Latest news with #CityMall
Mint
2 days ago
- Business
- Mint
Accel-backed CityMall breaks even in FY25 after pivot from community-led model
BENGALURU : E-commerce startup CityMall has turned operationally profitable in FY25, following a major revamp of its grocery delivery model across tier-2 and tier-3 towns. The Gurugram-based firm, now active across 60 cities in Uttar Pradesh, Haryana, National Capital Region (NCR), hit breakeven after streamlining its supply chain and pivoting away from its original social commerce approach. Backed by Accel, Elevation Capital, and General Catalyst, CityMall has grown over 3x in the past 15 months and is currently doubling its revenue year-on-year, according to co-founder and CEO Angad Kikla. Also read: Accel to sharpen focus on startups serving tier-2 areas after $650 mn fundraise 'We are now positive at the unit economics level. We are making money on every order through multiple iterations in our supply chain while building the cheapest possible grocery distribution channels," Kikla told Mint in an exclusive conversation. While absolute FY25 numbers are yet to be filed with the Ministry of Corporate Affairs (MCA), the company clocked ₹427 crore in revenue in FY24 with a loss of ₹159 crore—a 10% increase over the previous year, per Tofler data. Rethinking the model CityMall, founded in 2019 by Kikla and Naisheel Verdhan, was initially built around group-buying led by 'community leaders"—local influencers who drove sales in their neighbourhoods. But this social commerce model was scrapped after the company faced scaling challenges. 'We started in the pre-Covid era where fewer consumers were purchasing grocery and other goods online. At the time, our community leaders were tasked with generating demand in their respective clusters as well as facilitating fulfilment," Kikla said. But post-pandemic, the behaviour shifted. 'We realised that everybody is using e-commerce. We don't need to do the tough task of getting them on the platform through the micro entrepreneurs. Finding a way of delivering them with the best price is the most critical part in this category." To solve this, CityMall now works with local milkmen or shop owners in each cluster. Orders are delivered in bulk to these micro-entrepreneurs from centralised warehouses, and they handle last-mile fulfilment. This tweak has improved operational efficiency by at least 3x, Kikla noted. The company is currently in talks with investors—including existing backers like Accel—for a new funding round, possibly at a lower valuation. In March, it raised ₹50 crore in debt from Trifecta Capital and Alteria Capital. In total, CityMall has raised over $100 million, with its last major equity round being a $75 million Series C in March 2022 led by Norwest Venture Partners. Social commerce struggles to scale CityMall isn't the only player to pivot. Some of the largest startups in the space have pivoted from the model owing to inherent structural and behavioural barriers. Bengaluru-based value e-commerce firm Meesho scaled down its community offering Superstore in 2022 as did Lightspeed-backed Udaan with its 'Price Company' vertical. DealShare, which raised nearly $400 million in total, has also moved to a hybrid model. Experts point to the fragmented nature of India's consumer base. 'High diversity in income levels, regional preferences, and technology adoption creates challenges in standardising or scaling group-based online models especially in price-sensitive markets like India," said Mit Desai, consumer and internet practice member at consulting firm Praxis Global Alliance. Offline stronghold Even as digital transactions surge across India, grocery shopping in smaller towns remains largely offline. 'Despite the rise of 'shopcializing' (shopping influenced by community/friends), the actual transactions still skew towards individual rather than collective decision-making online," Desai said. Also read: Realtors eye new addresses in tier-2 cities According to him, the online shopper base grew rapidly until 2023 but is expected to slow between 2023 and 2027, with growth tapering to 10% CAGR from 24% earlier—due to metro saturation and slower adoption in smaller towns. Yet, Kikla remains optimistic. The company plans to deepen its presence in its existing markets and scale further in states like Bihar, betting on its revamped supply chain and cost-conscious execution. Also read: AI-native startups edge out SaaS in investor playbooks as tech shift accelerates
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Business Standard
02-06-2025
- Business
- Business Standard
We're reimagining retail for next 500 mn Indians: CityMall CEO Angad Kikla
E-commerce platform CityMall is reimagining retail for a massive, underserved population in Bharat struggling to access everyday essentials that are both affordable and aspirational, says co-founder and CEO Angad Kikla. India's food and grocery market is a USD 600 billion opportunity. Yet over 93 per cent of this market is still served by unorganised kirana stores and less than 2 per cent is captured by e-commerce, Kikla told PTI. The absence of a technology-led model, rich with data insights and real-time updates that remove inefficiencies, means choices are limited for small-town consumers, who may be often end up overpaying for inconsistent quality, he explained. That's where his company, which focuses on 500 million new to internet users living in small cities, towns, and villages in India, comes in. By removing inefficiencies, aggregating demand, and leveraging technology, we're not just making e-commerce accessible to Bharat, we're making it the most affordable way to shop for daily essentials, Kikla said. Excerpts from the interview: Q: What was the idea behind building CityMall? A: Before CityMall, I spent seven years building three startupseach an attempt to solve meaningful problems in logistics, B2B commerce, and software for FMCG brands. Some scaled, some didn't. What stayed