Grofers 2.0: inside the startup’s big mistakes and learnings

Photo credit: gratisography.

In April this year, Grofers ran a sale. The delivery startup was still app-only, and the temptation of getting daily household essentials at cheap rates made droves of new customers come online and order.

The app broke.

“The company saw a peak of more than 60,000 orders a day. But right after that, we said we are not going to run any more promotions unless we can fix our system, because the load completely broke everything in our system,” Albinder Dhindsa, co-founder and CEO of the Gurgaon-based company tells Tech in Asia.”

The problem? Grofers had bitten off much more than it could chew. Logistics were broken, long packaging times angered customers, shops ran out of stuff to sell, and it was mayhem all around.

Tiger Global and Sequoia Capital-backed Grofers is an online-and-app based grocery delivery startup, launched in 2013. It competes with Bangalore-based Bigbasket, but unlike them, believes in an inventory-light, aggregator model. That is, until April, when Albinder and team realized they needed to bring around some serious changes if the company were to get anywhere.

Pushed to “outgrow rivals,” and armed with massive amounts of money, the company launched an expensive TV spot and spread to various zip codes across India, fearing customer backlash if they saw the ad but realized the service was not available in their neighborhood. At that time, Grofers was servicing 27 cities across the country. (It’s in around 20 cities now).

“However, at that time we did not have the bandwidth to build the necessary supply chain. After our biggest cities started settling down, we now have the bandwidth to add these cities back,” Albinder says candidly, a rare quality in an entrepreneur these days.

Grofers started off as an online runner-boy, where customers could place orders from neighborhood stores.

Misses galore

After the April awakening, Grofers made a ton of changes to how it handles business. It did all that startups do when they have to trim costs, but also decided to up and alter its business model.

The biggest learning was in realizing how certain assumptions failed them in real life.

“One of the things we did not know was how much supply-chain involvement would be required from our end. As we started scaling up, the merchants were struggling with demand. Then we had to start making a lot of supply chain investment, which is actually something we were trying to avoid when we started initially,” Albinder says.

Grofers is now clocking half of the orders it was in July, but at a higher basket value.

To be or not to be asset-light

Changes