How Does Groww Make Money? Business Model Explained

The investment journey is no less than an adventurous trek. It offers optimistic outcomes if you have the skills and knowledge of trading. But for individuals without enough experience and knowledge, the idea of trading can be overwhelming. Seeing the gap in knowledge among youths, numerous e-trading platforms emerged. One of them was Groww! Established in 2016 to simplify trading, it became one of the leading e-trading platforms. Groww Business Model was successful to bridge the gap by providing a user-friendly platform for a seamless trading experience.

Groww: A Brief Overview

Before diving deep into the Groww business model, let’s have a brief overview of the company-

Grow Business Model works on the concept of democratizing the trading system where you can invest in stocks without paying any extra commission. You can access its services free of cost. Really? Yes! For more details look at the next section.

Working Strategy: How Does Groww Work?

Groww is an Indian e-trading platform that aims to make investing accessible and convenient for individuals. Look at the following points to know the working strategy of Groww in detail-

1. How to use Groww?

First of all, let’s look at the usage of the app. To use Groww, you need to follow the steps given below-

Step 1: Account Creation & KYC Verification

You can download the Groww mobile app or access its official website to create a Demat account. It is a paperless process where the account opening process is free of cost. Since Groww offers zero brokerage, you can start trading at Rs.20.00 or 0.5% per trade. We will discuss it in further sections.

However, you must complete the KYC process because it is mandated by regulatory authorities. This involves the submission of your authentic and verified personal information (name, contact details, address, etc.). Also, you need to provide identity proof like a PAN card number. Thus, your account is created.

Step 2: Investment Options

You will get a wide range of investment options in Groww. It includes the following-

• Mutual Funds
• Stocks
• ETFs (Exchange-traded funds)
• Digital Gold
• IPOs (Initial Public Offerings)
• Fixed deposits

Groww app also provides features like SIP for mutual funds. SIP means a Systematic Investment Plan, where you can invest a fixed amount of money regularly in a stipulated period. You will learn about it in detail in further sections.

2. Research and Analysis

Do you know, why common folks are so scared and doubtful about trading on stocks and investments? Because they lack sufficient knowledge. Due to this, they are vulnerable to different sorts of financial risks. That’s why they don’t prefer it. To solve this issue, Groww offers detailed information and analysis on various investment options. The informational offerings include comprehensive data on mutual funds, including performance history, risk assessment, portfolio composition, and expert recommendations. You can also access market news, stock prices, and other relevant information to make informed investment decisions.

3. Simplified Trading Process

This is the most alluring feature of Groww. It provides a user-friendly interface with which you can invest in trading options just with a few clicks. One of them is the SIP feature (Systematic Investment Plan). It enables you to invest in a fixed amount regularly in mutual funds.

4. Tracking and Monitoring

Groww provides real-time tracking and monitoring of investments. Users can easily keep track of their portfolio performance, transaction history, and investment returns through the app or website. They also receive regular updates and notifications regarding their investments.

5. Education and Support

To educate the folks about investments, Groww places a strong emphasis on investor education. It offers educational content, tutorials, and guides to help users understand investing concepts, strategies, and risks. Additionally, you can reach out to Groww’s customer support team for assistance or queries.

6. Additional Features

Groww offers additional features like-

• Tax-saving investment options
• Digital gold investment
• Ability to buy & sell stocks directly

They continuously upgrade their platform and introduce new features based on user feedback and market trends.

Revenue Sources: How does Groww make money?

In FY22, Groww earned revenue of Rs.351 crore. It makes money from various sources. Some of its major sources of revenue are-

1. Commission Fee on Mutual Funds

Do you know, Groww earns nearly 54% of its revenue through the commissions paid by mutual funds companies? Whenever you invest in mutual funds through this platform, the respective mutual fund houses pay a commission fee to Groww. So what do the mutual fund companies benefit from this? They get a large user base! It means that mutual fund companies expand their user base through Groww’s e-trading platform. A notable point is, users don’t have to pay a single penny to Groww to trade on mutual funds!

2. Value Added Services (VAS)

Groww offers additional value-added services to its users and charges fees for them. The VAS includes-

• Investment advisory services
• Tax planning assistance
• Personalized services like guidance.

4. Stock Market Trading

Groww has expanded its services to include stock market trading, allowing users to invest in equities and trade stocks. The company may generate revenue through brokerage charges on stock trades. But how much does Groww charge for stocks? You may ask! Look at the image below and you will know it.

5. Partnerships

Groww may enter into partnerships and collaborations with other financial service providers, such as insurance companies or lending platforms. These partnerships may involve revenue-sharing arrangements or referral fees.  

Marketing Strategies of Groww

The e-trading company has employed the following marketing strategies to promote its services and to gain a large user base-

1. Digital Marketing

As you know, this is the most cost-effective marketing strategy in today’s era. Therefore, like other companies, Groww also employs digital marketing techniques to connect with its target audience. Such as social media marketing, online display advertising, content marketing, etc.

2. Content Marketing

Although, this is a part of digital marketing. Groww uses this extensively to catch the eyes of the audience. As we have mentioned above, Groww offers educational support to users. If you look at its blogs, you will find various educational content. They share insights and information on different stock investment strategies. These informational contents are highly useful for traders. Because these strategies can be used for regular trading. 

3. Influencer Marketing

Collaborating with influencers and popular content creators in the finance and investment niche is another strategy employed by Groww. By partnering with influencers who have a significant following and credibility, Groww tapped into its audience base and gained a significant user base in a short period. 

4. Referral Programs

When you get a cash reward for referring an app to your acquaintance, you don’t hesitate to do it. Groww has utilized this fact effectively as it has expanded its loyal customer base. You get a cash reward for every referral. However, you will get the reward only if your acquaintance completes the onboarding and registration process through the unique referral link. This link is usually provided by Groww.

Final Words: Takeaways from Groww Business Model

As you can see, Groww business model revolves around providing a seamless platform for individuals to invest in mutual funds, stocks, and other financial products.From Groww’s business model, we learn the value of accessibility and user-centricity in trading platforms. Simplifying the investment processes and providing a user-friendly platform attract a wider audience. Do you know what differentiated Groww from traditional trading platforms? It disrupted the traditional models through innovations like user-friendly interfaces, zero commission fees, etc. 

Also, the diversification of revenue streams with a wide range of financial products and services enhanced its income. It specifically targeted millennials to emphasize transparency and build a loyal customer base. The idea of collaborating with industry partners strengthened its product offerings. Continuous innovation and staying up-to-date with market trends ensure competitiveness. 

Thus, Groww business model underscores the importance of simplicity, accessibility, customer focus, disruption, diversification, collaboration, and innovation in the e-trading industry.