Weeks after coming out of heavy criticism for laying off around 200 employees and revoking many job offers, delivery firm Grofers has now revealed that it is sacrificing growth for profitability and is finally aiming to achieve operational break-even by the end of this year, said Grofers CEO, Albinder Dhindsa in an interview.
Grofers is not the only startup who has been busy mending its casualties caused by the mad run for customer acquisition last year.
In the meantime, the Gurgaon-based company will primarily focus on fixing its business fundamentals and grow organically at 5% every month, said Dhindsa.
“Before we go after growth again, we need to figure out what is making money for us, where we can see growth and where we cannot. We are fixing things like brand monetization, building tools for our sellers to monitor performance, and improving our delivery utilisation.”
Focusing on the business fundamentals is not something surprising as the startup ecosystem is rapidly entering the second phase. With their rivals PepperTap shutting down, a shadow of sectoral slowdown is looming large over the ecosystem. It is time that the customer acquisition phase gets slowed and strategies towards sustainability get materialised.
He said that Grofers had to let these employees go because of technology efficiencies kicking in as well as a drop in orders. About 93% of the delivery process at Grofers has been fully automated, said Dhindsa.
“Our delivery capacity is the same as in November but with one-third the number of people… When a technology leap happens, it makes a huge bunch of people redundant very quickly. That happened to us in order processing.”
Where Grofers had hired a big enough team to handle 60,000-70,000 orders a day initially, it now expects an average of 20,000-30,000 orders a day.
“The number of orders doesn’t jump to that level (60,000-70,000) unless we do heavy discounting or marketing. But it’s tough on the employees and the team because we have never had to lay off employees.”
Contrary to recent belief, Dhindsa says that he is optimistic about the hyper-local delivery business model, pointing out that Grofers’ average order size has increased to above Rs 1,000 from about Rs 600 six months ago.
“Our gross merchandise value (GMV) hasn’t dropped, our number of orders have come down. But costs have come down dramatically,” Dhindsa said, adding that about 16% of the company’s consumers now pay a delivery fee.
Founded by IIT graduates Dhindsa and Saurabh Kumar, Grofers had raised $120 million (Rs800 crore) in a funding led by Japan’s SoftBank last November.
