Grofers has had a good run so far, aims at operational break-even by year end

Grofers, the Gurgaon-based delivery firm, has decided to let go of growth so that it can achieve profitability, while trying to repair the damage that a long run of growth and customer-wooing has caused to the company’s profitability.

It’s been a year that Grofers has been growing rapidly, and it is now aiming to achieve operational break-even before this year ends, CEO Albinder Dhindsa told ET. The company will also be focusing on fixing its business fundamentals so that it can achieve a monthly organic growth of 5%.

"Before we go after growth again, we need to figure out what is making money for us, where we can see growth and where we cannot," said Dhindsa. "We are fixing things like brand monetisation, building tools for our sellers to monitor performance, and improving our delivery utilisation."

The reason why Grofers decided to put some focus on business fundamentals could be influenced by its rival PepperTap shutting down its grocery business two months ago, while Grofers laying off about 200 people in the recent past can also be seen as a step in this direction.

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On laying off these employees, Dhindsa said that it had to be done because of technology efficiencies replacing the need of physical employees, while a drop in orders influenced this decision. On technology, he said that about 93% of the delivery process at Grofers has now been fully automated. "Our delivery capacity is the same as in November but with one third the number of people... When a technology leap happens, it makes a huge bunch of people redundant very quickly. That happened to us in order processing."

However, Dhindsa is now hopeful about the hyper-local delivery business model, saying that Grofers' average order size has gone up from about Rs 600 to above Rs 1,000 in a matter of six months.

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