Softbank responds to Alibaba investment in Bigbasket, leads $62 Mn round in Grofers

Game of online grocery is getting intensified in India with every passing day. After Bigbasket, Grofers has raised about $62 million (Rs 400 crore) from existing investors. Softbank leads the round and increased its holding to 35 to 40 per cent while Tiger Global and Yuri Milner also participated in the fresh round.

Softbank group has invested $40 million, Tiger Global injected $15 million while Milner injected the rest in the Gurugram-based company. Currently, Tiger holds 25 per cent in the e-grocer.

With this round, Grofers has scooped up about $220 million risk capital from aforementioned investors along with Sequoia and others. Notably, the valuation of the Albinder Dhindsa-led company has dropped to over 20 per cent in the latest fundraising, reports TOI.

The Gurugram-based company was valued $400 million when it raised about $120 million in late 2015. This is the much-needed firepower for Grofers to maintain its lead over rival Bigbasket in Delhi (NCR) and grab more market share in Bengaluru, Mumbai, and others.

Currently, it claims to do over 30,000 orders on a daily basis with monthly revenue of Rs 100 crore. Grofers claims to have 30 percent market share of online grocery retail while Bigbasket commands over 50 percent.

In an exclusive interview with Entrackr, Dhindsa had emphasised that Grofers has achieved over $15 million turnover (Rs 100 crore) every month.

Importantly, the company had pivoted from marketplace model to inventory led play in 2016. The major driver for moving from marketplace model was broken supply chain. However, the pivot was painful for Grofers as it didn’t see a path to profitability with 90 minutes delivery format. It was also causing a significant burn.

At the beginning of 2017, Grofers was doing little over 5,000 orders a day. Now, it processes 30,000 orders on a daily basis.

Unlike 2016 and before when it used to fulfill orders on bikes, the Softbank-backed company now uses a fleet of Tata Ace and vans to facilitate delivery from centralised warehouse (not through dark stores).

Currently, the company has 23 warehouses including 7 in Delhi (NCR), one big facility in Bengaluru accompanied by two small ones.

To beef up its stake in one of the fledgeling e-commerce economies, Alibaba had led a $300 million round in Bigbasket. Indian e-commerce major Flipkart also had made re-entry into grocery space. Jeff Bezos-led Amazon has been operating standalone app Amazon Now, dedicated to grocery delivery.

It also retails grocery and FMCG products via dedicated category - Pantry.