[Turning Point] How the pandemic enabled B2B ecommerce unicorn ElasticRun to find product-market fit
The latest round of funding brings the Pune-based startup’s valuation to $1.5 billion, marking its entry into the coveted unicorn club.
ElasticRun was founded in 2016 by three former DHL employees – Sandeep Deshmukh, Saurabh Nigam, and Shitiz Bansal. The startup enables businesses to reach kiranas or small neighbourhood stores – even in the most rural parts of India.
“We have a crowdsource logistics network that enables us to reach the deepest parts of the country at a fractional offer cost than what a traditional player will be able to reach in our model,” Sandeep tells YourStory.
ElasticRun’s customers, which includes Britannia, Tata Consumer Products, PepsiCo, Reliance Retail, Coca-Cola, and Godrej use its platform to reach out to the stores directly.
Using its platform data, the startup also helps banks and financial institutions serve new customers from its rural kirana network.
Sandeep Deshmukh, Co-founder and CEO, ElasticRun
How it started
Accenture’s Transforming Kirana Stores report pegs the total number of kirana stores in the country to be close to 13 million.
A majority of these stores are in rural areas. Unlike their urban counterparts, they are small in size – serving only a few people per shop, spread all over the country, and aren’t very well connected to the network of distributors.
“Until recently, large brands found it difficult to serve these stores that mostly relied on unorganised wholesale markets to source their products,” says Sandeep.
This is the problem ElasticRun aims to solve.
The company aggregates transport vehicles and human resources across the length and breadth of rural India, which enables it to build an aggregated virtual distribution network.
The startup competes with the likes of B2B ecommerce unicorn Udaan.
Having experience working in the transportation technology space and solving problems in global logistics company DHL, the three founders were well aware of the challenges, understood the market, and had ideas on how the problem could be solved.
In 2015-16, with an increase in mobile penetration and internet access across the country, the three of them decided to work on the problem and build a transportation engine that didn’t need very heavy capex.
“Before 2015-2016, it was not really possible to solve this problem without a large capital expenditure,” he says.
Sandeep explains that the idea was a culmination of three things – the need of the market to have a pan India technology-driven network, mobile penetration, and the concept of shared economy becoming more popular.
For ElasticRun, the onset of the pandemic proved to be a gamechanger.
During April-May 2020, brands were looking at the rural market as the next frontier for growth. For that, the companies needed scalable technology. ElasticRun already had the technology platform to aggregate brands and the crowdsourced-logistic and store network in place.
“It really changed our fortunes,” Sandeep says. “We went on to record an exponential growth rate.”
“The business we would have done in a full year just happened in a month, and then every month, we were adding more than a year's revenue,” he adds.
For the financial year (FY) ended March 2021, the startup’s revenue more than doubled to Rs 1,087 crore from the year before when it reported a revenue of Rs 510 crore, according to its regulatory filings. Prior to this, the company had reported a revenue of Rs 208 crore in FY2019.
“Throughout the pandemic, our robust logistics and channel framework ensured uninterrupted supply and support to our rural kirana partners. We have been growing at a rapid pace and are consistently expanding our store network across India,” Sandeep says.
ElasticRun serves more than 80,000 villages in over 300 cities in the country. It works with more than 400 brands on its platform.
The startup is aggressively aiming for growth and expansion with its latest $330 million fundraise, which is more than what it had cumulatively raised in all its previous funding rounds.
In all, the startup has raised about $460 million. It is backed by investors including Prosus Ventures (formerly Naspers Ventures), Kalaari Capital, and Avataar Ventures.
The company says it will use the funds to expand its rural reach and credit facilities for retailers.
“Where we are today, it’s just the start of the journey,” quips Sandeep.
“We would like to reach out to all of the 10 million rural stores in the country,” he adds. “We want to build a solid network that continues to remain operationally profitable and scale profitably and cover every nook and corner of the country.”