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E-commerce

Is Grofers Eyeing Brick and Mortar Model? The Startup is Converting Kirana Stores to its Branded Outlets

This move will broaden Grofers distribution network and help the soonicorn push its own labels to earn better margins
Is Grofers Eyeing Brick and Mortar Model? The Startup is Converting Kirana Stores to its Branded Outlets
Image credit: Grofers: Wikipedia Page
Entrepreneur Staff
Senior Correspondent, Entrepreneur India
3 min read

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Soon after foraying into milk-business under 'G-Fresh' label earlier this month, online supermarket Grofers is now planning to convert kirana stores to its own branded outlets. 

According to the Economic Times report, this move will broaden Grofers distribution network and help the soon-to-be unicorn push its own labels to earn better margins. 

By far, the company has converted close to 100 kirana stores along with several supermarket outlets to Grofers discount stores in the Delhi-NCR region. 

The delivery platform plans to manage the key process like back-end sourcing, inventory management and technology support on a revenue sharing model.

The news report also quoted, Grofers’ co-founder Albinder Dhindsa saying that move will help the company to have bigger purchasing power. It will also be a subset of Grofers’ delivery system since the company deals with close to 6,000 partner stores.

The Indian E-tail Market

As per USFDA paper, India’s food retail business is estimated at $ 380 billion and kirana stores hold close to 98 per cent of the market share. Having said, modern stores are expected to double from two to four per cent by 2020 as stores fulfill the evolving needs of consumers. 

While on the other side, according to Ridesheer Consulting report the Indian online grocery was valued at $ 2 billion in 2018. The market is predicted to grow rapidly and touch $ 5 billion by 2020. The growth is likely to be driven by favourable demographics, adoption and policy factors.

To leverage this opportunity, both domestic players like BigBasket and international players like Walmart-owned Flipkart and Amazon are bucking up. Even food deliveries platform such as Swiggy is eyeing the segment and have acquired smaller players such as Scootsy to execute the plan.

The ideal way to breakthrough traditional Indian ways of a bargain, Sunil Lakra, Founder of Lalaji24x7.com, in a column for Entrepreneur India, says an e-grocer has the option to offer discounts and money-saving deals wherein it’s either ‘buy me or lose me’. 

“Bearing in mind that times are constantly evolving and the common Indian man is career-driven, uses a smartphone, buys great internet speed, is e-banking savvy and more than often short of time to run errands. Getting a chance to save money and save time is just icing on the cake for a consumer,” he added.

How is Grofers’ Gearing Up

Last May, the online grocery start-up raised $200 million in Series F funding round led by SoftBank Vision Fund along with Tiger Global, Sequoia Capital, and KTB. This round has helped Grofers inch closer to the unicorn club. 

Sometime time back, Grofers changed its business model from a hyperlocal delivery model to inventory-based model. It has also expanded the private label to over 250 food and other consumer products.

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