Agritech startup Otipy raised a $32 million Series B round in the beginning of FY23 and it helped the company to grow its gross revenue to the tune of 2X. The company’s founder and chief executive Varun Khurana claimed that Otipy has crossed Rs 115 crore in gross revenue during the last fiscal year.
For context, Otipy recorded Rs 62 crore in gross revenue in FY22.
Otipy follows a farm-to-fork model and procures fresh produce directly from farmers and delivers it to consumers every morning.
“Fruits and vegetables formed 80% of our total collection while groceries and dairy products contributed 10% each,” said Khurana in an interaction with Entrackr.
Otipy claims to serve more than one million customers and support over 20,000 farmers in selling their produce. At present, it’s operational in Delhi (NCR) and Mumbai and looking to get into Hyderabad and Chennai. “Otipy’s loyal customers use the platform everyday and see retention rates north of 60%,” added Khurana.
According to Khurana, the average basket size ranges between Rs 210-240. On the expense side, the cost of procurement of produce formed 63% of the total revenue which grew 55% to Rs 75.2 crore in FY23 from Rs 48.5 crore in FY22. This cost also includes logistics for carrying produce from the farmers to their warehouses.
“Overall, our burn stood at around Rs 205 crore in FY23,” said Khurana.
Comparatively, its last fiscal year revenue grew by 66% year on year, while burn grew by 34%. “We have closed FY23 with a loss of Rs Rs 90 crore,” said Khurana.
Currently, the company claims that it has hit a monthly average revenue run rate of Rs 18-20 crore and delivers over 30,000 orders in a day. We are targeting to touch Rs 250 crore in gross revenue in FY24,” said Khurana
For a firm like Otipy, the prescription seems obvious, but equally obviously, is not so easy to execute. It is to increase average order value and keep improving pricing and quality. The former has surprisingly, been the tougher one to manage for the firm, as it runs up against the massive informal network of vegetable and fruit vendors in Indian cities. These vendors might occasionally charge a little more than e-commerce sites like Otipy or even Milkbasket, but make up for it by allowing customers to ‘feel’ and pick their own choice of fruits and vegetables.
Speaking to a small sample (10-15) of Otipy customers in Delhi, it is very obvious that the firm delivers well when it comes to vegetables, thanks to the freshness pitch that is seen as credible. But there is room for improvement in fruits , since it comes from various locations pan-India and customers face issues with respect to over-ripening, under-ripening, damage etc. These are issues common across e-grocers, and Otipy has done well to build credibility on vegetables at least.
On dairy and other groceries, Otipy of course faces an even more formidable challenge from existing firms vying for the same market, besides the relative handicap of focusing on smaller brands that may not have any pulling power with customers other than price. That seems a contradiction in terms for the average Otipy consumer, who would appear to be a very net savvy and presumably, brand aware buyer who understands the convenience and quality they can get from the app.
