If you are a college student or professional living in another city, nothing can replace the care packages of homemade goodies from your mother. When he was studying in IIT Kanpur, Nitesh Prajapat (25) realised that when the goodies ran out, local substitutes never satisfied.
Petha from Agra or Kolkata misti (sweets) would never taste the same when bought from a shop in Mumbai or Bengaluru. This personal need gave way to his business idea later.
After graduating from IIT Kanpur in 2012, Nitesh joined Hero Motors Corp. for a strategy role. While looking after product development, he had to travel to two new destinations across India ever month.
These trips enabled the hardcore foodie to sample delicacies at their place of origin. This made Nitesh start to wonder how to make them available to others who cannot travel.
He discussed this with his uncle Narendra Prajapati, 35, a foodie himself and the conversation culminated in Appeti, which was set up in February 2015.
Nitesh is in his first year at IIM Calcutta. He has a unique approach to his stint there. It was not to land a lucrative job in an MNC – he was the only one in his batch of 500 not to sign up for campus placements – but to learn the ropes of business to augment his startup. Opting for only those courses which he thinks will benefit his learning, Nitesh vows to drop out if his studies get in the way of running Appeti.
Appeti is a curated online marketplace offering authentic Indian delicacies from regional establishments at their place of origin.
From Gujarat's khakras, Hyderabad's Karachi Bakery biscuits, Agra's pethas, Kolkata's rossogullas to Panipat’s pachranga achaar, Kerala’s banana chips and Ooty’s chocolates, the firm claims to deliver everything right at the doorstep of customers in any part of the country by sourcing them from the place of origin.
According to the founders, the firm has an active network of 27 vendors across 14 cities of India, offering 240 different kinds of delicacies and products from Ludhiana, Agra, Ahmedabad, Pune, Goa, Hyderabad, Mysore, Indore as well as Kolkata.
“The driving force for us is ‘food’. We want to take the responsibility to make sure that customers get the opportunity to relish traditional, regional delicacies across India,” Nitesh adds.
The team is made up of 10 individuals with seven freelancers helping with the operations and orders at the different cities of operation.
On delivery, Nitesh says they only sell delicacies with shelflife of seven to 10 days. Their partnership with courier companies ensure deliveries take place within four days of purchase. They are working towards reducing this time to two days.
The firm is also working with Indian Institute of Packaging, West Bengal, to devise better packaging to prevent food from spoiling, as well to retain freshness.
Packaging includes customised detailing of the cities the food comes from.
The company website has 2,000 unique visitors and the app has had over 1,000 downloads so far. The firm also claims to have a network of 700 subscribed customers as of now.
The firm went fully operational this Diwali and has closed 400 orders till now. They plan to bump this number by 500 by the end of this year. All this with no marketing, says Nitesh.
With the average ticket size of an order being Rs 600, the firm receives an average of 10-15 per cent of operating profit from each order.
Nitesh says this tends to depend on the size of the order. If the order is less than Rs 499, the operating profit might increase to 30-35 per cent, since the logistics cost of Rs 50 is borne by the customer. Usually, the partner vendor provides as much as 40-45 per cent of discount to Appeti.
In November 2015, the firm managed to garner Rs 80,000 as profits and plans to increase it in the coming years. The initial investment of almost Rs seven lakh has been funnelled into hiring, packaging and technology.
The startup has plans of operatingin 28 cities in the next six months, expanding the current team to 25 full-time members. It also plans to increase product offerings to 600 on the platform.
Further, the firm is set to jet abroad by April next year for deliveries in London, New York, and Pennsylvania.
For easily perishable commodities, the firm will be looking at intra-city delivery to Jodhpur, Jaipur and Kolkata, starting January 2016.
The platform will also work as a classifieds for vendors of various cities with the top five having their own customised pages on the platform.
Plan are also on to empower housewives in Tier 2 and Tier 3 cities by getting them onto the platform to sell their delicacies.
These are difficult times for food tech startups. This year saw Dazo and SpoonJoy shutting down, while TinyOwl scaled down operations to just Mumbai and Bengaluru.
There has been a dip in the funding as well. According to YourStory Research, the investment in the month of April alone was a whopping $ 74 million on a total of seven deals. In August, this dipped to $19 million with a total five deals, while September saw this number further drop to two deals.
The initial euphoria was largely driven by the fear of missing out.
Kanti Sweets has collaborated with UrbanPiper and hyperlocal delivery RoadRunnr to take the sweatmeats hyperlocal in Bengaluru.
As food tech businesses are operation-extensive, in order to be sustainable, hyperlocal businesses need investors with deep pockets to support them.
One thing going for Appeti is that they are able to show profits right after a few months of operations.
However, the challenge remains on sustainability with customer acquisition being an expensive affair. As Anand Lunia, Founder of IndiaQuotient, says “Food business needs to self-sustain at least for a decade before the dynamics change. For that you need passion.”