Bullish on its model, DealShare wants to expand offline presence

DealShare brought a new flavor in the online grocery and FMCG space by its sole focus on tier II and III cities. The pitch clearly worked as heavyweight investors such as Falcon Edge and Tiger Global wrote big cheques and placed it in the coveted club of unicorns.

While the company has a warchest of around Rs 1,600 crore in its account, the market is rife with talks about the viability of DealShare’s business model, stalled growth and a possible pivot. Entrackr reached out to the company’s co-founder and chief executive officer Vineet Rao to clear the air on these rumors.

According to Rao, the company is on track to finish FY23 with around 20% growth in its topline. “We will be closing FY23 with Rs 2,300 crore in operating revenue (excluding return and discounts,” Rao told Entrackr in a telephonic conversation.

As per Fintrackr, DealShare’s scale spiked 8X to Rs 1,933 crore income in FY22 while its losses stood at Rs 431 crore.

Several sources outlined that DealShare is exploring new business models and may go through a pivot but Rao denies. “We will continue to bet on core B2C and B2B2C models which contribute 50-50% business at the moment,” he said.

“We believe that the offline component has a pivotal role in creating trust and attracting customers in smaller cities. Hence, we will be opening up stores ranging from 500 sq ft to 5000 sq ft depending on the size of the area,” added Rao.

The company has been running half a dozen stores in Jaipur for a while, and in a year's time it expects 15-20% of their business to come from offline channels. DealShare will follow a franchise model and set up stores in every city they have a presence, said Rao.

He further added that the company facilitates 2 million transactions on a monthly basis and over 99% volume comes through its Android app. About 50% of overall volume is pure play B2C (orders directly by customers) and rest via B2B2C (order directly by small kirana stores who ultimately sell to consumers), he said.

Besides its offline foray, DealShare has been ramping up its private labels for several quarters and Rao is optimistic about it. We anticipate 15-25% of total business coming from our own labels in the next 12 months, he said. The company claims anywhere between 4-5 million monthly active users (MAUs) which it targets to take it to 7 million by the end of FY24.

Thanks to its tier II and III cities focus, DealShare is well away from the limelight that other grocery startups get. Being out of sight from mainstream analysts can certainly lead to many theories on how well it is doing, especially considering the chequered record of many startups that have claimed their numbers from these very same markets. The road ahead remains tough, and as the sharp deceleration in growth has shown, every point gain in market share from here on is going to remain an expensive battle, with other well funded startups as well as the heavyweights (read-Jiomart, Flipkart, Amazon) eyeing the same markets.

Doing well enough to justify that unicorn badge would be no mean achievement for DealShare. It knows there are many who believe it will struggle to retain it, leave aside justify it.