With customers favoring online options, online grocery shopping has become extremely popular. Grofers, the online grocers present in Bengaluru and Gurgaon, are changing things up in order to optimise their business model after receiving $62 million in funding led by Softbank.
As such, Grofers is cutting back on the sale of fresh products in order to focus more on their private label offerings. “Fresh products form 2% of the company’s overall revenues,” said Albinder Dhindsa, CEO, Grofers. “We will probably come back with it (fresh products) in a few months but for now we need space for our growing private label business.”
Fresh produce has one of the lowest profit margins in this sector at 7%, hence, Grofers has spent the last seven months focusing on its non-fresh private label products with over 700 items on its roster currently and 30 to 40 new items added monthly.
However, that’s not Grofers only key to success, according to Dhindsa,“Private labels can help improve margins, but it’s not the only way to reach profitability. It comes from having good cost control and discipline.” With the online grocery market burgeoning, we’re yet to see if this strategy pays off.