Bengaluru: After raising around $90 million from American venture investor Tiger Global earlier last year, fresh produce supply chain startup Ninjacart raised an undisclosed amount from Walmart and Flipkart in December. The deal is significant with Walmart and Flipkart both trying to strengthen their direct sourcing of fresh produce for Walmart India’s Best Price B2B cash-and-carry stores and Flipkart’s online grocery business Supermart.
The tech-enabled, agri-tech startup delivers 1400-1500 tonnes of fruits and vegetables to retailers, with highest demand from kirana stores. In an interview, Thirukumaran Nagarajan, CEO and co-founder of Ninjacart, which also counts Accel, Nandani Nilekani, Qualcomm Ventures among others as investors, spoke about growing profitably and the huge potential and investor interest in the fresh fruits and vegetables business. Edited excerpts:
How does the association with Walmart, Flipkart help Ninjacart?
There are a lot of synergies when working with Walmart and Flipkart in terms of ensuring the supply chain is stabilized, implementing best practices and efficiencies, expanding the customer base and reach and finally, the process of helping grow the fruits and vegetables business on the retail front, in the long run.
What is Ninjacart’s strategy for 2020?
Last year was an interesting one for us from many perspectives. We went from two to seven cities, hired people and raised capital from new investors such as Tiger Global and Walmart. In 2020, we are very close to break even in key cities. We plan to break even in the Bengaluru market by mid-year, and later, in Chennai and Hyderabad. We believe that the fresh produce (fruit and vegetables) market is very huge and the only way to go after the business is to be profitable. We have been working on efficiency, improving every component so that we are on the line of profitability. We will expand into newer cities but it will be different from the way we entered the earlier cities. We believe that the seven cities we are operational in, constitutes 15-20% of the overall market. If we get these right, every other city will fall in place.
Given the high investor interest in this business, is it tempting to grow fast?
We have had the support of big investors like Tiger Global and Steadview Capital and more investors want to come in. But as a company, we strongly believe that we have to prove it to ourselves before embarking on the next lap of growth. Between January and June, last year, we grew nearly six times in volumes and revenues. Then we realized that the (fresh produce) market is big and the potential to scale is so huge, we can grow fast. But what makes real sense is to grow at a certain speed, but grow with efficiency.
Do you see many startups/e-tailers entering the sector?
Yes. Everyone wants to get into vegetables and fruits. Grocery is a large category for online retailers and many are present in the ‘dry’ category. Now everyone wants to jump into the ‘wet’ grocery space too because this space is huge. Both demand and consumption are high. There are clear-cut precedents in the developed countries to run the ‘dry’ grocery business, but not so much in vegetables and fruits. Ninjakart has given confidence to people that it can be done successfully. We have had offers to either invest in us or buy us out.
What is the early-mover advantage for Ninjacart?
Market intelligence. Right now, we are a company that has decoded the market because one has to understand the how the fresh produce markets work and how to operate profitably. We are valued for two things – supply chain capabilities and efficiencies we have brought into the supply chain, along with the technology. We have worked extensively on innovation to contain pilferages and other issues.
When an incident like the onion crisis in 2019 happens, how does it impact Ninjacart’s business?
We deliver around 1,400-1,500 tonnes of fruits and vegetables daily, but suddenly no one was buying onions. It does impact because overall volumes go down, as much as 15%. Stores are ordering much less. Demand for onions has not gone up and the quality is not good. Since onion prices are high, farmers who have grown onions are harvesting it much earlier. The price keeps fluctuating but we are expecting them to stabilize in February.
But when onion prices rise, farmers will want to grow only onions next season and prices would crash. So we study these cycles and are able to tell our farmers what these trends look like. Primarily, we have a huge amount of data in every village about which crop works, which doesn’t, price expectation from a crop among other things.
Recent Comments