From nearly being written-off to becoming hot proposition for VCs: Milkbasket’s story

Milkbasket

Milk-tech and micro-delivery startups have been in news for raising funds, consolidations and shutting shops. The segment has heated up after BigBasket and Swiggy have shown interests in it.

While BigBasket is acquiring Pune-based RainCan, Swiggy is in an advanced stage of taking over YC-graduated SuprDaily.

Recently, Sequoia-backed DailyNinja raised $3 million in a fresh round led by Saama Capital. 

On the other hand, Milkbasket has been the first startup to evangelise micro-delivery model. The three-year-old company has come a long way since its inception in early 2015. Started with delivering milk in a few households in Gurugram, Milkbasket has reached a stage where it delivers milk, grocery and FMCG products to about 15,000 households in the city.

From nearly being written-off to becoming a poster child

Remembering when the entire segment, including Milkbasket, was written-off, Anant Goel, co-founder, and CEO of the company said, “We have seen a fair share of ups and down. During 2015-16, we went to many investors but none were interested to back us as several other startups had also entered the segment, and they were very sceptical about the model.”

Nevertheless, Milkbasket continued to solve the problem with perseverance. Little capital too was raised by a clutch of Chinese investors, including Empower Ventures and Lenovo Capital.

Last year, Milkbasket saw its fortune turned as many investors started showing faith in the model.

In the first half of 2017, it raised one round from Blume Ventures and Unilever Venture and this year Kalaari pumped about $3.5 million in Milkbasket.

Why has Milkbasket limited itself to a few areas in Gurugram?

“Actually, it’s deliberate,” added Goel, “We want to cement our position here first.” Explaining further he said that the grocery segment opportunity is worth about $1 billion in Gurugram itself.

According to Goel, Milkbasket hasn’t yet decided on a plan but the company is eyeing to expand its reach to 300 communities (apartment with multiple towers) from current 200. “We have set an internal target to have at least 80,000 household reach by the end of current calendar year,” he said.

Operational model

Milkbasket works on a hybrid model (inventory plus marketplace). While 20 per cent of high-frequency items are held by the company, remaining 80 per cent volume is being sourced from the supermarket in real-time.

Presently, it has two facilities in new Gurugram that cover 60,000 sq ft, to provide service in areas including Sohna Road, Golf Course Road, and Sector 55-56 amongst others.

About 65% of the overall volume is non-milk

While a section of experts and investor community are skeptical about how Milkbasket would make money ever by delivering milk, Goel emphasises that about 65 per cent revenue is non-milk. “We are a grocery player that use milk as a layer to cross-sell grocery, FMCG, and fresh veggies & fruits,” adds Goel.

The company claims to have an average basket size of Rs 170. When asked about margin Milkbasket makes on transactions, he preferred not to disclose it citing competition concerns.

Milk-tech is consolidated: What’s left for Milkbasket?

Over the past six weeks, a lot of actions has been observed in the micro-delivery segment. Since SuprDaily and RainCan are in the last leg of their acquisition, Milkbasket and DailyNinja are the only pure-play players left in the segment.

Speaking about consolidations, Goel says that large companies are going after buy versus build model. “We’re not bothered about competition, be it consolidations or new entrances into the segment. Over the past three years, we have built a moat which can’t be filled with the support of a deep pocket,” says Goel.

Gaining loyal customers has really been hard for any e-commerce play even with massive financial backing. However, that’s not the case with Milkbasket. “We have about 90 per cent retention rate month-on-month since our exception,” adds Goel. This loyalty can be expected as daily essential is something which every household needs every day.

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