ShopKirana’s gross revenues increased by 50% from INR 452 crore in FY22 to INR 682 crore in the subsequent year, according to regulatory filings.

The B2B commerce platform aids retailers, particularly grocers, in placing orders for goods from brands, monitoring inventory, and facilitating payments—all through a mobile app. It caters to retailers in cities with a population exceeding one million in Madhya Pradesh, Uttar Pradesh, Maharashtra, and Gujarat.

The rise in revenue can be equally credited to both the existing markets where ShopKirana operates and its entry into new ones. Its presence has expanded from eight cities in 2021 to 15 in 2023. Nevertheless, this expansion has led to increased losses, surging by 34% to INR 79 crore in FY23.

The startup is on track to achieve a topline run rate of INR 1,000 crore in FY24. Its proprietary food brand, KisanKirana, currently constitutes 10% of the business. Products like flour, spices, pulses, and instant mixes are marketed under the KisanKirana label, targeting both consumers and retail outlets.

ShopKirana’s strategies for expanding its profit pool involve introducing lending services for store owners, expanding distribution for regional brands, and promoting the popularity of KisanKirana.

To date, it has raised funding over $55 million, with the last round of $38 million in 2022 valuing it at around $160 million.

The bustling establishments on the startup’s platform rely on it for 50-60% of their inventory, with an average monthly expenditure of INR 60,000.

An average kirana store generates sales of about INR 7-8 lakh per month. ShopKirana aims to streamline the supply of approximately INR 2 lakh per month.

Until recently, the prevailing notion was that well-funded corporations (such as Reliance’s JioMart, Flipkart, and Amazon) and unicorns (ElasticRun, DealShare, and Udaan) would dominate the business of supplying goods to kirana stores.

Undoubtedly, they invested billions with the aspiration of establishing and spearheading online B2B commerce. Nevertheless, many have encountered setbacks to different extents, reassessed their strategies, and pulled back from markets incurring losses.

Companies with fewer resources, like ShopKirana and Jumbotail, have adopted a more focused and cash-efficient approach to progress in the space, achieving growth that may be relatively slower but is sustainable.

ShopKirana, situated in Indore and supported by the internet group Info Edge, possesses certain distinctive characteristics.

Rather than spreading its presence thinly across metros, it focuses on kirana stores in the next 15 top cities and pursues repeat business. This approach differs from that of cash-rich players.

It has a stronger inclination towards FMCG, beauty, and personal care compared to commodities like oil, salt, and sugar, which experience high volume but low margins. Although this choice constrains its topline GMV metric, it contributes to healthier business growth.

Running a food brand, KisanKirana, sets it apart from certain competitors that operate as pure-play marketplaces. The INR 100-crore brand, offering products to both retailers and consumers, contributes to its profit margins.

The overarching strategy has proven successful for ShopKirana, propelling it to a revenue run rate of INR 1,000 crore. The subsequent objective is to achieve city-level EBITDA profitability by June 2024; it has already attained profitability at the regional level.

“It takes almost a year to persuade a retailer. Onboarding them is comparatively easy. Ensuring they stick around and consistently increase their orders with us takes processes, and operational rigour,” said the company’s co-founder, Sumit Ghorawat.

Prominent entities in the sector, ranging from conglomerates to unicorns, attempted to encourage shopkeepers to increase their spending—ordering stocks in large volumes within a short timeframe—by offering discounts and providing cheap credit (with poor collections). While they achieved rapid scaling, they encountered difficulties in securing loyalty from retailers.

In contrast to these firms, ShopKirana lacked abundant capital, so it prioritised retaining retailers. After establishing a solid foundation, it initiated the provision of value-added services such as credit through partner banks and KisanKirana merchandise. (Retailers utilize credit to procure supplies.)

To strengthen its lending operations, it has established a new entity that has applied for a license to operate as a non-banking financial company.

“We have developed our own algorithm and a credit rating system to analyse retailers. And we have just applied for an NBFC licence,” Ghorawat said.

The company is incorporating diverse regional brands into its B2B marketplace, enabling them to harness its network of retailers for distribution.

Collectively, these actions are anticipated to expand its profit reservoir.