Grofers shuts down fruits and vegetable segment in NCR, Bengaluru and others

SoftBank-backed Grofers has shut down vegetable and fruits segment across cities including Delhi (NCR) and Bengaluru. The service has been suspended in the above cities from past couple of weeks. Grofers has confirmed the pull out of fresh produce category from its app to Entrackr.

“Since Grofers has been focusing on next day delivery, our volume for fresh produce was very little. Hence, it doesn’t make sense to prioritise,” says Albinder Dhindsa, co-founder and CEO of the company to Entrackr.

The Gurugram-based company had pivoted in late 2016 to focus on mass market and monthly stock-up. It also pulled the plug from 90 minutes delivery. “Vegetable and fruits suit express delivery format, not ours,” explains Dhindsa.

Fruit and vegetables are considered as a margin-rich category for online grocers. It allows margin up to 30-40 per cent if sourced directly from farmers. According to Entrackr sources, the company has been grappling with waste and tepid demand (after pivot).

After Grofers pulling out from the category, Bigbasket, Satvacart and a slew of micro-delivery platforms including Milkbasket (Gurugram) and Dailyninja (Bengaluru) would compete in the fresh produce segment.

At present, Alibaba-backed BigBasket is the only player that offers express delivery service across all major cities.

According to Dhindsa, Grofers private label business has picked up fast in the current calendar year. “About 35 per cent of our total revenue comes from private labels in staples and FMCG products such as beverages, pasta, and detergent,” adds Dhindsa.

Currently, the company does about 35,000 orders a day and Rs 150 crore monthly revenue.

Micro-delivery (aka milktech) platforms have been in news as investors and established companies - MilkBasket and Swiggy have triggered consolidation in the space. While Swiggy is in the last leg to announce SuprDaily’s acquisition, BigBasket had acquired Bengaluru-based Morning Cart and Pune-based RainCan.

Since Grofers has shut down fresh produce segment to focus on growing private label business, it would be interesting to watch how Grofers’ in-house brands are being accepted by consumers. Also, it’s a good news for Bigbasket as it’s the only big player left in the segment.