Grofers has raised $220 million from SoftBank Vision Fund and other investors, marking the biggest fundraising in India’s online grocery delivery industry and ratcheting up pressure on larger rival BigBasket.
The latest funding comes after the startup executed a quick turnaround plan following a fund-raising at a beaten-down valuation in February 2018.
South Korean investment firm KTB Ventures and existing investors Tiger Global and Sequoia Capital also invested in the latest round, Grofers said on Wednesday.
The commitment of funds by SoftBank and other investors also comes just a few weeks after Grofers’s biggest rival, Alibaba-backed BigBasket, raised $150 million in funding. Both companies are building war chests to battle it out for market leadership in the online grocery sector.
E-commerce giants Amazon and Flipkart have also been growing their grocery verticals aggressively.
Grofers will use the money from the series F round to expand its supply chain operations. The company, which started out as a hyperlocal grocery delivery player in December 2013, has moved to the inventory model over the last two-three years and has recently focused on private labels. However, unlike BigBasket, Grofers does not offer fresh produce or same-day deliveries.
“We are clear about our target audience,” said Albinder Dhindsa, chief executive of Grofers. “It is going to be middle India that goes after planned purchases and low-priced offerings.”
Grofers had raised $120 million in November 2015 at a valuation of $400 million. However, as the company rolled back its hyperlocal services and changed its business model, it also had to accept a drop in valuation. In February 2018, Grofers raised money from its existing investors at an approximately 40% lower valuation than its previous round in 2015.
However, the company stuck to its new business model and kept growing its private label business. This resulted in investors gaining confidence, following which SoftBank moved its Grofers investment from its balance sheet to the Vision Fund.
Now, the company is eyeing profitability, riding on the back of its private label offerings. Almost half of the company’s sales are from private label offerings. The private label stack of Grofers consists of 780 products that is expected to increase to 1,200 by the end of 2020.
The company also plans to make its private label products available at local grocery stores in the next few months.
Grofers is profitable in Delhi, where it clocks about ₹100 crore in monthly revenue, Dhindsa said. He expected Grofers to become profitable for the overall business by the end of 2021.
The company claims to clock about 60,000 daily orders, with an average order value of ₹1,450.
However, BigBasket continues to lead the online grocery sector with approximately 80,000 daily orders, according to industry estimates. Moreover, its subscription service, BB Daily, clocks almost 30,000 daily orders, although the ticket size of these orders is much smaller.