with me through it all was a deep fascination and eventually, love for India's distribution problem. There's a massive, underserved population in Bharat that still struggles to access everyday essentials that are both affordable and aspirational. That gap isn't just a business problem, it's a human one. CityMall was born to bridge that gap. To reimagine commerce for Bharat in a way that's trusted, accessible, and built for the next 500 million. Q: How is CityMall tapping into the Bharat opportunity? A: So, imagine walking into a small-town kirana store. No price tags, no discounts, just whatever the shopkeeper decides that day. The selection? Limited. The quality? Questionable. And the prices? Always at Maximum Retail Priceif not higher. Now, imagine doing that every single month, knowing you're paying 15-20 per cent more than you shouldjust because there's no better option. This isn't a small problem. Despite all the noise around e-commerce, 93 per cent of groceries in India are still bought from mom-and-pop kirana stores. E-commerce? Just 2 per cent. That means for every Rs 100 spent on groceries, only Rs 2 flows through online channels. Kirana stores are actually the most expensive grocery channel globally. The very people who need the lowest prices are overpaying the most, spending USD 50-70 billion more on groceries every year than they should. This is the problem CityMall is solving. By removing inefficiencies, aggregating demand, and leveraging technology, we're not just making e-commerce accessible to Bharat, we're making it the most affordable way to shop for daily essentials. Q: How does CityMall's 'virtual kirana' model combine the best of traditional retail and modern e-commerce, especially for low-margin categories like groceries? A: The virtual kirana concept arose from looking at how corner stores operate. They have a low overhead, deep local knowledge, and a personalised touch. We essentially digitised this approach. For local outreach, we enlist community partners, people who already have strong local credibility, to serve as the face of CityMall in their areas. Think of them as digital/virtual kirana stores. They act as last mile centres for CityMall. We deliver in bulk to digital kirana stores, reducing warehousing and sorting costs significantly -- less than half as that of traditional ecommerce. They sort the orders, pack and deliver them to customers making it a sustainable and low-cost last-mile solution. This creates remarkable cost efficiency. By leveraging these local nodes (our community leaders), we don't need expensive infrastructure for each neighborhood, keeping our supply chain cost below Rs 60 per order, roughly 40 per cent lower than our competitor. We then add a technology layer: our digital platform consolidates these dispersed orders, enabling bulk procurement, which further drives down costs. Traditional kiranas do this in a rudimentary way; we do it at scale with data insights and real-time updates. Q: E-commerce penetration in India's food and grocery sector is under two per cent. Why has this space remained relatively untapped, and how is CityMall looking to fill this gap? A: Despite being a USD 600 billion market, e-commerce penetration in India's food and grocery sector remains under 2 per cent primarily because traditional models weren't built for 'Bharat'. Some players focused on affluent metro consumers, relying on expensive warehouses, high last-mile costs, and large basket sizes. This model breaks down in small towns, where consumers buy in smaller, frequent quantities and affordability is key. I believe quick commerce also doesn't work it optimises for speed, not cost. Meanwhile, organised retail hasn't scaled beyond urban pockets due to low density and limited spending power. No one had redesigned the supply chain to make low-margin, small-basket deliveries viable, until CityMall. CityMall has built a Bharat-first model by partnering with local entrepreneurs who act as 'digital kirana stores'. These partners receive bulk deliveries, sort and deliver orders locally, making last-mile delivery affordable and sustainable. Our hyper-batched business to business-style fulfillment further reduces logistics costs, enabling us to serve small-town India with unmatched efficiency and value. Q: You recently expanded across Tier 2, 3, and beyond, doubling city presence in less than 60 days. What were the main operational hurdles you faced and how did you overcome them? A: Scaling so quickly, especially in smaller cities brought a unique set of challenges. In the last 60 days, we expanded to 31 new markets, more than doubling our presence and deepening our footprint in underpenetrated regions. On the logistics front, each new market required careful planning for motherhub placement, route optimisation, and delivery partnerships. Recruiting and training local community partners was vital to our expansion. We designed a structured onboarding programme that covers product knowledge, customer service, and digital literacy, ensuring our new community leaders could quickly engage their neighbourhoods. By keeping our tech framework modular, we seamlessly scaled or customised for each new market, minimising disruptions during the rapid rollout. Q: Many e-commerce or quick-commerce startups rely on heavy discounting to gain traction, often at the expense of profitability. How does CityMall balance customer acquisition with sustainable unit economics? A: From a unit economics perspective, with our total per-order cost under Rs 60, we can offer competitive prices without eroding margins. This model pays for itself more quickly than a model that burns cash to acquire customers. We also see greater long-term loyalty. Since community leaders often have direct relationships with their customers, we experience higher repeat purchase rates, which further improves our lifetime customer value. It's a virtuous cycle: reduced overhead leads to better prices, which creates loyal customers.
