Investment To Meet Surging Demand

Grofers Plans $15 Mn Investment To Meet Surging Demand

The company plans to invest $50 Mn in its business over the next two years

It has sent 70 employees on furloughs from offline sales and beauty business division

Zomato is said to be in talks to acquire Grofers for $750 Mn

Online grocery platform Grofers is looking to invest $50 Mn to strengthen its supply chain and private label category over the next two years.

For 2020, Grofers has set aside $15 Mn for private labels as the company believes that it could contribute over 60% of its business during the current surge and subsequently up to $50 million to grow both its supply chain and private label business, over the next two years, said a top company executive.

These investments will also be used to enable better distribution of Grofers’ private label — to enable more stores with its products — as well as to partner with more kiranas to streamline its delivery process.

Besides this, the company will also be focusing on setting up mini santised warehouses across the country to reduce delivery time.

The company has noted a three-fold growth during the lockdown period, serving over a million households.

“To cater to this increasing demand, we are not only more but also introducing an apartment-led delivery model, where groceries to a certain apartment complex can be delivered once a week, instead of making trips every day. We have quickly scaled this to 1,000 apartments as of last week,” Saurabh Kumar, cofounder of Grofers, told Mint.

Grofers had launched its private label in 2018 and planned to pivot to a 100% private label reliant model by 2021. Under its G-Brand label houses brands like Mother’s Choice, G-Fresh, G-Happy Day for premium products as well as HappyHome and SaveMore for its budget category.

With this investment, the company plans to enable more stores with its products as well as bring 2K kiranas (departmental stores) to streamline the delivery process. Currently, Grofers has over 350 private label stores onboard.

Grofers Sends Employees On Furloughs Despite Demand Surge

Despite the surge in business, Grofers has asked 50 to 70 of its employees from offline sales and beauty business division, Orange Something, to go on furloughs for a period of up to three months. The employees of the offline sales department are the ones responsible for bringing more departmental stores on board.

Meanwhile, Grofers’ cofounder Albinder Dhindsa also told Economic Times that the company had “stopped” Orange Something’s operations. However, the company has assured that it has readjusted 38 impacted employees in the core essential business and will be doing the same for the remaining 32 employees.

For the time being, the remaining employees are liable to full health insurance and 33% salary until the company finds a suitable role for them. While the non-essential segment of Grofers is suffering, its essential grocery delivery business has brought the company to the forefront of the battle against Covid-19.

A week before the lockdown was announced, Grofers registered a 5% to 7% surge in business during weekdays and an 80% increase in demands during the weekend. Before the nation-wide lockdown was announced, Grofers catered to 90K orders daily. With the spike in demand and availability of limited workforce, the company had to hire additional 2,000 temporary workers for its warehouses and delivery stock across the country.

Media reports suggest that the latest entrant in the grocery segment Zomato has been eyeing Grofers to consolidate its positions. Zomato is reportedly said to be considering acquiring Grofers in an all-stock deal worth $750 Mn.