Grofers to launch homecare private label, plans to raise $130 mn

Saurabh Kumar (Seated), Founder with Albinder Dhindsa, Co-founder of Grofers

Softbank backed Grofers that has essentially been a grocery delivery firm is now looking to expand beyond the delivery of food products.

The Gurgaon based firm is launching a new private label category called 'Savemore' under which the company will be selling home care items such as cleaners, soap, phenyl, towels etc.

Grofers currently gets about 30 percent of its sales, from its private label brands in the food category including Freshberry and Best Value. It aims to double the sales of private label category to Rs 60 crore per month by December, this year.

"Private labels now is contributing to almost 30 percent plus of the overall sales. We are adding a homecare category to our existing business," Albinder Dhindsa, co-founder of Grofers told Moneycontrol in an interaction.

"Our target for the end of the year is that private labels should gross close to Rs 60 crore as a standalone business. It, however, is still going to be 30 percent of the overall sales because we are targeting to double this year in terms of overall sales," he added.

The company expects to be getting a larger margin from its brand 'Savemore' as compared to the staples private label 'Best Value'.

According to Dhindsa, 80 percent of Grofers customers are women who prefer buying ancillary home care products from its platform, while buying the monthly food supply items. It's bigger rival BigBasket sells products worth an estimated Rs 120 crore per month.

Conventionally a marketplace, Grofers earns revenue from the commissions it gets from the merchants listed on its site.

However, the gross margins earned on private labels are much larger as compared to the commissions that it would get from their merchants which ranges between 1 percent and 5 percent.

Grofers is also in talks with existing investor Softbank besides multiple other investors including Chinese investors to raise a fresh round of USD 130 million. Dhindsa declined to comment on this.

The company last raised USD 120 million in November 2015 from Softbank and Russian entrepreneur Yuri Milner among others.

Grofers currently has 25 warehouses consisting of 1.1 million square feet space, where it stores the products before delivering it to the customers.

It targets to expand it to 1.6 million square feet by the end of the year.

The idea, however, is not to increase the number of warehouses, but replace the existing ones with larger warehouses, Dhindsa said.