Indian grocery startup Citymall raises $47M to challenge ultra-fast delivery giants
TechCrunch —
Citymall's latest funding round positions it to take on quick-commerce rivals by focusing on value-driven grocery shopping.
**Citymall has raised $47 million in Series D funding** to enhance its budget grocery delivery service, specifically targeting tier 2 and tier 3 towns in India. This funding round was led by Accel, with contributions from existing investors such as Waterbridge Ventures, Citius, General Catalyst, Elevation Capital, Norwest Venture Partners, and Jungle Ventures. This latest funding comes three years after Citymall's $75 million Series C round. Despite maintaining a flat valuation of $320 million, investors are optimistic about Citymall's potential for growth in a competitive landscape that includes quick-commerce giants like BlinkIt and Zepto. The company has raised a total of $165 million since its inception in 2019, indicating strong investor confidence in its business model and market strategy.
Funding Details
Citymall's Series D funding round, which raised $47 million, was spearheaded by Accel and saw participation from several notable investors, including Waterbridge Ventures, Citius, General Catalyst, Elevation Capital, Norwest Venture Partners, and Jungle Ventures. Since its founding in 2019, Citymall has successfully raised a total of $165 million. The valuation of the company, assessed using a nearly 4x revenue multiple from the previous year, has remained stable at $320 million. This flat valuation, despite the company's growth, reflects a cautious market environment. Investors believe that the online grocery sector, particularly the value segment, represents a significant opportunity in India, as highlighted by Pratik Agarwal from Accel, who emphasized the potential for growth in this consumer market.
Targeting Value-Conscious Shoppers
Citymall sets itself apart by catering to value-conscious customers who prefer making planned grocery purchases rather than impulsively ordering through quick-commerce apps. CEO Angad Kikla noted that while Citymall offers about half the product selection of quick-commerce platforms, it provides double the variety found in traditional offline stores. This strategic positioning aims to attract customers who prioritize cost over speed. Kikla likened Citymall to Dmart, a well-known superstore chain, emphasizing the startup's goal to serve a demographic that is more focused on value. By understanding the needs of these shoppers, Citymall aims to create a loyal customer base that appreciates the balance of quality and affordability in their grocery shopping experience.
Operational Strategy
Citymall's operational strategy is centered around building private labels and forming partnerships with manufacturers to keep prices competitive. Unlike many quick-commerce competitors, Citymall does not impose delivery fees and typically delivers orders within a day, catering to customers who do not require immediate delivery. The startup primarily serves customers with monthly incomes ranging from ₹15,000 to ₹80,000 ($170-$910), with an average order value of ₹450-500 ($5-6). This focus on affordability allows Citymall to maintain lower operational costs, which is crucial for its business model. By streamlining its operations and leveraging community leaders for fulfillment, Citymall aims to enhance efficiency and reduce expenses, ultimately benefiting its customers.
Market Position and Challenges
Citymall operates in 60 cities across India, including key regions like Delhi NCR and Uttar Pradesh. However, it faces intense competition from local grocery stores and established online grocery platforms. Despite experiencing steady growth, the company reported over 30% negative EBIDTA margins in the last financial year, indicating challenges in achieving profitability. Analysts predict that quick-commerce platforms could capture a significant portion of e-commerce sales in India, potentially reaching 20% by 2035. This competitive landscape poses a substantial challenge for Citymall, which must navigate these pressures while continuing to attract and retain its customer base.
Future Outlook
Looking ahead, Citymall plans to expand into adjacent cities to optimize its warehouse utilization and enhance its service reach. The company believes that its emphasis on value and lower costs will draw customers away from quick-commerce platforms, which often charge higher fees and cater to impulse buying. With the online grocery market projected to account for 12% of e-commerce sales by the end of the year, Citymall is strategically positioning itself to take advantage of this growth. By focusing on its unique value proposition and operational efficiencies, Citymall aims to solidify its presence in the market and continue its upward trajectory.
Why it matters
- Citymall's funding highlights investor confidence in budget grocery delivery amid rising competition.
- The startup's focus on value-conscious consumers addresses a significant market gap in India's grocery sector.
- Citymall's operational model could redefine grocery shopping habits in tier 2 and tier 3 towns.
Key numbers
- $47 million raised in Series D funding
- $165 million total funding to date
- Average order value of ₹450-500 ($5-6)
- Operates in 60 cities across India
Context
Citymall, founded in 2019, has carved a niche in the Indian grocery delivery market by targeting budget-conscious consumers, contrasting with the rapid delivery model of quick-commerce competitors.
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