START-UP CORNER: Selling fruits & veggies is a piece of cake
Ninjacart, a B2B agri-marketing platform, needs to expand. ABHISHEK JEJANI writes
The everyday hassle of transferring fruit and vegetables from vendors to retail stores has come to an end for Raghavendra Swamy as he now relies on Ninjacart to do it for him. The head of merchandising of departmental store FoodWorld says he can maintain the “quality” and “freshness” as well through instant orders at the grocery store.
Bengaluru-based Ninjacart is a business-to-business (B2B) agri-marketing platform connecting fruit and vegetables farmers directly with retailers. Last week, the company raised $5.5 million (~37 crore) from new investors — Mistletoe Inc and Nandan Nilekani’s NRJN Family Trust. Existing investors Accel Partners, Qualcomm Ventures and M&S Partners also participated in the funding round.
Co-founded by Thirukumaran Nagarajan, Sharath Loganathan, Kartheeswaran K K, Ashutosh Vikram, Sachin P Jose and Vasudevan Chinnathambi in May 2015, the company had raised $3 million (~20 crore) last year from existing investors.
Concept
Ninjacart started as an on-demand grocery delivery company, but after facing an inefficient and broken supply chain it pivoted to becoming a B2B platform. Poor logistics, lack of market information, distribution inefficiency and marginal farming lead to creation of numerous middlemen who are involved in supplying produce from farm to store. As a result, farmers are shortchanged and stand to earn less than half of what the consumer pays. Also, the necessity to go to the market every day puts retailers and restaurateurs at a disadvantage.
The start-up aims to solve this problem by enabling farmers with a supplychain platform to sell directly to businesses, thereby helping to maximise farmers’ income. It picks up the produce from farms and delivers it to businesses, helping more more than 1,000 farmers to sell their produce daily to more than 500 retailers and restaurants in Bengaluru.
“The team’s strong technology-first thinking enables the fruit and vegetables supply chain to be extremely cost efficient, thus improving farmer earnings and living standards. Despite limited cold chain facilities in India, the team has built a logistics system with which they are able to supply the produce from farm to stores in less than 14 hours,” Nandan Nilekani said.
Currently, 30 per cent of fruit and vegetables are wasted because of an inefficient supply chain and broken agri-marketing ecosystem but the company claims to have less than 4 per cent wastage in its supply chain. “Initially, we started in B2C and quickly pivoted to B2B when we realised the bigger pain point and superior economics. The opportunity is big as it a very large market with inherent inefficiencies. It is a difficult execution-oriented business so the team has to be good at running operations,” says Abhinav Chaturvedi, principal, Accel Partners.
Opportunity
The fruit and vegetables market is worth approximately $150 billion (2015) and it is growing at 9 per cent a year. It is expected to reach $224 billion by 2020, according to data compiled by Euromonitor. “The produce we deal with is for everyday consumption, which makes the opportunity comparable with markets for milk and water,” says Thirukumaran Nagarajan, CEO and co-founder of Ninjacart. “The viability of our business model is proven for decades. Ninjacart rides on a proven business model with innovative execution, better cost and a strong value proposition for farmers and customers while solving the problems left unsolved by the traditional agri-marketing ecosystem,” he adds.
Revenue
The company makes money by charging customers at the time of delivery in cash as it does not offer credit. However, from farmers it enjoys a credit period of up to 15 days. It charges a platform and distribution fee from the farmer's selling price and ensures that farmers receive their payment without any commission or logistics fee. “We are transacting 60 tonnes of fruit and vegetables a day. We hope to reach city level break-even at 150 tonnes a day and organisational level break-even at 300 tonnes a day,” says Nagarajan. “We have a turnover of ~3 crore per month.”
Road ahead
Ninjacart aims to reach the mark of 300 tonnes to achieve break-even in the next six months. To achieve scale, the company will be focusing on building a strong farmer network to ensure consistent supply. Ninjacart will use the raised funds in areas like technology, data science, customer acquisition and sourcing. It will also invest in supply-chain innovation and automation to improve reliability. With 170 employees, the start-up aims to increase its customer count fourfold. The company sees varying seasons, volatile prices, inconsistent supply and logistics as major challenges. To deliver 300 tonnes, an army of trucks is required to ensure on-time delivery with minimum wastage. The challenge will be to build a reliable and responsive logistics network, says Nagarajan.