Grofers’ total losses increase by over 40% y-o-y in FY20

Total losses for online grocery firm Grofers increased by over 40% year-on-year to Rs 637.49 crore in the year to March 31, 2020. The company incurred higher expenses which widened to Rs 814.29 crore in FY20 from Rs 531.62 crore in FY19, according to the company’s filings with the RoC sourced from business intelligence platform Tofler.
Revenue from operations grew by a little over 135% y-o-y to Rs 165.27 crore in FY20.

The company’s advertising and promotional expenses shot up to Rs 179.21 crore in the last financial year from Rs 82.08 crore in FY19. Discounting charges rose to Rs 158.59 crore in FY20 compared to Rs 128.32 crore in FY19, the documents showed.

Grofers said that new households added amid the pandemic had accelerated the firm’s path to profitability during the lockdown. The company is eyeing overall profitability in the current year. Analysts observed that a significant proportion of the 150 million online buyers have started spending on e-groceries. Saurabh Kumar, founder, Grofers, claims that the firm has acquired 18 lakh new customers and managed to retain more than 70% of those who used the platform in the first month of the pandemic. “We expect this trend to continue in the coming months as there seems to be a natural demand for groceries online,” Kumar had told FE in October last year.

Consultants at RedSeer said there was an expected 1.5 to 1.6 times increase in households that subscribed to online grocery in May 2020 compared to the beginning of the year. Grofers that is gearing up for an IPO later this year plans to broaden its private label offerings and has reportedly allocated $15 million for the category. Experts point out that it is not as though the business models of e-commerce firms are in themselves unviable, it’s merely that companies continue to invest in acquiring customers.

“It is not so much of a unit economics challenge for some of the scaled-up players,” said Arpit Mathur, partner, Kearney.