Otipy posts 50% GMV growth in FY24; losses down by 21%

Milkbasket started subscription commerce in India but it appears that Westbridge-backed Otipy is championing the concept with its farm-to-fork model wherein it delivers ordered items the next morning. 

The company, which offers fruits, vegetables, dairy and bakery products along with a subscription option, claims over 50% growth in its GMV in the fiscal year ending March 2024.

Otipy also reduced losses by 21% during the same period, its founder and chief executive officer Varun Khurana told Entrackr in an interview.

“We did Rs 115 crore in gross revenue in FY23 and unaudited numbers show that our topline will stay near Rs 175 crore in FY24,” Khurana said.

Otipy had a gross revenue of Rs 115 crore in FY23 which includes Rs 96 crore of operating revenue, Rs 11 crore of discount offered, and other income Rs 8 crore.

Fruits and vegetables form 70% of the firm’s total collection while groceries and dairy products contributed 20% and 10%, respectively.

According to Khurana, the cost of procurement formed 70% of its total expenditure. “Our total expenses including employee benefits and logistics stood at around Rs 245 crore in FY24,” he said.

Otipy claims that it fulfills 8 lakh orders on a monthly basis, and is witnessing 10% month-on-month growth. Khurana disclosed that the average order value hovers in the range of Rs 270, adding that an fulfilment cost of Rs 40 per order allows the company “to operate profitably even at low AOVs of Rs 270.”

While Otipy has been operating in Delhi (NCR) and Mumbai for some time, Khurana outlined that the firm plans to expand its footprint into Bengaluru and Hyderabad during the second half of 2024.

“We stayed in the two metros for several years as we wanted to perfect the model, unit economics and there has been no dearth of depth in NCR and Mumbai. Now that the company is making money at an order level, we plan further expansion” said Khurana while explaining the rationale behind gradual expansion.

Backed by the likes of Westbridge Capital, SIG India, Omidyar Network, Otipy has raised $44 million across several rounds including a $32 million Series B round. 

“Strong focus on bringing the losses down throughout the last fiscal year helped us to cut losses by 21% to Rs 71 crore in FY23,” said Khurana.

Khurana claims that Otipy has hit an average monthly revenue run rate (ARR) of Rs 20 crore. 

“We are targeting to touch Rs 500 crore in gross revenue in FY25 and hit positive ebitda at a monthly level,” said Khurana.

Otipy has been a relatively quiet success story, building up strengths even as larger, flashier rivals have floundered. The firm has built up a strong base of users today, and the promise of delivering fresh produce has withstood challenges along the way. We are not sure about the actual performance of the categories beyond fresh fruits and vegetables, as Otipy has frequently gone with smaller brands in the space to support margins. 

However, it risks diluting its own core brand promise of fresh produce delivery if it goes too far down that path and associates with produce that does not meet the same promise in fact. The firm is likely to find expansion easier now, thanks to its learnings. However, both East India and South India, are tough nuts to crack due to elevated competition and the different nature of the markets, from being more price sensitive (East) to brand savvy (South).