E-commerce in India has come a long way. Now we have the luxury to order everything online — be it apparels, bike accessories and grocery among several others. CPG/FMCG (grocery) is one of the largest category in the overall retail segment. Players like BigBasket, Zopnow, Aaramshop and LocalBanya are one of the early movers in the space.
While BigBasket and Zopnow dominate in Bangalore, Bigbasket and LocalBanya have been evangelizing the Mumbai market. LocalBanya had experienced exponential growth in 2013 and it’s going stronger in the current year. “In 2013, we had crossed the 400 deliveries mark daily by leveraging employee strength of over 100 personnel and listing over 8000 products till December last year,” says Rashi Choudhary, COO and Co-founder of LocalBanya.com.
Last year, the company directed its efforts into building its infrastructure and processes to create a strong value proposition for the business. “Funding from Springboard Ventures (part of BCCL) and Karmvir Avant Group through the course of the year allowed LocalBanya to strengthen its operations, technology, marketing, brand building, recruitment and systems to cater effectively to higher business volumes,” adds Rashi.
At present, LocalBanya processes over 600 deliveries every day in Mumbai, Thane and Navi Mumbai. Importantly, it claims to achieve 98% punctuality in terms of order fulfilment. “The efforts put in marketing, customer retention and maintaining a high level of customer service has resulted in growth across customer groups,” points out Rashi.
The startup observed that during the first and last week of the month, customers place orders for larger SKU sizes and have bigger carts due to salary patterns and need. “This takes the average order size to Rs. 1350. The addition of new categories on the site such as imported products has accounted for an increase in ticket size as well,” says Rashi.
Groceries and staples lead the sales with a contribution of over 22%. Dairy products and household supplies follow this up with an equal contribution of 11% each. “The interesting category is fruits and vegetables which contribute 11%, however, it has been considerably improving due to higher quality standards and a sourcing model that allows the customer to enjoy superior quality produce,” adds Rashi.
Unlike other forms of e-commerce, grocery e-tailing faces a wide variety of challenges over more traditional forms. Logistics and operations are at the core of service and are the pillars that keep startups in this space ticking. “Every order on an average comprises over 15 items and the very nature of these products entails unique solutions to be implemented for handling them. The convenience features such as delivery slots, multiple payment options and a well-appointed customer service team allows for better management of orders and delivers a great experience to the customer,” reveals Rashi.
With the present scale of operation, the company is expected to break even by July 2014 in Mumbai. However, each new city the company plans to expand to brings associated costs which push the horizon for breaking even.
“The company has been making cash profits on each transaction since the past three months, and is slated to gradually increase these profits with an increase in business volumes by capitalizing on economies of scale,” adds Rashi. It aims at launching in a new city within the next quarter followed by more cities in this fiscal.
LocalBanya had raised two rounds of investment from BCCL’s Springboard fund and Karamvir Avant Group. When asked about series B round, Rashi says, “LocalBanya is in the final stages of closing its $5 million series B soon.”