GrocerMax, a Gurugram-based online grocery delivery company is planning to expand its services to five new cities in next three years.
Co-founder, GrocerMax, K Radhakrishnan told Indiaretailing Bureau in an exclusive interview, “We are on the verge of closing with one of the largest retailers of the world, we are expecting to make the announcement in the month of April. We are also looking forward to raise the funds that we will be utilising for expansion as we need to go other cities. We have a five city plan for the next three years – Pune, Bengaluru, Hyderabad, Chandigarh and Delhi.”
He further added, “At present we are only present in Gurugram which was our pilot project, we wanted to prove ourselves before expanding. I did not want to be someone like going to 15 cities and then shutting those down because the model is not set. Now our model is set and I am prepared to expand.”
In next six months, the company has plans to cover the whole of Delhi, Gurugram and Noida. It has taken almost 18 months to establish its business in Gurugram and post feeling confident about the business model, the brand is all set to explore new cities.
The company that delivers everything from brooms to ice-creams and contracts third-party fleet for delivering goods will be continuing with the same model and same products in the new cities as well as it believes grocery is the next big thing in the e-commerce.
“Without any doubt grocery is the next big thing in e-commerce because it is the largest category around US $300 billion dollars and in the top 6-8 cities, the size US $80 billion. If you look at what Amazon, Flipkart and all the other people do, they are fighting for the pie of just US $80 billion and the other more compelling reason is that all the categories other than grocery, nobody buys thrice a week but grocery as a category is about 70 times a year or 100 times a year,” revealed Radhakrishnan.
Survival of the Fittest
As far as grocery is concerned, if a company sets up an expensive infrastructure it can not survive. As margins in the category is low so therefore the cost to deliver also must be low.
According to Radhakrishnan, “I have a model which is a hybrid model. I stock only very little, I do real time sourcing from wholesalers, I do more than 500 orders a day in Gurugram and doing extremely well and I have an asset like model – from a 5,000 sq.ft. warehouse, I can do the business that other e-commerce players do in 10,000 – 20,000 sq.ft. stores. I think I have the model which suits India.”
“This model is that if you order by 12:00 pm, the products will be delivered by 5:00 pm. The customer can choose any slot from 5:00 pm – 10:00 pm. I buy only after I sell to the customers. So for fruit and vegetable, in Azadpur Mandi I have my own consolidation centre. I have 100 per cent predictability, I have less than 1 per cent damage or wastage in the supply chain, I keep only very little stock. With the stock of Rs 20 lakh, I do the sale of Rs 1.5 crore a month. That is the genius of the whole model. I still get the margin that normal regional retailers make but I don’t have the huge cost that my competitors have built,” he further explained.
The company with an average ticket size of Rs 1,300 on its platform, gross margin of 15 per cent and my delivery cost of Rs 73, stocks only 20 per cent of the stock and rest 80 per cent it procures in real time and it helps in keeping the cost low.