Case Study 1 — Grofers: Part 4

Real-Time Inventory Management:
Maintaining real-time inventory management from stores would be a challenge. Customers would dislike ordering items only to realize that they are out of stock.
Possible Solution: Create a technology solution which integrates into existing standard inventory management systems of stores. If they don’t have create a technology platform, create one for them. If stores don’t have one, it could be a very strong differentiation Grofers can offer these stores.

Updation of more and more items from stores:
I recently visited a store in a posh locality in Mumbai. The store owner complained that he had so many products but most of them were not listed on Grofers. It seemed like the process of getting products listed on Grofers is cumbersome or restricted to limited products. This has to ease out. If it is a manual process wherein someone visits the stores and checks / updates these items, then cost viability needs to be evaluated as it might become a very expensive process just running around to update availability.
Possible Solution: Create an app for them to directly upload new product availability. This could be an integrated platform to track inventory as well as update products. If a certain prodct is out of stock, the shop keeper updates the status of the product to “Out of stock”, so customer is aware and avoids a bad customer experience. Grofers needs to empower stores with a technology differentiator which they probably currently do not have and in the process also enhance their customer experience.

Challenge from Completely Online Grocery Stores:
Portals like BigBasket are delivering similar product lines and hence will be a huge contender to deal with.
Possible Solution: Identify high margin products, stock them up and sell at a discount.

Threat from large Global / Indian E-Commerce Brands:
Companies like Amazon with huge cash reserves can very well enter these product lines and they have a lot of international experience as well. Competition from them can be detrimental as they can easily get into a huge price war along with a much stronger technology and supply chain back-end. Considering Indians customers are extremely price-sensitive, they wouldn’t mind shifting to these offerings.
Possible Solution: Possible partnerships with them to offer last mile logistics. Can’t beat them, but provide a distinct value add to them to co-exist.

Low Profit Margins / Distinctive Value Proposition:
Groceries and allied products have reasonably low profit margins. Hence one needs to work on the unit economics to actually identify if it is a profitable venture. Products are priced at MRP. Shops sometimes offer cheaper. If they don’t there is someone in the market who is doing so and hence customer will go to them. Hence there cannot be a big differentiator in terms of product price margins. If it comes down to delivery, it is a people intensive business if volumes were to scale up. Even if these shops are not offering all the products, I have BigBasket’s of the world to offer me a competitive offering.
Possible Solution: It might sound stupid, but I have seen all Grofers delivery people on bikes. Probably getting delivery boys on cycles might be a good idea as it might save on the fuel costs.

Add-on possibilities to stand out:
- Employ girls as a part of the delivery network on cycles. If I know that Grofers is creating employment for 1,00,000 girls, even if there is a competitive brand offering the same products at the same price, I would prefer going in for it.