Pradyut (Host): Hi guys, welcome to yet another super insightful episode of The Martechno Beat, a specially curated podcast series powered by Netcore Solutions. This is exactly where you gain cutting-edge insights from leading marketers, product champions, and market influencers on all things, user growth, engagement, retention, and omnichannel personalization. The New Year 2021 is well and truly upon us. Digital and mobile-first brands are moving beyond realigning to The New Normal. It promises to be a year of experimentation, disruptive innovation, and consolidation, especially in terms of marketing technology adoption. I’m your host-produced Pradyut Hande and today I’m joined by a very special guest Vakul Agarwal, Global head of retention product and CLM marketing at Grofers, India’s leading online grocery app. Welcome to the show Vakul.
Vakul (Guest): Thank you Pradyut, really excited to be on this talk with you.
Pradyut: Awesome. So glad to have you here, for our listeners across the globe just a little bit about Vakul, Vakul in his current role is responsible for the overall Top Line and customer retention at Grofer. He leads retention, analytics, products, and consumer life cycle marketing. Thank you once again Vakul for joining us today and with Vakul on this episode, all of you are guaranteed to gain a razor-sharp insight on how Grover’s has managed to scale and has managed to combat various pandemic related user retention challenges through the power of data-driven marketing and personalized customer experiences. So, what do you say Vakul, should we get down to it?
Vakul: Yeah, let’s start.
Pradyut: Awesome. All right, so well for starters, could you just talk us through Grofers genesis and you know, your fascinating growth stories?
Vakul: So, Grofers started in December 2014, right and in 2015, Grofers was a very different player altogether. We were what’s Swiggy is now. We were the market place and the promise that we had was you order on Grofers and we will get you everything in 90 minutes. So, in 2015, we saw some initial success. The unit economics of that business was not that great and hence in 2016, we were struggling as a business, right and then is when we decided to go to market and study what consumers would want from a grocery player. So, we visited key markets, which are Delhi NCR, Kolkata, Mumbai, Bangalore, etc., and did some focus group studies there and one thing which people in India want from a grocery player is a better price.
Pradyut: Especially, its price-conscious market like India is.
Vakul: So, grocery is not a want, it is a need, but you need your groceries and hence people said that they don’t want to pay more for the same Ashirwad atta and for the same Maggie that they consume. That was across all markets. In 2016, we repositioned our positioning to the lowest prices guaranteed, and by then I think big basket was our biggest competitor and able to talk about convenience and freshness of fruits and vegetables. So, very clear positioning, one talking about convenience and freshness of fruits and vegetables on the other hand Grofers first stood for lowest prices. 2016 is when we saw the period wherein 2016 2017, we grew very rapidly because of that difference in positioning for it and there were few consumption moments wherein we leveraged white. Well, the offline convention moment is filled in India. Where in Republic Day Sale period or Independence Day sale period which is really big for grocery category. It was by the likes of big bazars of the world, the offline players so we took that power consumption moment at a scribe, and hence we came up with our Mark your property with the name of Grofer’s orange Back days. We did it in 2019 for the very first time with a proposition that was unheard of. It was essentially a 100 percent cashback up to 5,000 and whatever cashback you get you can consume that in future transactions. So, that becomes an instant hit, we grew by almost a hundred percent month-over-month, right and by the end of 2019, we were the biggest player in the online grocery space. Now things have become slightly complicated because big basket has also started talking about pricing, the Amazon is there Flipkart is there and all of us are talking about better prices only now, it’s the time to again reposition yourself so that you create a clear bifurcation of why you are superior in terms of providing groceries to users but the reason we grow was to latch onto the Insight that people and they all want better prices from their grocery player. That is the first and the foremost thing that wants after that comes the convenience or the other things.
Pradyut: Makes sense, it very interesting and I’m sure it was flattering for you guys or so at some level to realize that your positioning stance is now being replicated by a lot of the other competitors also but also complicates matters for you because you now need to figure out early positioning statement and just sort of combat the competition that’s doing pretty much the same thing that you guys are in terms of what they’re communicating to the customers.
