These micro-delivery startups have garnered interest among investors in the past year due to high frequency in orders. Of the 20 disclosed companies in the space, a quarter had raised external capital, and most continue to remain a single region phenomenon with no external funding, data sourced from industry tracker Tracxn indicate. Early signs of consolidation are visible, through.
Gurugram-based Milkbasket said it was scaling down operations in select localities in Bengaluru and Delhi NCR — its two largest markets. Sources told ET that the company, funded by Kalaari Capital and Unilever Ventures among others, may even limit products to make its supply chain more efficient, and conserve cash. Milkbasket is among the most wellfunded hyperlocal milk delivery startups, having raised $26 million till date.
DailyNinja, which counts Matrix Partners and Sequoia Capital as investors and has raised about $10 million, is looking for a buyer, at least four people told ET. Last month, Omnivore Partners-backed Doodhwala sold its business to FreshToHome in a distress sale. DailyNinja and Doodhwala did not respond to a detailed email sent by ET.
Milkbasket CEO Anant Goel, however, told ET in an email that the company had achieved positive unit economics within six months of inception, with more than 60% of clusters profitable. Positive unit economics indicates that the company makes money on every order it delivers.
Goel said daily revenue stood at over ?1crore and confirmed that the company had stopped operating in certain clusters. Since 2018, venture capitalists have invested nearly ?300 crore in the sector, excluding Swiggy’s and BigBasket’s internal allocation to this business, Tracxn data showed.
“If you don’t fulfill orders with density, the cost of logistics outweighs margins. These models can only work if you can fulfill orders from a certain number of households per sq. km, while keeping the number of items you deliver, limited,” said Anup Jain, managing partner, Orios Venture Partners. Even larger players such as Big-Basket, which runs BB Daily, and Swiggy, which operates SuprDaily, are expanding their presence cautiously — one cluster at a time. Yet, none of these companies have reached the scale they would need to break even on every order.
For instance, BigBasket overhauled its city hubs to service most orders in less than 4 hours. The same hubs fulfill micro delivery orders. “We made this shift primarily to get cold items less than 10 minutes away from our customers,” said Hari Menon, CEO of BigBasket, adding that the cost of delivery needs to come down to Rs 2 to make this business viable. While the grocer does hold some extra margins by being a full-stack farm-to-fork player in all fresh categories including milk, building density in a cluster which would lead to profitable economics is still some time away, he said.
BigBasket acquired Pune-based RainCan and Bengaluru-based Morningcart for its morning delivery service, BBDaily. Swiggy-owned SuprDaily, too, has not been able to scale as fast as expected, both in terms of building supply chain capabilities and building density to curb cost of delivery, multiple sources said. “Given the capital advantage, and large complementary businesses that these companies run, they may survive, but (only) if they have to convince the top tier customer to pay a premium for the service,” said an investor in the space.
Micro-delivery startups make early-morning deliveries from a select set of grocery items and milk which are ordered before 10 pm the previous night. These items are left at a customer’s doorsteps — similar to what traditional milkmen do, without ringing the doorbell on most occasions.
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