Grofers to invest $15 million in private labels as demand grows

Bengaluru: With increasing demand for essential services, online grocery platform Grofers is looking to invest in its supply chain operations and private labels category.

The company plans to invest $15 million to boost its private label category this year, 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.

It is also setting up sanitised mini-warehouses closer to the delivery addresses, to enable swift deliveries to customers during this lockdown.

By 2020-end, Grofers aims to have more than 2,000 stores selling its products, up from the current 350 stores.

“In the next six months, private labels will contribute to 60% of our business, considering the current consumer demand,” Saurabh Kumar, co-founder of Grofers said in an interview.

In 2018, Grofers had aimed to become a 100% private label firm by 2021. It launched its private label strategy in March 2018, and 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.

The same year, Grofers said that it was venturing into the FMCG segment, as part of its strategy to aggressively expand its private label business. The company had then launched 250 food and non-food products, including tea, fruit jam, muesli, tomato ketchup, corn flakes, detergents, and oral care.

The online grocery delivery industry has benefited immensely from the current lockdown announced by the government to curb the spread of covid-19. Brands such as Grofers and BigBasket have been increasingly working towards catering to the surge in demand for essential goods.

“During this lockdown, we have seen daily demand grow three-fold. And to cater to this increasing demand, we have looked to not just hire morr but also introduced an apartment-led delivery model, where all groceries to a certain apartment society 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,” adds Saurabh.

Over the past few weeks, Grofers has hired close to 2,500 people for its supply-chain operations, including warehousing, and plans to hire another 5,000 workmen in the coming weeks.

“We are making contractual hires from industries like textiles, and auto-parts manufacturing which are close to our warehouses and are not operating as of yet. There is also a process in place to quickly train these employees since we do not see demand easing anytime soon,” comments Saurabh.

Before covid-19, Grofers had partnerships with 7,000 kirana stores pan-India, which it used as ‘staging stations’ for last-mile deliveries within cities. However, with the lockdown, Grofers would have made additions of another 2,000 stores during the lockdown period to streamline deliveries.

It is also putting a cap on the total quantity of a certain product a consumer can buy, so as to ensure that there is supply-chain continuity. It is also focussing heavily on the bulk-buy segment to ensure that it eliminates the need of multiple deliveries of a certain product.

Grofers’ competitor BigBasket has in-house brands which cater to segments like pulses, breads, and fruit and vegetables.