Grofers aims $1 billion run rate during upcoming grocery sale

New Delhi: Online grocery start-up Grofers is a aiming to hit $1 billion gross sale run rate during an upcoming grocery sale as it prepares for an expensive marketshare battle against bigger rivals such as BigBasket and Amazon India.

“During the sale we will hit a billion dollar run rate,” Albinder Dhindsa, co-founder and CEO at Grofers told Mint in an interview. “It is not likely to continue at the same level post the sale but will be 1.5X of the current run rate because we are acquiring new users,” added Dhindsa.

Grofers, which is set to raise funds from SoftBank Group Corp and other investors, is expecting to touch R 150 crore in gross merchandise value during the sale.

Grofers India Pvt. Ltd posted ₹700 crore in sales in FY18 and is aiming at ₹2,500 crore in overall revenue this fiscal.

“We will be the first company to fulfill one lakh orders per day (during the sale),” added Dhindsa. The average order size is likely to jump by 20% to R 2,000 from the usual day order size during the nine-day Grand orange bag days sale, according to the company.

BigBasket (run by Supermarket Grocery Supplies Pvt. Ltd), on the other hand, is looking to hit a run rate of $1 billion by the end of this fiscal. In a July interview, BigBasket co-founder and CEO Hari Menon said the company was aiming to touch a $1 billion ( ₹6,865 crore) gross sales run rate by March 2019.

Dhindsa had indicated that Gurugram-based Grofers is growing faster than the arch rival BigBasket and has closed the gap during a December interview with Mint.

Grofers is also focussing on growing its private label business in 2019. The private label segment is growing at 30% month-on-month, according to the five-year-old company.

Both the online grocery start-ups are betting big on their private label segments to capture market share in the wafer-thin margin business.

Earlier last year, BigBasket and Grofers had revived merger talks as investors Alibaba Group Holding and SoftBank looked to join hands. The talks didn’t materialise eventually, Mint reported.

Grofers has also initiated a wallet to promote brand loyalty for its customers called Orange Cash beginning from 19th January.

“For the Grocery category, it will be a very good test to see if consumers can stay loyal to a platform,” said Dhindsa. It has partnered with companies to offer cashbacks for customers purchasing same brands during the year, Dhindsa added.

Grofers also has a subscription based service for grocery buyers called Smart Bachat Club (SBC). It currently has six lakh paid subscribers currently. “It (number of subscribers) might very well touch 1.5 million if the sale goes well,” said Dhindhsa.