[Startup Bharat] This retail-tech platform is revamping kiranas in Tier III cities in Andhra Pradesh
Capitalising on the increase in demand for online grocery deliveries during COVID-19, grocery startups are offering services to people’s doors in as less as 10 minutes.
While these companies are luring tech-savvy customers in metros, the scenario is different in smaller towns.
BITS Pilani batchmates Neeraj Menta and Anil Thontepu decided to place their bet on the grocery retail market in Tier III, IV, and V towns and launched, a tech-enabled franchised grocery retail chain, in 2019.
“We always have this impression that people from small towns are not looking for better experiences and services. But when I travelled in 2019 through these towns and villages, and met with the people, I realised they have the same expectations as people living in cities. They are looking for the same experiences because they are exposed to the same media today,” explains Neeraj.
At present, SuperK is present in over 30 towns across three districts of Andhra Pradesh, with 17 stores in Kadapa town.
The startup claims the franchisee stores are seeing 4X growth in sales volume, clocking Rs 1 crore on an average in annual sales, resulting in 10X jump in their take-home profits.
How it started?
While at BITS Pilani, Neeraj and Anil worked on a 15-day long project together. After graduating in 2012, the two went their separate ways, taking on different roles at various tech startups.
Between 2012 and 2019, they stayed in touch, talking about the possibility of starting up together.
In 2015, Neeraj founded Hungerbox, a meal delivery marketplace. Neeraj’s maternal family owns and runs a kirana store and wholesale business in Kadapa district, while Anil’s family owns rice mills in the region.
Neeraj was attempting to create a bulk buying system between the two families, which sparked a conversation about the retail sector and the kirana ecosystem between the two, and materialised into SuperK in 2019.
A SuperK franchise store
Kadapa (AP)-based SuperK works with an asset-light franchise model, wherein it partners with kirana stores and manages procurement, marketing, and promotions for them.
The startup has built an end-to-end integrated system that enables franchise stores to offer standardised low pricing, consistent quality, discounts, cashback, and digital billing.
SuperK started out by partnering with existing kirana stores, but now caters to people who want to set up their own stores under the SuperK flagship in Tier III, IV, and V towns.
“We have made a DIY kit for Kiranas saying that you come to us and we will help you go from zero to one. We help these people right from step one, which is identifying and renting it out, how much rent to pay, what is the right way to furnish a store, and what inventory to stock,” explains Anil.
“The franchise only needs to manage the store and maintain customer relations, and we take care of everything else,” he adds.
The market and revenue
“The overall retail market in India is set to cross the $1.75 trillion mark by 2026, and is set to grow at a CAGR of 30 percent for gross merchandise value worth $200 billion by 2026,” according to data by Invest India.
The year 2020 was a golden year for the Indian grocery sector, which saw investments of around 70 percent of the global share excluding mergers and acquisitions ($7 billion of a global total of $10 billion), said a McKinsey report titled ‘The state of grocery retail in India’, which was published in January 2022.
SuperK raised $5.5 million in pre-Series A round led by Binny Bansal-backed 021 Capital in April 2022.
Investors, including Saikiran Krishnamurthy (Co-founder, xto10x); Ankit Nagori (Founder, Curefoods); Ashish Kacholia (public market investor); Nipun Mehra (Founder, Ula); MarsShot Ventures; Razorpay founders; Blume Founders Fund, and existing investors participated in the funding round.
“India’s non-metropolitan customers’ aspirations and consumption powered by steady growth in their incomes have been driving demand over the last few years. This is accelerating the grocery category towards organised retail in these Tier III towns in the country,” said Sailesh Tulshan, Founder, 021 Capital, at the time of funding.
The startup had previously raised a seed round of Rs 6 crore led by Strive VC.
SuperK faces competition from startups like Gully Network, PepperTap, Jumbogrocery, and Jumbotail.
The startup is looking to expand into the Rayalaseema region of Andhra Pradesh in the next one year, and then plans to expand to Tamil Nadu, Karnataka, and Telangana.
SuperK aims to build a Rs 200-250 crore annualised GMV business by the end of 2023, and Rs 2,000 crore in annualised GMV by the end of 2024.
“The interesting part here is that the depth of the business is so much that we just corner the state of Andhra Pradesh for the next two to three years, and it will be enough to make us a billion dollar business,” says Neeraj.
SuperK is expanding its team and is looking to hire across sales and marketing, tech and product, analytics and data science roles. Currently, the startup has a team of around 95-100 employees.