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We are delivering 1.25 lakh orders every day: Albinder Dhindsa of Grofers

'What is different about Grofers is that we not only solve for 10 minutes but because of our knowledge about what customers need.'

November 22, 2021 / 11:11 AM IST

There has been a big debate around the quick commerce or instant delivery business model over the last few months. The jury is divided on whether one really needs vegetables or staples such as rice, wheat, and pulses delivered in 10 minutes in India, where mom-and-pop shops can be found on every corner.

The model has also come in for scathing criticism for putting customers first and delivery partners last, especially over safety, as riders are under pressure to zip through treacherous roads to make deliveries in minutes.

However, Founder Albinder Dhindsa is unfazed. He believes 10-minute deliveries are not just possible, they are  also a must in today’s fast-paced life so that people have time for more important things.  Grofers, in which Zomato has a strategic stake, competes with Swiggy’s Instamart, BigBasket, Dunzo and upstart Zepto.

In a detailed conversation with Moneycontrol, Dhindsa talked about the need for quick delivery in India, synergy with food-tech firm and investor Zomato, and plans to invest in Co-founder Saurabh Kumar’s new venture, Warpli. Excerpts from the interview:

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How has the business grown in the last five months? In July, you had claimed that the company made 7,000 15-minute deliveries in a single day. How has that expanded now?

We are delivering 1.25 lakh orders on a daily basis currently across eight cities where we have express stores.

Your strategy seems to be first enter a city and then spread operations across all its pin codes, instead of fully covering a city before expanding into another.

It is different in different cities. Most of Mumbai is still covered by our next-day delivery model. There are only 22 locations where we have stores and those stores deliver in 10 minutes. They cover very small areas. Some of this is also because we have to look for merchant partners and that takes time.

But do you intend to completely convert into an express delivery platform? If so, by when?

Absolutely. I think we should be done with this transition by the middle of December.

What led to the growth in demand for express grocery delivery now? Half a decade ago, most of the grocery companies that tried experimenting with it had to either pull out the service or shut shop.

Customers wanted express delivery even in 2015 but there were a couple of issues. The number of customers that were online and were comfortable buying online was much lower. Customers were also not used to delivery from an app, which is a problem that food-delivery companies solved because they were able to expand. Second, this needed a very liquid and proactive rider ecosystem at the local level to make the economics viable. This is also something that food delivery solved. As a result of the expansion of food delivery, this model became possible.

How has the basket size been impacted? It used to be Rs 1,400-1,800 for the next day or planned delivery.

Currently it is Rs 700-800. The ticket size has obviously come down because consumers get things faster and there are more fresh items that they are buying – fresh fruits, vegetables. But the amount of time users spend to buy on the platform has gone up.

But Rs 700 is still a tad too much when talking about express. Anecdotally we have seen that most of the quick deliveries are done for items amounting to not more than Rs 200-300. Can you please comment? Also, what is the frequency of express orders?

Currently it is four times a month. What is different about Grofers is that we not only solve for 10 minutes but because of our knowledge about what customers need, because we have been doing this business for a while, we are also keeping the largest assortment for ten minutes.

In addition to impulse buying use cases such as namkeen, ice cream or soda, we are also able to cater to the needs of households entirely. We have all the staples. We also have all emergency-use cases such as Dettol, band-aids, phone chargers. I am keeping anywhere from 3,500-4,500 items for customers (in dark stores) and these numbers are as high as 7,000 at select locations.

We believe that if you are just selling snacks or party supplies then the economics of the business will get stressed very, very quickly.

Given that you are talking about the economics of the business, how are your unit economics post the launch of express delivery? Do you plan to get profitable on a unit economic level anytime soon?

The economics are significantly different and they are still evolving for us. But cities like Noida, Gurgaon etc are already contribution positive.

Can you delve a little deeper? How far is the current dark store from the house of a customer?

On the top of my head, I know the numbers for Gurgaon. Over here, the average distance from a partner store to our customer doorstep is 940 metres.

Is that making an impact on your unit economics? Are the riders able to make more deliveries, given the small distance?

Yes, so both things happen. The riders have to travel less and they can do more orders per hour reducing the cost of delivery very significantly. Even at a smaller ticket size, we are able to maintain contribution profit.

In Gurgaon, when we started instant delivery, we didn’t have that many orders. But then we scaled. With more orders coming into each store the economics started working. The last-mile economics also improve if there are more orders in a locality.

Will there be dedicated delivery partners outside each warehouse, unlike food delivery where they have to go to different restaurants to pick up orders?

