Online grocery startup Grofers received a sum of Rs. 321.35 crore by issuing 2674 equity shares to its parent entity based in Singapore, with the shares being priced at Rs. 12.01 lakh per share, as part of its Series F funding.
Grofers has also been able to onboard another prolific investor in media conglomerate Bennett Coleman & Company Limited. As per regulatory filings, Grofers has bagged funding to the tune of Rs 142.6 crore from BCCL, which owns the popular newspaper ‘Times of India’ among others, while also owning its digital arm, Times Internet.
Usually BCCL invests in start-ups through its ad-for-equity model. Whether the deal also involves promotional and advertising campaigns across BCCL media properties is not yet ascertained.
On the other hand, Grofers has also freshly received Rs 321 crore from its parent entity in Singapore as the company continues to ramp up its operations. The participation of horizontal majors – Amazon and Flipkart is yet to be seen, while BigBasket and Grofers have been leading the segment for the past few years.
In earlier years, both companies were seen competing and had a cut throat competition between them with a similar business model, but it has since changed, with Grofers tweaking its approach two-and-a-half years ago. Unlike BigBasket, the Softbank-backed firm has been focusing on the non-premium customer with its ‘private label’ approach.
Moreover, the model seems to have resonated well with its existing investors – Softbank Vision Fund, Tiger Global and Sequoia Capital. As a consequence, they have now gone a step ahead and invested around $270 million in the Gurugram-based company earlier this year. It seems like part of this investment has been put into the Indian entity by its parent.
The new infusion might be used towards expanding operations and launching more brands across FMCG and other staples. Along with the expansion of its online presence, Grofers has also been pumping its in-house brands through the offline channel, in an attempt to become a new-age FMCG firm. The firm is now also partnering with retailers for this purpose.
Till date it has powered about 125 small and medium retailers across the NCR region.The move is largely guided as the company wants to find a fresh market.Exploration of the offline market has turned out to be a meaningful strategy for Grofers, which is now looking to build itself as a mass brand in the grocery and FMCG segment. The Gurugram-based startup is now pushing for aligned categories such as kitchen utensils and cosmetics as well.
One among multiple ways for grocery players to make money would be by expanding their in-house brands which demand a much higher margin when compared to simply selling other brands on their platform. BigBasket, too, has been pushing its private brands on the online grocery platform.
Contrary to this, both Flipkart and Amazon are trying their chances at grocery, at a much slower pace. While Amazon is ramping up its grocery game through acquiring stakes in brick and mortar businesses such as the Future Group and others, Flipkart has the back of its parent Walmart to have a strong grocery arm.
Lately Flipkart has forayed into food retail through its new entity Flipkart Farmer Mart. It is looking to invest $258 million in the new entity.
Founded in 2013 by IIT graduates Albinder Dhindsa and Saurabh Kumar, Grofers has expanded its range of brands over the last year and currently has 800 products spread across categories such as pantry staples and kitchen ingredients, FMCG, personal hygiene covering soaps, shower gels, and face wash, among others as part of its inventory.