Vakul: Yes, exactly. That becomes a problem. Because then we are talking about whoever has a deep pocket, correct? However, there is no substitute to customer experience that also holds true but someone or the other will need to take a leading position there to change the overall scenario and then we go beyond pricing and how do we do that? That is the question that probably everyone needs to answer now
Pradyut: And in an extremely competitive space like the online grocery industry, you know, we’ve seen how across different Industries consumer Behavior patterns and trends and shopping habits have evolved. What are specifically the key trends that you have witnessed in this space over the last 10 months in the backdrop of the lockdown, the pandemic, and things opening up a post that also?
Vakul: Fortunately for us, we were one of the few categories wherein the entire lockdown most beneficial for business equal often respective places and homes and hence it was majorly dependent on either nearby kirana store or online grocery players.
Pradyut: Demand basically shifted online overnight. They were a lot of first-time online grocery Shoppers as well.
Vakul: At the very start, traffic was so high that people almost when it became impossible for us to serve those many orders and thus it was very challenging. There were strict lockdown guidelines from the government itself. It also takes some time for us to get exact Clarity on what services can we start whether we are going to deliver it right or not.
Pradyut: They said that Essentials could be delivered but we broaden the definition of Essentials was something that a lot of e-commerce players were still grappling with.
Vakul: Yes. Like you said rightly said, demand overshot within a day or what we have witnessed is that there was a lot of organic demand, right? Essentially, we were okay without spending any marketing dollars, right? That was this kind of scenario. The second thing, which was very interesting was the average order value before the covid and after covid-19 that order value shot up by over 60%. People were consuming a lot more because I think outside ordering was almost zero, we’re not moving outside homes anyhow, then hence all the meals will be prepared within the house and hence the consumption went ahead. Good thing that we are seen as interestingly that average order value still holds true now, even though now things are very relaxed when you look at nation point of view but I think that habit shift where people were ordering for more when they used to order something online case that has remained with them. So our average basket size has increased dramatically. The consumption has come down a little but if I compare directly from pre covid levels overall, we are still at 40% higher. The peak was around 55 to 60 right. In some cities, it was even 70% but still, 40% is better than pre covid levels.
Pradyut: Okay really interesting and I think the fact that it has turned into a very habit-driven purchase Behavior. I think that has obviously worked in your favor. I’m sure that was a trend that got a lot of view on the supply side also by surprise because the tendency normally in our country at least is when things go back to normal, you try and go back to that level of normalcy in your life. Also, which means that they could have been a shift in terms of you know, what a digital customer might need or might not need. But in this case, it’s clear that demand continues to remain at that level to a large extent. Yep.
Vakul: I think the reason for that is also because many people were hesitant to try online groceries earlier.
Pradyut: So, this entire period actually turned into a confidence-building exercise for them as well.
Vakul: Yeah, because of the element of liability. Many users tried it for the very first time and they saw the benefit. There is a convenience for sure because groceries are delivered home, the pricing is top-notch, a right which is again something that people would have discovered and hence It is both lights on your pocket plus it is convenient and hence people stick to a more convenient or better service.
Pradyut: Makes sense makes sense and these behavioral Trends have a direct impact on a mobile-first Brands product in engagement strategy. We’ve seen that in a lot of our conversations with our customers and the larger industry as well. For you as a brand what are the three biggest user data or engagement or retention challenges that you are currently combatting.
Vakul: So, see there is multiple challenges type of quantifying them, three would be difficult. But let me give it a shot. One of them is to have a single view of a user and when I say a single view, I mean, how do I compliment or get every piece of information across my digital platforms, across my CLM channels, and across my CRM channels, can I get a very simple view that will get this user interacted with my Facebook ad then also interacted with notification, for example, did purchase and had a good experience or not had a good experience. Then a CRM call went to him or initiated by him or her, right? It’s a kind of single view is something which is still in progress. We are still trying to get that single view ready for multiple situations that we were in 2018 or 2019. Things are better now but still, there are few gaps that needs to sell even from a user point. The second ongoing exercises within the entire team is how better can we get in personalizing our communication and being relevant all the time. The multiple Journeys that have been personalized and have been automated but the scope out there is so much fast as you essentially for us we would Want to send every communication that we send should be super relevant and personalized to that user. We are not at that stage right now so, that is the second important thing, the third is how do we attribute better? So digital Channels, CLM, these things can be attributed given the complex and good nature of the platforms that we have, but then how do we attribute that This user came onto the platform only because of XYZ exercise and not because of ABC and that kind of that is also an Ever evolving process I would say, but our focus is also to get more deep insights across different channels that we use whether it be the simple conversion lift study that can help us and attributing gains that we see on the business front but attribution is again one constant and involving exercise for us.