We work with the local merchants who run these stores. We provide the last-mile delivery. So, they are usually positioned outside the store but because we are managing the delivery network through our tech, we are able to move people around. If a specific area has more orders from one store, we can move them to that store. We balance the last-mile network... but usually, they are stationed outside the store.

Are these riders on your payrolls?

It is a mix. We also keep people on our payroll but a lot of them are contract employees since they want the flexibility of working a few hours a day.

What is the total strength of the delivery fleet?

Right now we have close to 10,000 partners. It is increasing very quickly.

How has investor sentiment changed for express delivery in the country over the last few months?

One of our investors (Softbank) has announced that they are very bullish on this. In general, I haven’t spoken to many investors because we are fairly well capitalised right now. We haven't interacted much but I think once people see the kind of numbers we are generating, the kind of economics that we are already displaying. I think this would be a very positive story for the investors to follow as well.

It has also been reported that your existing investor Zomato is in talks to invest $500 million in Grofers. By when will that happen?

We are very well capitalised as I said. We haven’t even touched the capital from our last round.

What is the synergy that Grofers draws from Zomato?

There are a lot of learnings that we take from them because they have obviously scaled the business up. But right now they are only a financial investor. So, we interact with them just like we would interact with all of our other investors. But, of course, Deepinder is on our board, and that way we get a lot of inside inputs into how we should think about things.

There are reports doing the rounds that in the longer term Zomato might consider acquiring Grofers. What is your view on that?

That’s a question for Zomato. That’s not a question I can answer.

What is the average time in which Grofers is currently delivering?

Where we have launched 10-minute delivery, from the store to the customer doorstep, the average time is close to 9 minutes.

What are some of the challenges you face? How is technology helping the company deliver what you are promising?

All this is orchestrated by the tech we built. So, everything from what to keep, in which areas, how do we direct the pickers, how do store employees locate SKUs quickly, bill them, pack them, send them to the customers, all of this is orchestrated by the tech that we built.

When you place an order the tech first determines which store it will go to, depending on the store that will be fastest to deliver to you at that point in time. It could be a store only 1 km from you, or it could be a store 1.5 km from you. It is trying to locate a store with available pickers. They will receive the order and they will pick it and bill it. Our average billing time is less than 2 minutes even for a basket of our size, with an average size of 8-9 items. We take 8 minutes to deliver. Pickers hand the orders to the delivery partners. They (delivery partners) have to travel only 940 metres so they have about 8 minutes to cover that distance and reach the customer doorstep. So, internally we try to ensure all these handshakes are quick.

What do you have to say to the claims that riders have a tough time while making express deliveries?

This is a distance play. You cannot make a rider run and get your job done. You have to give them enough time . They don't have any incentive attached to delivering the order faster. We say that you should ride the bike at your pace only.

How many stores do you plan to have?

By the middle of next year, we should be at about 1,000 stores.

How many techies do you plan to hire?

There are 200 positions open for tech talent. We currently have 350.

What are your thoughts on the new competition in the market. A young company, Zepto, has raised $60 million in its first round of funding. Have you ordered from Zepto to see how it works?  

Not till now but I wish them the best.

Recently, you said that Grofers would do any delivery in 10 mins. Grocery will just be a part of it. So, what are your plans to enter into the horizontal e-commerce space?

Our approach is to see what consumers need in 10 minutes and fulfil those needs. We leverage a lot of local information because we have local partners who run these businesses. We get to know what sells in every locality. So, to that end, we are 10 minutes first – we will  deliver anything that consumers need in 10 minutes.

Tell me about some of the categories. Will there be fashion and electronics?

I will share an anecdote. A few weeks before Diwali one of our merchants pinged us to say that he wanted to sell gold coins. He said everyone here buys them on Dhanteras so he wanted to keep them. I thought it was a great idea and told everybody to keep them. We actually sold 30,000 coins on Dhanteras.

So, you don’t plan to enter  the space currently catered to by Amazon and Flipkart?

Absolutely.

Grofers Co-founder Saurabh, who exited the company early this year, told me he wants to enter this space with the launch of his company, Warpli. Is there any synergy the two of you may have?

We will evaluate it when it comes. That will also open up another new area for instant delivery.

I asked him if Albinder would invest in the company and he said, ‘You should ask him’.

Absolutely, I will invest. You invest in people, you don't invest in ideas.



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Priyanka Sahay
first published: Nov 22, 2021 11:03 am
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