Backed by Tiger Global and Sequoia Capital, Grofers addresses the hyper-local delivery needs of merchants in each city. Its recent mobile app allows merchants to extend their products to a wider customer base and aids customers seeking delivery of goods with just a tap on the phone

Madhumita Prabhakar

The problem

Small time vendors and merchants often face a challenge in fulfilling home deliveries and showcasing their products beyond a two-kilometre radius (in any locality). At the same time, consumers would love the comfort of getting something home delivered.

The solution

Grofers, founded by Albinder Dhindsa, offers hyper-local delivery services, which are beneficial for merchants and customers. On one hand, it sets up delivery centres in key localities (in a city) and fulfills delivery requirements for merchants and customers within a five-kilometre radius. On the other, it has developed an Android and iOS app through which customers can access products offered by merchants (registered on the app) and sign for home delivery.

It operates on a revenue model wherein it charges a set commission on each transaction (by a merchant or consumer). In fact, the commission is higher if the transaction is held through the mobile app.

The company has raised two rounds of funding, an undisclosed amount of seed funding from Sequoia Capital (in 2014) and a Series A to the tune of Rs. 62 crore from Tiger Global and existing investor Sequoia Capital (in February 2015).

It has currently partnered with 150 merchants across Delhi, Mumbai and Bengaluru, and is expected to record 7,000 orders by end of March. While its Android app has recorded 50,000 downloads, its more recent iOS app has witnessed 2,500 downloads across the three cities.

Future Outlook

Going forward, the startup’s focus will be to sign more merchants in Bengaluru, and expand into other cities including Hyderabad, Pune, Chennai, Kolkata, Chandigarh and Ahmedabad. Three years from now, it sees its daily orders rising to 20,000 across key cities.

How the hyper-local logistics model works 

While Grofers started by working with merchants in and around its office in Delhi, experience and research led it to develop an effective delivery model in each locality.

The startup identifies key localities in each city, and sets up delivery centres, which can cater to the needs of merchants and customers within a five kilometre radius. Each centre has 10 employees, including an operations manager and delivery personnel. Initially, the biggest challenge it faced was in tracking and evaluating the effectiveness of delivery executives. Eventually, it built a delivery tracking system and arrived at an optimisation model to ensure that several orders are grouped together and delivery is done in an effective manner. Currently, it has 200 people stationed across the three cities, and the delivery process is entirely automated.

In terms of client acquisition, it faces no resistance from merchants because, as the founders are now convinced, the service addresses a big pain point of fulfilling delivery requirements.