Case Study 1: Grofers Market Sizing

Name: Ripan Dutta

Email ID: rsd.19930@gmail.com
Submission Date: 8/29/2016

TAM All the small and medium sized retail shops (Kirana stores) in India
SAM All the medium sized retail shops (Kirana stores) who can support the supply for a large enough custom
Target Market All the medium sized retail shops (Kirana stores) in Tier 1 cities who can support the supply for a large

Assumptions The retail shops which can support the supply for a large enough area have a digital POS system
I can find a mid sized retail shop in every colony area which serves the demand for most of the people
Grofers charges around 8% commision on orders below 700 and around 12-15% on order above that. O
People on a 2G connection would be facing a lot of difficulties while browsing the app. Hence, only con
Among the 3G subscribers, assuming 95% people in the middle class and 5% people in the rich categor
Considering an average family to be of 3/4 people and also, I have seen friends living in groups of 3/4 p
Assuming, a rich family spends around 2.5 times on grocery items than an average middle class family

Total Market Size Total no. of stores in tier 1 cities * yearly sales per store * %age of transaction amount charged as com

Total number of mid-sized retail shops in our target group = Total area of Tier 1 cities/Area served by 1
%age of transaction amount charged as commission = 10%

No. of people served by a particular store = (Total 3G subscribers in 2014/Area of Tier1 cities)*Area co
In India, people usually buy groceries for their family as a whole. Even when it is a group of friends livin
No. of families served by a particular store = 2973/3.5 = 850 families

Using some primary research for a few middle class families,

Shopping for groceries, snacks, fruits = Every 3 days, an average of 500 spent = 5000/month
Shopping for personal care items, dry fruits = Every 15 days, an average of 1000 spent = 2000/month

Yearly sales supported by a retail store = Middle class families*their monthly spending*12 + Rich fami

Total Market Size = 7660*76755000*0.1 = 58794330000 = INR 58.8 billion = USD 876 million
ers Market Sizing

Data Needed from Exhibit 1

Total size by area of Tier 1 cities 6016 sqkm
Total 3G subscribers in Tier 1 cities(Dec' 14) 22.77 million

irana stores) in India

es) who can support the supply for a large enough customer base and have digital Point of Sale systems
es) in Tier 1 cities who can support the supply for a large enough customer base and have digital Point of Sale systems

for a large enough area have a digital POS system

ny area which serves the demand for most of the people in that area. Thus, It handles the demand for people in a radius of 500m
ers below 700 and around 12-15% on order above that. On an average, I am taking 10% commision on all orders to simplify things
lot of difficulties while browsing the app. Hence, only considering 3G subscribers as people who will order on the app.
ople in the middle class and 5% people in the rich category(> upper middle class) and no one below lower middle class.
ople and also, I have seen friends living in groups of 3/4 people. Hence, taking the average family size to be 3.5 people.
es on grocery items than an average middle class family

per store * %age of transaction amount charged as commission

target group = Total area of Tier 1 cities/Area served by 1 shop = 6016/(pi*0.5*0.5) = 7660 stores
mission = 10%

Total 3G subscribers in 2014/Area of Tier1 cities)*Area covered by a store = 2973 people

family as a whole. Even when it is a group of friends living together, the groceries, snacks, fruits, etc are bought in bulk. Considering th
2973/3.5 = 850 families

class families,
3 days, an average of 500 spent = 5000/month
Every 15 days, an average of 1000 spent = 2000/month

dle class families*their monthly spending*12 + Rich families * their monthly spending*12 = 850*(0.95*7000+0.05*2.5*7000)*12 = 767

794330000 = INR 58.8 billion = USD 876 million

 le in a radius of 500m
rders to simplify things

middle class.
3.5 people.

ught in bulk. Considering these group of friends as a family too.

0+0.05*2.5*7000)*12 = 76755000