Grofers was founded in December 2013 with the goal to solve the problems associated with the unorganised nature of the grocery delivery space in India. The startup piloted in Delhi NCR before reaching other cities. After seven years of operations as an online grocery delivery service, on December 13, 2021, Grofers changed its brand name to Blinkit in line with its vision to embrace quick-commerce, introducing express grocery delivery in India, by building dark stores across cities.
In January 2016, the on-demand delivery service startup had to shut operation in 9 cities.
What happened?
Grocery buying via an app was never a necessity for Indians. Every city and neighbourhood in India has a grocery store selling the essentials like bread, rice, lentils, milk, and eggs. The model of acquiring customers at any cost and growth, by all means, put Grofers on a path to self-destruction. Below are some of the reasons to Grofers’ failure:
Inaccurate audience analysis
The business did not unbiasedly assess the viability of the operations in small towns as part of its growth strategy. A client in a tier-2 or tier-3 city would prefer to stroll to the friendly local store and buy what he needs when he needs it, as opposed to someone in a tier-1 city who would be relieved to have groceries delivered to their doorway. These small businesses also extend credit, something that online retailers do not (BNPL was not introduced at that time and still would take some time for the users to get the hang of it)
The hiring and the Firing
They employed more employees than they needed, only to fire them later and generate negative press, damaging the company’s reputation and any future revenue. The same applied to other resources, particularly the substantial advertising expenditure.
Customer, who?
The major mistake that Grofers made was that they didn’t know their customer. While a tech-aware person would normally use an app to place an order, homemakers and elderly people frequently order daily groceries and would rather pick up the phone and call their nearby trusted shop to order groceries even if it costs a few rupees more to them.
Other Casualties
Howevers it’s not just Grofers that had to close down some of its operations. In february 2016, Flipkart also closed down its online grocery business just five months after the commencement. Peppertap also had to close down some of its operations due to excess financial bleeding.
