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Grofers: A Case Study of Influencing Factors and Constraints in an E-Commerce Driven Supply Chain*

CASE STUDY, SUPPLY CHAIN MANAGEMENT
ET Cases - GSMC, 14 Pages
AUTHOR(S) : Sunita Guru - Institute of Management, Nirma University, Ahmedabad, Neha - Institute of Management, Nirma University, Ahmedabad

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Grofers: A Case Study of Influencing Factors and Constraints in an E-Commerce Driven Supply Chain

It was windy weather on 15th July 2015 in New Delhi, the Capital of India. Mrs. Sharma arrived home after a very hectic schedule at office. As she entered the hall, she realized that she has forgotten to pick up the grocery required for preparing breakfast the next day. She loathed the very idea of going back to the grocery shop. It simply required a lot of energy and time. It would mean taking her vehicle out from congested parking lot, driving through mad traffic, looking for a parking space, picking up the grocery, making payments and carrying the bagful of grocery and so on. Was it really worth the efforts or should she announce that tomorrow also her husband will have to compromise with breakfast? She looked out of the window and noticed that it started raining. What could she do? Normally, after a busy office schedule, she preferred to freshen up and relax, or perhaps listen to light music.

Mr. Sharma, her husband, had arrived a little earlier than usual. He understood her plight. Mr. Sharma owned a bakery shop. He was working on the idea of partnering with an online delivery service to expand the reach of his business. He had downloaded information from internet about a number of on-demand delivery service providers such as Grofers, Bigbasket, Peppertap and ZopNow. He asked Mrs. Sharma not to worry and try out any one of them. Reluctantly, Mrs. Sharma called up Grofers and placed the order for groceries required by her instructing them to supply the same from her favorite grocery shop.

About an hour later, as they finished their dinner and were having their dessert, the doorbell rang. The delivery boy from Grofers arrived, and delivered the order in full and collected the payment. Mrs. Sharma was relieved and indeed felt very happy!!

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Grofers.com

Grofers is an ‘on-demand drop delivery service’ that connects the consumers with the local stores. As the description suggests, the ‘on-demand drop delivery service’ model essentially means that the customer places the order on mobile/telephone or on the company website through internet, advising the provider of the service to purchase items ordered by him/her from a grocery shop of his/her choice and deliver the same to his/her home at no extra cost, and within a promised time period. To meet the customer’s expectations, the provider of the service needs to organize an efficient supply chain in the area of operations...........

Supply Chain

The supply chain is all about efficient execution of an order. It was imperative that Grofers create a m-commerce platform that would be customers delight when it comes to placing the order. However, the execution must also excel the customer’s expectations.

When the founders visualized a supply chain for Grofers they had three clear priorities in mind. The first was Delivery. They set the benchmark of 90 minutes after considerable debate. Grofers must stay committed to deliver any order within 90 minutes. They believed that assuring delivery within 90 minutes would set industry standard difficult to be achieved by new entrants. The second was Scalability............

Daily Operations

The process starts with a customer placing an order. The core of Grofers’ business is the customer-friendly mobile application. This application allows consumers to transact with third-party stores i.e., the stores listed with the Grofers. The customers could place an order of any number of products from over 1,75,000 products listed on the Grofers website clubbed in nearly 14 categories. Customers have options to build up their cart by clubbing products from different stores and categories............

Technology and Supply Chain

Technology provides major support to Grofers’ Supply Chain. It proves to be an excellent prototype of functioning organization without infrastructure. The success lies in the user friendliness and pervasiveness of the Grofers mobile application among shoppers, packers, delivery boys.............

Competitors

With the increasing number of players in the hyper local market the survival depends on the acceptance by consumers and merchants. India had a total of 110 hyper local startups as of 2015 and the number is continuously growing. According to a study conducted by Ken Research, hyper local market is expected to reach INR2,306 crore by 2020...............

Looking Ahead

Grofers’ founders are looking forward to expand their business in new cities such as Hyderabad and Pune. They are also planning to add new verticals such as electronics, pharmacy and cosmetics to their business. Apart from this, the founders aim to bring offline retailers online so that customers save time by doing most of their shopping online.............

