Retailer-focused digital inventory platform Arzooo had scooped up $70 million in a Series B round in June this year with around 10X premium in its valuation. The company’s valuation mounted on the back of a 4.3X surge in its scale (gross revenue) which went past Rs 1,100 crore.
Arzooo’s gross revenue grew 4.3X to Rs 1,117 crore in the fiscal year ending March 2022 from Rs 259 crore in the previous fiscal year (FY21), according to the company’s annual financial statements.
Sale of products formed 99.8% of the firm’s total operating revenue while it also made Rs 2.55 crore from after-sale services including insurance and extended warranty.
For the uninitiated, Arzooo is a real-time reverse auction-based e-commerce platform for electric and home appliances such as refrigerators, air conditioners, and televisions among others. Founded by ex-Flipsters Khushnud Khan and Rishi Raj Rathore, Arzooo claims to power over 30,000 retailers with its digital inventory.
On the cost side, procurement of products emerged as the largest cost element for Arzooo and accounted for 92.3% of the company’s overall cost which blew 4.3X to Rs 1,090 crore in FY22.
Employee benefit was the second highest expense which shot up 2.2X to Rs 28 crore in FY22 while advertisement cost rose 15X to Rs 5 crore. The company also spent Rs 23 crore on transportation and distribution which pushed Arzooo’s total costs by 4.26X to Rs 1,181 crore in FY22.
With a 4.3X surge in scale, the company’s losses spiked 3.5X to Rs 63 crore in FY22. On a unit level, Arzooo spent Rs 1.06 to earn a rupee in FY22.
The company has kept a tight control over costs in what is essentially a market with fine margins, and that should hold it in good stead as it seeks a breakeven or perhaps even profitability in FY23. With larger scale, Arzooo is bound to see opportunities, including in after-sales service or extended product warranties, which is opening up strongly as a market.