INTERVIEW: Grofers founder explains why he rushed to rebrand the startup and his plans seem ambitious

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INTERVIEW: Grofers founder explains why he rushed to rebrand the startup and his plans seem ambitious
BCCL
  • The rebranding was a part of its plan to make users aware that Grofers goes beyond grocery delivery.
  • “We just found a name that we liked a lot,” Dhindsa said while referring to the trigger point of this rebranding.
  • Grofers was valued over a billion dollars in August this year, after it raised about $100 million from Zomato.
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“We were doing it [rebranding and focusing on faster delivery] out of the mind that we either out-innovate [sic] ourselves, or we will become redundant,” founder and chief executive Albinder Dhindsa told Business Insider.

This why the company rushed with its rebranding exercise ⁠— changing the name of the company to Blinkit ⁠— taking it live within a week of deciding the name.

Five years after it gave up on 90-minute deliveries because of bad unit economics and lack of profitability, Grofers rushed to give itself a makeover to show that it can do really fast deliveries.

So, what has changed in the last five years? Dhindsa believes that there are a lot more customers shopping for groceries online and so, even the smaller shopkeepers are ready to deliver for online orders. “Local partners and stores are much more willing to join the ecommerce revolution and really want to be a part of newage and technology businesses,” he noted.

And it’s not just Grofers, but even food delivery app Swiggy, quick delivery specialists Dunzo and Zepto have also pumped in big money into quick commerce. Tata Digital-owned BigBasket, which is Grofers’ biggest rival, also plans to enter this segment with a 10-20 minute delivery option. Meanwhile, Reliance Industries is chasing Dunzo for an investment opportunity, probably for its groceries and ecommerce business JioMart.

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CompanyMoney invested into these companies in 2021
Swiggy$800 million
Dunzo$8.3 million
Zepto$60 million
Grofers$120 million
Source: Media reports, company announcements
Dhindsa may be hoping that this pivot to instant deliveries will end the cycle of losses. “...this is a better business and a stronger business for us to be able to build and capture this opportunity,” he added.

INTERVIEW: Grofers founder explains why he rushed to rebrand the startup and his plans seem ambitious
BI India

However, aside from being rushed, the challenges are going to be immense.

Google-backed Dunzo, which is an early mover into the quick delivery space offers limited product options to their customers. Zepto — founded six months ago by two 19-year-old Stanford dropouts — has also found its model to deliver products in 10 minutes on the back of limited products, which has helped it achieve a $250 million valuation.

But Grofers wants to sell a much larger product line. Everything from ice cream to poncho for winters will be delivered by Blinkit, Dhindsa added. Globally quick commerce players have fewer stock keeping units (SKU), between 1,000 and 3000 products, Grofers is chasing 4000-7000 SKUs, which can put a strain on its operations.

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“Customers expect us to have more things, not less. And they want faster delivery, not slower. So we don't have a business model, we are just obsessed with the customers,” is Dhindsa's defence.

So, he is not cutting back on the inventory. And he wants to serve 30 cities through 1000 stores by the middle of next year. It is currently executing its 10-minute delivery in 12 cities through over 250 stores and plans to take this number to 530 stores by next month. Is it really enough?

In comparison, Dunzo has over 11,000 merchants listed on its platform across 8 cities.

A chief executive of a firm in the quick commerce space, on the condition of anonymity, told Business Insider that 540 stories across 12 cities would not be enough to carry out 10-minute deliveries. Besides this, the larger SKUs of over 5000 is not feasible, the executive added.

“We did some maths on our end to do 10-minute delivery in a city like Bangalore [Bengaluru], you will need close to 80-90 stores. If you have to deliver in Delhi [under 10 minutes], you would need around 300-400 stores. But maybe they [Grofers] are not operating everywhere, they are only offering 10-minute delivery to places with dense localities,” the person added.

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INTERVIEW: Grofers founder explains why he rushed to rebrand the startup and his plans seem ambitious
Bi India

Grofers, now Blinkit, was founded in 2013 by Albinder Dhindsa and Saurabh Kumar.

It was valued over a billion dollars in August this year, after it raised about $120 million from food aggregator business Zomato and Tiger Global. According to media reports, Zomato was in talks to acquire Grofers last year, but the talks reportedly didn’t fructify. Instead of an acquisition, Zomato went ahead with investing in Grofers to boost its grocery delivery ambition.

The company has raised around $800 million in funding to date, as per Crunchbase. It counts SoftBank, Bennett Coleman and Co., and KTB Ventures as its investors.

Disclosure: Business Insider India is a partner of Times Internet, which is a subsidiary of Bennett Coleman and Co.

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