Grofers sees 30% revenue from group buying: Will Pinduoduo model work in grocery?

Grocery is the next frontier for large scaled horizontal e-commerce companies. Sensing a fierce competition from the likes of Amazon and Flipkart, BigBasket and Grofers have been devising several strategies to stay ahead of deep-pocketed rivals.

While Bigbasket has been getting into micro-delivery space, Grofers had recently pivoted to evolve as private label brand in FMCG and staple verticals. Differentiating further from BigBasket and others, Grofers has now betting big on group buying.

After running a pilot in Bengaluru, Grofers is expanding group buying programme (GBP) to Delhi, Mumbai and several other cities. According to the company, the decision to scale GBP is based on insights and data.

It observed that many users prefer to share screenshots of products and price and share within WhatsApp groups. The GBP concept worked well for Grofers in categories including kitchen utensils, cosmetics, and food items like cereals and biscuits.

Buoyed by initial traction, the company sees GBP to contribute 25 to 30 per cent revenue in the current fiscal.

Isn’t Grofers evangelising successful model of PDD?

The group buying programme mirrors the successful model of China’s Pinduoduo (PDD). The size of discounts is dependent on the number of people ready to purchase a particular product. 

For uninitiated, Pinduoduo is a consumer-facing e-commerce platform that redefined and championed social commerce in China. It allows users to group together and avail mind-boggling discount offers.

Using the power of group buying, Pinduoduo strikes a deal with manufacturers and users get a discount of up to 80 per cent.

Also Read: With 300 mn+ users and $38 Bn annual GMV, China’s Pinduoduo is bigger than Indian e-tail

Grofers seems to be repeating PDD playbook in grocery. The group buying concept also goes well with the company's target audience - mass market. Grofers caters to non-premium customers which are more likely to participate in buying together for discounts.

So far, under-penetration of social media platforms were one of the reasons for slow growth of group buying concept in India. However, it's slated to pick up with penetration of smartphones, cheap data, vernacular version of Facebook, WhatsApp and regional languages focused platforms like  ShareChat.

While Grofers pilot with group buying model making it confident to replicate in various cities, it would be exciting to see whether the company achieve the projected 25-30 per cent revenue from GBP or not.