Solution to Case Study 1 : Grofers — Assignment 2

Price Differentiator : The cost of items in Grofers is same as MRP which is greater than what it costs in the superstores and wholesale stores, and there exists market segment where most of the people want to buy goods in large quantities and wholesale rates, Grofers will not be able to penetrate this segment if it doesn’t provide the same. →Current solution : Grofers fulfill the needs of those who don’t have time to go out and buy stuff. So eventually it will hit the saturation and would want to attract other segment also which I defined earlier. → Future solution : Grofers can team up with these stores and provide supervalue packs or discounts on large quantity buying. Or in near future should own warehouses to have an edge over these stores.
Cost Structure : How they will compensate the salaries of delivery boys. As the number of orders has to highly compensate for the wages which they are paying to delivery boys. Maintaining this balance of cost structure and wages will be difficult if they don’t get minimum amount of orders everyday. →Current solution : Right now they are paying monthly wage whether in that particular area delivery guys fulfills 1 order or 50 orders. →Future solution : One way to reduce this cost is just like what Flipkart is doing, they can open pick-up stores and tempt the customers to order and than later pick it up from there on their way home by giving that wholesale store type discount. Here also they are saving time for customers as the customers don’t have to handpick every item offline, they trust that it will be freshly picked for them.
Competition & Dependence on stores : Right now grofers is highly dependent on these stores and is attractive to them because of the business they bring. But what will happen when the major players like amazon who are already entering this space and have such a huge customer base will leverage cash reserves and logistical expertise to scale in this business. They can easily tempt these stores to partner with them with respect to customer base and business they bring. →Current solution : Grofers has partnered up with several stores to fulfill customer’s needs. →Future solution : They can create their own warehouses or have the competitive edge over big players by continuing building the trust on both sides with stores as well as customers. They have to gain loyalty from both sides then only they will be able to compete with Giants.