Assignment Questions

I. Define E-supply chain? How is supply chain managed online? What are the advantages and disadvantages of e-supply chain? List all the components and their processes of the e-supply chain. Support the explanation by theories and models. How technology can be used to improve the operation of supply chain? From the case facts, establish a new model for Grofers.
II...........

Exhibits

Exhibit I: Indicative Compensation Model for Delivery Boys

Exhibit II: Flow of Information Within the System for Supplying Orders

Exhibit III: The Macro Processes and Their Sub-Processes

Exhibit IV: Comparison of Various Players in the E-grocery Market

Exhibit V: Revenue per Employee

Teaching Note Preview

Grofers: A Case Study of Influencing Factors and Constraints in an E-Commerce Driven Supply Chain

 

Synopsis

This case study describes how a startup had leveraged IT to support its supply chain for creating a differentiating advantage to establish itself as a major player in the e-commerce space of Grocery supplies. The case highlights steps required to set up a flexible supply chain for optimizing its costs.

The instructors should encourage students to scan data about supply chains of various e-commerce companies from the internet in preparation for the classroom discussion. The students should also be encouraged to explore the concept of flexible supply chains for facilitating the discussion.

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

The students must be encouraged to prepare with the pre-reads for insightful classroom discussion and analysis of the case. This will help to explore the nuances of an e-commerce driven supply chain management.

Chopra, S., Meindl, P., and Kalra, D.V., “Supply Chain Management: Strategy, Planning and Operation, Pearson, 2013

An additional exercise of ordering a product from Grofers can create an understanding among participants.

Case Positioning and Setting

The case can be insightful in teaching the MBA, executive MBA and Ph.D. students about the nuances of supply chain in the upcoming hyper local businesses. It will build an understanding of e-commerce supply chains and the future on e-commerce retail in Indian market. This case can be used to facilitate the classroom discussion on e-supply chain, logistics, and customer services in a mobile driven environment, forecasting, warehousing and order fulfillment.

In Post-Graduate and Ph.D. programs, this case can be covered in Supply Chain Management course under the topics: Supply Chain Management, Information Technology in Supply Chain, E-Business and Supply chain, Understanding of latest development in Supply Chain in E-Business. Similarly, in Operations Management II, the case can be covered under Performance Issues, Supply Chain Design Strategy, Outsourcing, Mass Customization, Forecasting and Demand Management........................

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Abstract

**IIM RAIPUR – ET CASES Award (GSMC 2017) - For Showcasing a Futuristic and Progressive Idea

Award Winning Case Study

The on-demand pickup and delivery service market has rapidly evolved in all major urban centers in India. Major players such as Grofers, Bigbasket, ZopNow etc., provide such services across many verticals such as packaged goods, cosmetics, fresh foods and so on. Designing and maintaining a scalable, cost-efficient & flexible supply chain is a major challenge.

This case study narrates how Grofers, a major player in the industry, could design, implement and maintain such supply chain that has given them solid competitive advantage by creating industry benchmark in delivery time. The case study begins by describing a real-life situation that encouraged a new customer to try Grofers. It discusses the background of the promoters and various phases of the start-up as it evolved from a B2B business in Gurgaon to becoming B2C service provider across many cities. The case focuses on challenges in establishing scalable, cost-efficient and flexible supply chain to support the evolving business strategy. The strategic inflection points of discontinuation of food delivery business and conceptualization of creating Dark Stores to maintain continuity of timely supply deserve special mention. The case describes the mechanics of how the supply chain is organized and managed.



Pedagogical Objectives

  • To understand the role of technology in driving and managing an efficient supply chain
  • To understand the on-demand pickup delivery model and discuss its role in grocery supply chain in India

Case Positioning and Setting

This case study can be used to sensitize the students regarding various supply chain issues and the evolving role of technology in managing supply chain functions effectively. It can be used in the MBA, Executive MBA programs for the following courses:

  • Supply Chain Management: Information Technology in Supply Chain, E-Business and Supply chain, Understanding of latest development in Supply Chain in E-Business
  • Operations Management II: Supply Chain Management, Performance Issues, Supply Chain Design Strategy, Outsourcing, Mass Customization, Forecasting and Demand Management


* GSMC 2017, IIM Raipur



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