Known for grocery delivery, Grofers looks to become an all-rounder ecommerce platform, to rival Amazon, Flipkart, Licious, Myntra.
Wouldn’t it be a surprise if your local kirana started selling refrigerators alongside its usual staples and FMCG stock? As outlandish as it may sound, the scenario is a reality in the world of e-commerce. Grocery delivery platform Grofers is expanding into newer categories.
Apart from the usual staples, FMCG and fruits/vegetables, Grofers has started selling, apparel, home décor, consumers durables, toys and books. The new sections on Grofers include fashion and lifestyle; home accessories; appliances; books, stationery, toys and games; home furnishing and décor.
In its new avatar, Grofer’s enters the territories of ‘do-all’ e-commerce platforms like Flipkart, Snapdeal and Amazon while also challenging niche fashion platforms like Myntra.
Launched in December 2013, Grofers is among the oldest proponents of online grocery delivery in India. Along with platforms like BigBasket and Zopnow, Grofers has been deeply involved in the creation of grocery delivery as a sub-segment within the e-commerce category.
The segment shone during the COVID months as shops and marts remained shuttered and ecommerce took charge. Grocery delivery players witnessed heavy traffic and hordes of new users. The new challenge was to seamlessly service the tsunami of orders placed by consumers stuck indoors due to the lockdown.
According to a recent report by Redseer and BigBasket, the grocery delivery segment touched a GMV (Gross Merchandise Value) of $3 billion in 2020 from $1.9 billion in 2019. The report projects the figure to reach $18.2 billion in 2024.
However, if all’s well, then why is Grofers out exploring beyond its seemingly fertile home turf?
Upfront, it seems like Grofers might be under severe pressure as large players with deeper pockets set their sights on the grocery delivery business. While Flipkart and Amazon are busy building their grocery capabilities, Reliance’s Jiomart is expanding aggressively across cities with its Offline2Online omnichannel plan.
Over that, online food ordering and delivery platforms like Swiggy and Zomato have been actively bumping up their grocery delivery offerings.
While Grofers curently services around 38 cities, Jiomart (launched only in May last year) has reportedly touched base in 200 cities. This coupled with the possible Reliance-Future Group deal and Jiomart’s WhatsApp integration, is being projected as the next big thing in online grocery shopping.
Grofers is positioning itself as an online hypermarket which addresses all parts of a customer’s consumption basket – much like Big Bazaar in the world of offline retail. Interestingly, Grofers instead of only being an aggregator platform, is launching its own labels (e.g. Grofers Happy Home).
Speaking with afaqs!, a Grofers spokesperson says that the recent initiatives emerged from the strategy of not only providing for the kitchen but also for other rooms in a household. “Consumers usually buy items like buckets, towels, bed-sheets, winter wear and other general merchandise when they visit hypermarkets or a local store, hence the company introduced non-grocery categories.”
The spokesperson adds that the company continues to drive its private label segment and is anticipating private labels to account for 60 per cent of the overall revenue by 2022-23. “For this year, we have earmarked an investment of $15 million for our private label category. Grofers will invest in new product development and work with OEMs to help them with capital needs.”
Speaking on the pros of a private labels, the spokesperson adds, “Since products are made in-house and sold on the app itself, there are no commissions for middlemen, hence resulting in low product prices i.e. 30 to 40 per cent cheaper than national brands.”
The fashion and Lifestyle portfolio is being scaled up with a focus on sportswear and casual wear (clothing and footwear), womens ethnicwear, innerwear and accessories targeted towards the age group of 25-45 years. The company is also looking at launching kidswear. Some of the new product launches under the private label ‘Happy Home’ are toothpaste, detergents.
Grofers is also focusing on daily ‘fresh-use’ categories such as milk, bread, vegetables/fruits and fresh meat. The platform is already in the process of scaling its fresh produce and meat assortments. These categories are now live in all the cities Grofers is active in. With this, Grofers enters the domain of multiple niche ecommerce platforms like meat delivery platform Licious and milk delivery startup Milkbasket.
But can Grofers pull off the ‘do-all’ act especially when giants like Amazon and Flipkart have dug deep into households reaching PIN codes all across the country?
Nikita Bhargav, co-founder NittyGritti, (ex category marketing manager Amazon), says that getting into other categories is another way of getting more business and platforms are looking for ways to capitalise on the traffic that’s coming in (due to COVID).
“The pressure is on everybody to do more. Chasing more and more customers and therefore appealing to every need that a customer has. A customer who’s buying groceries also needs to buy clothes.”
She however points out that a consumer might not be in the mood for buying apparel in a grocery setup. “It’s like Nykaa selling vegetables.”
Bhargav mentions that Grofers will have to offer unique experience for the new sections. “Like in a mall, there is way of keeping each of the stores’ experiences separate. Grofers needs to provide a completely different CX (customer experience) from its groceries offering. It depends on how the CX is going to be. It is important how they tackle it on the site. Like say, when I get to the site and they give me a gateway to fashion which is totally different to groceries.”
K Vaitheeswaran, co-founder AGAIN Drinks and an e-commerce pioneer, says that with the interest of large companies like Amazon, Reliance, Tata, etc., in grocery delivery, Grofers’ plan to be among the top players may not realise anymore. He points out that the margins in the grocery segment are among the lowest and its gets further impacted with intense competition.
“Even to maintain low margins, Grofers has to increase investment which puts it in a difficult situation. The platform not only has to expand into newer categories but also in areas with higher margins. Fashion and toys, etc are high margin categories. Again, the margins in appliances maybe low but the absolute value of the product is high. It evens out that way.”
Vaitheeswaran mentions that Grofers has already built infrastructure and a cost structure, expanding into new categories allows it to amortise same costs over newer businesses. “They’ve built high cost infrastructure which was amortised only off grocery which is under pressure now.”
Speaking on the impact of the platform’s grocery identity, he says that there could be an issue initially but that it’s a short lived challenge “..since customers themselves have seen over years that a platform starts with one category and gradually expands into others. The bigger challenge will be to get customers to shift from platforms like Amazon.”