Hard work comes to fruition

Grofers moved away from hyper local delivery to inventory-led model to strengthen its supply capabilities. In an interview Saurabh Kumar, founder, Grofers, tells us that automation is the key difference between a traditional and an online retailer, and how it enables consistent output both for the brand and consumers.

 

Grofers has been called the comeback kid in the online business. How did you manage this turnaround?
We are a consumer business and at the heart of the business is our consumer. We listened to our consumers, did a lot of market research to understand what potential consumers want and modelled our business as per their needs. With this, came many changes such as doing away with Grofer’s Express and making savings the core benefit for the consumer.
 It is a recognition for our team that has worked hard to make sure we do the right things for our business and consumers from day one. We continued to innovate and improve our services and bring efficiency into grocery buying that aimed at increasing savings for our consumers. 

What practices have you adopted for warehouse management? How has the automation impacted the industry?
We are focused on creating ‘value’ for consumers that goes just beyond convenience. Every decision has been to make our supply chain more efficient, so that we can bring better value for consumers, day in and day out. 
In a typical distribution network, there are various stages before the product reaches the consumer especially the regional and local distributors. While we started as a marketplace, in order to deliver true value to the consumers, we needed to consolidate the supply chain. We have shortened the supply chain by sourcing directly from the manufacturers while being a direct channel for the consumers. To that effect, we opened our own warehouses.  
Our approach has been to “solve problems with the use of technology”. Our supply chain technology stack is built with a view to build efficiency at every leg of the goods movement. At warehouses, the company has introduced hand-held devices for workers that help them locate the products on shelves in the least possible time and thereby increasing the location accuracy and improvising the efficiencies. Similar technologies help in streamlining the first and last mile connectivity. We also ensure that warehouses are located in close proximity to the consumers, so that it takes minimal amount of time to process and deliver the orders. 
We feel automation is the key difference between a traditional and an online retailer. The best part of automation is that it enables consistent output both for the brand and 
for consumers. 
How did an inventory-led model help the company in terms of profit after it deviated from hyper local delivery model?
In 2016, we pivoted our business to an inventory led model. The biggest reason that made us pivot to an inventory lead model was that it was difficult to control users experience. A very few merchants had accurate inventory management systems, which lead to consumers either not receiving all the products they had ordered, or not receiving good 
quality products.
Shifting to inventory-led model was an important decision to strengthen the supply capabilities and keep pace with the growth. We setup warehouses in 12 cities within a span of 6 months and since then, we have been growing remarkably, while simultaneously decreasing our operational costs. We have been able to achieve this growth with a much better consumer experience. The model has allowed us to have better control over inventory and we can offer better margins from the manufacturers.

How many warehouses are established as of now? Did GST aid expansion of warehouses across the country?
Currently there are 26 warehousing facilities and in order to fuel the expansion, we are consolidating warehouses and replacing the smaller ones as the company looks to streamline the supply chain.
GST is a welcomed initiative. Since we are on an expansion phase and plan to open multiple warehouses in the existing cities, the GST impact will help us in consolidation of the warehousing facilities. 

How do you address the supply chain bottlenecks at the back end to ensure minimum wastages?
Our supply chain technology integration starts with the manufacturer and we track every single product movement to the customer’s doorsteps. 
We are in the business of groceries and household needs wherein we need to keep a close eye on the product criticalities such as expiry dates, packaging, quality, temperature at which the product is stored, etc. Along with enablement through technology, we also extend special training and instruction programmes for workers in warehouses to better manage shelf life of various products, packaging requirements, delivery instructions etc. This helps us in ensuring minimal wastages in the entire supply chain. 

What are some of the challenges for online grocery companies? How do you see the trend going ahead?
The challenge ahead is to resolve the structural inefficiencies that exist in the traditional grocery supply chain and bring manufacturers and consumers closer. Online grocery companies will evolve to solve for differentiated customer needs. New customers who are coming online expect better savings and accessibility than offline retail, and this will be a challenge for online grocery companies.

Assistant Editor