Pradyut: True and as is the case, I think a lot of e-commerce businesses there’s that constant debate between single touch and multi-touch attribution and that’s an ongoing debate. Absolutely you touched upon you know, how you are trying to deliver personalization at scale and go about doing it in the most relevant and contextual manner possible and in a lot of our conversations as well we realized that it has emerged as a major Game Changer and a conversion and retention lever if I might call it that but personalization as we’ve also seen can mean different things to different brands, you know, it can be Channel based personalization in terms of your marketing communication. It could be in terms of product recommendation engine on your website or mobile app. So, I just wanted your thoughts on how does grofers leverage this could drive higher platform stickiness customer loyalty and revenue growth?
Vakul: Like you rightly mentioned right personalization could be across different channels but one is how do you personalize the content on the platform itself, how does app look to user as compared to how relevant your messaging is on a notification or on a digital ad or for example of emailer. Very two important aspects and the way we have gone about doing this has obviously you try to create leverage data that you will be have for users and try to create personalized product views for users because you already know what kind of brands and products they buy. It becomes easy for us to predict that okay, if you as a user are shopping on gophers and you have shopped multiple times, then we know for sure at what time you’re likely to revisit the app and shop. What are your favorite Brands and what are your favorite products that you would want to buy, so that we leverage on both our platform and on a communication so that is the easy part? The difficult part is because you will buy certain products and groceries is a very vast category as you have hundreds of subcategories and multiple subcategories within. How do you know that okay if a person is transacting for say ten categories from me, is he or she interested in buying more from me if I say that okay, I have this particular category also on the platform? So, the discovery part of it is really difficult, like I said dealing in multiple hundreds of subcategories. This is where we try to probably leverage something like a category Affinity, if you are shopping for say munchies from me. I know that a personal shopping for Munchies is also likely to buy A beverage from me which is a cold drink or a juice then how do I certainly pitch that category to a user who is on a Munchies page. These kinds of use cases are very important for us and the whole idea is to penetrate further and further in the number of categories and it is a key to increasing our average order value and hence the volunteer that household will spend on a grocery list.
Pradyut: That makes sense. The very interesting point that you brought out there is the fact that grocery itself has so many subcategories. That’s not like a fashion and apparel store, where you know, you might have clothes, shoes, accessories, etc. and also, another important aspect here with the grocery that I wanted to bring to the table is the fact that the frequency of purchase for different grocery items is very different right for perishable items is very different for dry items over certain items like Munchies as you mentioned would be different, for cooking oil and other household cooking condiments Etc. It would be slightly different. So, I think that also adds another layer of complexity to how relevant and how you know, you’re contextual your recommendations can be.
Vakul: Exactly, there are two ways that you can buy groceries, one is stock-up purchase and the other is a top-up purchase. A stock up is wherein people stock up for the entire month. We will buy things like 10 kg or ata or 5L of oil or pack of eight Maggie which they will stock up and this stock up usually happens when people get salaries in India. So that is one use case. The second is like you rightly said that you are running out of your favorite Munchies or you are out of your favorite, Maggie. You will probably go to another nearby shop and top it up. Correct. These use cases exist online groceries majorly are solving the stock up behavior right now wherein people usually buy items in bulk and hence average order size which looks like a complex mix of subcategories and people will have roughly around when you were 22 categories within their order but as the month progresses, say after 15, towards the end of the month, you will see people buying fruits and vegetables, buying munchies more often. The average order value will go down. It starts with a very high at the month start and then tapers off towards month-end and between 30th and 31st again rises because some of the players and India give early salaries as well. It’s a very interesting method. It holds true every month on every city that you see a peak at the end months start then it tapers off in the week 3 and during the week for towards the later stages it starts picking up again.
Pradyut: All right. So, we touched upon certain key use cases that your product recommendation engine is trying to address. Just wanted to put help get more of a spotlight from you in terms of any Innovative personalization campaigns that Grofers may have implemented recently and perhaps of the key metrics that these may have impacted.
