Online grocery delivery company, Grofers has raised Rs. 400 crore ($61.6 million) in a fresh funding round led by SoftBank. Other existing investors, including Tiger Global and Russian billionaire Yuri Milner-backed fund Apoletto Asia, also participated in this round. The total funding raised by Grofers now stands at $226.5 million.

In October 2017, Grofers had Rs 96 crores from its Singapore-based parent company Grofers International. Before that, the company had raised $120 million from SoftBank, Russian entrepreneur Yuri Milner, with participation from existing investors Tiger Global and Sequoia Capital, in November 2015.

The firm said a significant amount of investment will go towards building infrastructure and technology. Grofers also plans to use the money to efficiently manage its supply chain to achieve deeper penetration in cities where it is already present.

DIPP approval

In July 2017, Grofers received the final approval from the Department of Industrial Policy and Promotion (DIPP) to stock food and food products and sell it through both online and offline channels. At the time, the company had said that this approval will now allow it to set up a direct line with farmers, which in turn will reduce wastage and thereby make it possible to offer its customers lower prices, according to this Livemint report. The report also mentioned that food and food products accounted for 70% of Grofers’ sales.

Grofers had applied for approval “to undertake trading including through e-commerce in food products manufactured and/or produced in India” in August last year. This after the government allowed 100% FDI in single-brand retailing for the e-commerce sector in June. Note that the government had also relaxed FDI rule that required mandatory 30% local sourcing for opening single-brand retail stores for up to three years, and additionally up to five years if the brand proved that its products are “state-of-art and cutting edge’ technology.

The competition

The latest funding round will help Grofers compete against global retail giant Amazon’s hyperlocal push with its Amazon Now platform. Amazon Now originally launched with only third-party grocery retailers. But in January, Amazon rolled out its own delivery service with the launch of Now Store on Amazon Now.

Bengaluru based BigBasket is Grofers’ other big competitor in the space. Last month, BigBasket raised $300 million from the Alibaba Group, with participation from other investors. BigBasket currently operates in 30 cities, and partners with about 1800 farmers across the country. The company also mentioned that it recently crossed the 8 million customers mark, but it’s not clear if these are registered customers or monthly active customers.