B2B rural e-commerce startup VilCart raised $18 million (Rs 144 crore) in a Series A round led by Asia Impact in January 2023. According to Fintrackr’s estimates, the company’s valuation stood at around $50 million in the round which came with 10-fold growth in its scale (gross revenue) in the last two fiscal years (FY21 and FY22).
The gross revenue (read GMV) for VilCart ballooned 10X to Rs 209.7 crore in FY22 from Rs 21.8 crore in FY20. To understand its growth in the last fiscal year, let’s focus on its FY22 numbers.
VilCart’s gross merchandise revenue (GMV) grew 2.65X to Rs 209.7 crore in the last fiscal year from Rs 79 crore in FY21, as per its annual financial with the Registrar of Companies.
The four-year-old firm offers a local language mobile app for rural kirana stores and consumers. It also acts as a sourcing, logistics, technology, marketing, and branding partner for these stores.
The sale of products such as grocery, beauty, cleaning, personal care, and beverages to the kirana stores was the sole source of revenue for VilCart. It claims to service around 85,000 Kirana stores in 30,000 villages majorly in the state of Karnataka.
On the cost side, procurement of products accounted for 90.2% of the company’s total expense which spiked 2.6X to Rs 199.28 crore in FY22 from Rs 75.19 crore in FY21. Traveling conveyance was the next line of expense, increasing 2.77X to Rs 8.6 crore in FY22 while the cost of the secondary package grew 11X to Rs 5.28 crore.
Employee benefits expense remained almost unchanged at Rs 2.83 crore during FY22. VilCart added another Rs 1.18 crore on legal and professional charges which catalyzed its overall expenditure by 2.65X to Rs 220.9 crore in the same duration.
Vilcart’s losses grew in line with its GMV and stood at Rs 11.13 crore during FY22 as compared to Rs 4.8 crore in FY21. On a unit level, the company spent Rs 1.05 to earn a single unit of GMV.
While VilCart’s losses continue to demonstrate how, for all the downplaying of purchasing power there, rural India does allow better margins than urban centres, the fact remains that the firm has a long, tough road ahead. Be it the blurring of boundaries between rural and urban India, or the appetite of the large Ecom players like Amazon and Flipkart to seek new buyers, VilCart faces a long term dilemma. If it does well, it is bound to make for an attractive acquisition target, while any flagging in growth or perhaps even margins might mean waning investor backing too. For nowhere is the fail fast philosophy applied to faster than an ‘unglamourous’ market like rural India.
Like all successful rural India focused startups, the answer lies in becoming a sustainable business at the earliest.