Vakul: Actually, talked about it in the last question. So, one of the most important use cases for us is how many categories are user is buying from us. Hence the discoverability becomes a big question, how do we ensure that a user is discovering more and more categories that he or she consumes for sure. So, the affinity across different subcategories has something that we have mapped already so we can quite rightly predict that if a user is adding products from this particular category, then the likelihood for him or her to add the product of some other two-three categories is fairly high on it. So how do we make sure that we are showing those relevant categories on that page? In fact we have an option of editing your order after you’ve placed your order even after they have checked out because we know for sure that that grocery buying is a huge list and we wanted to take this opportunity of recommending the right categories even after you’ve bought from us because we know for sure that okay is you as a user has bought 17 categories and there is a very high likelihood but you are likely to buy some another category that you have not bought some, we’ll pitch that category. Okay, so you can see Still edit your order and add this particular product because it has really good prices and it is super relevant for you and that has been a huge success for us.
Pradyut: In fact, very interesting and I think it plays into that entire philosophy of impulse purchase when it comes to grocery right because you come to buy groceries with a fixed list, but then eventually you figure out that okay. Maybe there are two-three more items that I could buy which will not only be regionally, so I think that editing option post checks out makes a lot of sense. Very fascinating Insight on that. Okay, my final question to you Vakul, we’ve touched upon the use cases that personalization is solving for a brand like Grofers, your growth in Genesis over the years, the key consumption and habitual trends that have been emerged over the last 10 or 11 months. Let’s Get you to put your futuristic hat on and I want you to tell me what you think is the future adoption and use of technology like artificial intelligence, Predictive Analytics Etc. Especially in the context of online grocery as an e-commerce category.
Vakul: So, see this could be a very good differentiation among different players out there in the market. It is like I said a grocery buying purchase habit deals with multiple products and multiples of categories and traditionally in India FMCG companies, the likes of Hindustan Unilever, ITC, TNGs of the world. They’ve done really well, right and because the network is so strong their bands are so strong. But one thing that they never had was real-time data real-time purchase data because they approach retailers and wholesalers and it’s almost impossible to get real-time data from such a big Network. What any online grocery player has an advantage is they get real-time data not only of what people have bought. They also be real-time data of what people have browsed right like categories and subcategories people have to browse to the event how much time they had spent on a particular product or a category and you can also pan out affinities across different products, different categories and hence the use of Predictive Analytics AI ML is nothing and it’s how you use your data, what the future or how can you push a particular product or category to a user he/she might be actually looking to buy. This piece can be rea differentiation in this space because you’re getting very rich data, you’re getting data of what people consume, what they are interested in and you’re getting it in such large volumes just to give you an example that when typical check out on an Amazon and Flipkart usually has one point seven 5x products. You will go check out Flipkart and buy the mobile phone and you check out or you will buy a PC refrigerator whatever that is it you require, multiple products at one go click. On Grofers, the average number of items that a user has on his order is roughly around 25 to 30 different items, and this with a very high-frequency rate almost 0.5 to 3 times in a month. This is only purchased data right now, imagine the browsing data that we would have and hence if you use that data really well, if you’re able to predict and be super relevant words users, then it can be a very good differentiation, which is also hard for anyone to combat.
Pradyut: Yes, makes a lot of sense. It is a vast Treasure Trove of data points that would be available to a platform in the online grocery space such as Grofers does because every time a customer logs on to the website or launches the mobile app, they leaving digital Footprints, right? And it’s not just about what they are doing and what they’re purchasing but as you mentioned it’s also what their browsing is doing, but I think another key signal here is they’re not purchasing or what they are not viewing and it goes negative signals also become part of you know, your data Treasure Trove at the end of the day.
Vakul: Yes, exactly. So what they are not doing is part of that exercise wherein we try to predict that okay, if they are not used certain categories of products, which is the most likely category that I can pitch so that at least the user browses that particular category. That is how we ensure that we go deep and buy from multiple categories and not really depend on few basic ones.
Pradyut: Makes absolute sense Vakul. That was my final question of this particular episode. Thank you so much for the time and being a guest on the Martechno Beat. It’s been a pleasure interacting with you and I’m sure a global audience will gain a lot through this particular episode, especially in a time like this when a lot of e-commerce companies in this particular space are still trying to figure out how they can sustain that growth momentum. Thank you so much for joining us today.