Grocery delivery startup Grofers nabs $35M in funding as competition in India heats up

Grofers, an Indian startup that delivers groceries and everyday items to households through a mobile app, announced today it has closed a US$35 million funding round led by existing investors Tiger Global Management and Sequoia Capital. The investment comes about eight weeks since the company closed its last US$10 million round, which itself came almost immediately after it bagged a seed round.

Grofers says that it intends to use the funding to ramp up its product offerings and expand throughout India. Based in Gurgaon, the company provides 90-minute delivery to customers in Delhi, Mumbai, and Bangalore.

Startups are popping up all over the world in hopes of becoming consumers’ go-to app for on-demand goods. While the service is identical, the business models can vary. Grofers owns no inventory of its own, and works with brick-and-mortar retailers to help them list products on its app. It then works with a mixture of in-house deliverymen (both part-time and full-time) and third-party logistics companies to take the goods to doorsteps. Albinder Dhisa, co-founder of Grofers, tells Tech in Asia that it monetizes by taking cuts from purchases, which come at six percent to eight percent for packaged goods, and over ten percent for perishables. Deliverymen are paid per order but are guaranteed a monthly minimum.

Much like the US and China, India’s on-demand delivery space is fragmented and extremely competitive. Just today Peppertap, another grocery delivery startup, announced it closed a US$10 million round from Sequoia (a Grofers investor) and SAIF partners. One day before that, Bangalore-based Zopnow, which sources groceries from supermarket chain HyperCity, announced it closed a US$10 million round led by Dragoneer Investment Group. Meanwhile, online grocery stores like  BigBasket and LocalBanya compete with these newer on-demand startups for orders.

Bigger players are eyeing the space as well. Flipkart, one of India’s leading all-purpose ecommerce sites, has also expressed interest in grocery delivery. Amazon launched Amazon Kirana in Bangalore, which lets mom-and-pop C-store list on the site, and Snapdeal partnered with supermarket chain Nature’s Basket to bring its inventory onto its marketplace.

With such intense competition, speed will be the name of the game, so funding and consolidation will likely continue to ramp up. Last week, Grofers acquired MyGreenBox, a rival delivery grocery firm in Gurgaon.

Editing by Malavika Velayanikal, image by Vivek Thayakal