Name: SACHIN S P

Email ID: chetan.brunswick@gmail.com

Assumptions

Grofers market size will be calculated as of 2013-2014 using the

1 data provided in Exhibit-1 during the time it was established no
extrapolation of data will be done for current time.

2 Tier-3 and Rural cities are ignored as this would not be practical
consideration to begin with.
Since its the starting phase for a company its unlikely to start
3 businsess in all 75 Tier-2 cities,hence assuming only close to 30%
of these cities into being part of initial operations. (I,e 20 tier-2
cities)
Peak hours for a kirana store is considered as (6am-9am) and
4 (5pm-8pm) total of 6hrs. Non-peak ours are considered to be 8
hrs.

Facts based approximations

Average sales per small stores in major cities is around 5000-

5 1000Rs as quoted in The Hindu Business line. Hence, to match up
this range I have taken the average sales for every 5 minutes in
such stores as "1" and average price per order close to 80rs(1.5$)
in peak hours. For non-peak hours 1 order every 15 minutes

Number of SKUs for a medium size stores are around 2-3k

6 compared to 1k SKUs of small stores which brings in variety of
products than small sized stores. Approximating the average price
per order is double than small stores I,e around 180rs (3$)

From the given data on mean annual income the Tier-2 people
income is about 2/3 of that of Tier-1, and the goods price such as
7 vegetables, fruits are cheaper than the Tier-1. Hence I'm assuming
the average price per order to be 2/3rd of that of Tier-1, which
results in 60rs(1$) for small stores and 130rs(2$) in medium
stores.

Grofers take 8% commisson on average sale from the merchant

 Internet penetration from the given data and as well as the actual
data is around 15% in India. When it comes to kirana stores due to
8
number of constraints such as technology awareness, hardware
requirements and additional costs for setting up the digital
platform there are very few percentage of suppliers willing to go
online.Hence I have assumed the following values

Small Kirana Stores

Tier-1
Medium Kirana Stores
Small Kirana Stores
Tier-2
Medium Kirana Stores

Formula Total No of kirana stores of a given size in a given Tier cities = (No. of
kirana stores per sq.km) x (% share of given size store in Tier-#)

# of cities used for calculations

Tier-1 cities
Tier-2 cities

Tier-1 Small Kirana Stores

Medium Kirana Stores
Small Kirana Stores
Tier-2
Medium Kirana Stores

Per store calculation of a Tier-1 city Small sized store

No.of Hours per day

No.of Orders per 5 minutes
No.of Orders per hour
No.of Orders per day

Total Orders per day

Average price per order in dollars($)
Average sales per day in dollars

Per store calculation of a Tier-1 city Medium sized store

No.of Hours per day

No.of Orders per 5 minutes
No.of Orders per hour
 No.of Orders per day

Total Orders per day

Average price per order in dollars($)
Average sales per day in dollars

Average sales in Tier-2 small sized store per day in dollars = 2/3 x Av
=100
Average sales in Tier-2 small sized store per day in dollars = 2/3 x Av
200

Cities Stores

Small Kirana Stores

Tier-1
Medium Kirana Stores
Small Kirana Stores
Tier-2
Medium Kirana Stores

Average revenue Grofers make per day = Commission x Average

sales per day

Average revenue Grofers make per day(Market Size)

 Grofers Market Sizing

Source

http://www.thehindubusinessline.com/news/variety/dig-through-the-data-
goldmine/article4949282.ece

http://shodhganga.inflibnet.ac.in/bitstream/10603/69868/13/13_chapter%204.pdf

https://yourstory.com/2016/02/hyperlocal-services-tier-2-cities/

https://www.quora.com/What-is-the-business-model-of-Grofers-How-do-they-optimize-their-delivery
 http://www.thehindubusinessline.com/news/variety/dig-through-the-data-
goldmine/article4949282.ece

% of Stores would onboard digital platform for their sales

5%
15%
2%
10%

Tier cities = (No. of Tier-# cities) x (Average area size in sq.km of Tier-# city) x (Average No.of
Tier-#)

8
20

65% of ((1484+603+1189+185+464+700+650+741)x 240)

35% of ((1484+603+1189+185+464+700+650+741)x 240)
75% of (20x 450 x 150)
25% of (20x 450 x 150)

Peak Hours(6am-9am/5pm-8pm)
6
1
12
72

72 + 28=100
1.5
150

Peak Hours(6am-9am/5pm-8pm)
6
1
12
 72

72 + 28=100
3
300

dollars = 2/3 x Average sales in Tier-1 small sized store per day in dollars = 2/3 x 150
dollars = 2/3 x Average sales in Tier-1 small sized store per day in dollars= 2/3 x 300 =

Average sales per day

150
300
100
200

7% of 38.5M

2.7M
arket Sizing
No.of kirana Stores
938340
505260
1012500
337500

Non- Peak Hours

7
0.33
4
28

Non- Peak Hours

7
0.33
4
28

Total No.of Kirana Stores % Stores to digital platform

938340 5%
505260 15%
1012500 2%
337500 10%
 Average sales per day with grofers(digital
No.of Kirana stores platform)= # of Stores with Digita
with Digital Platform platform x Average Sales per day
46917 7.03M
75789 22.73M
20250 2.02M
33750 6.75M
Total 38.53M