Milk & grocery delivery startups attract investors

Chennai: The last six months have seen a flurry of funding activity in the daily grocery and milk delivery space. With established venture capital (VC) firms such as Blume Ventures and Kalaari capital investing in the space, entrepreneurs and investors say that organisation of the fragmented milk and daily needs delivery market has attracted attention from investors.

Recent deals in the space include Milkbasket raising $7 million in series-A funding from Kalaari and Blume, Doodhwala raking in undisclosed pre series-A funding from a US-based hedge fund, Raincan seeing an investment from IIFL Holdings and Supr Daily raising $ 1.5 million, according to data from research firm Venture Intelligence.

The startups either run on a subscription model or can place orders the previous day. Bengaluru-based Doodhwala operates in the 4 a.m.-7 a.m. time slot, delivering milk, daily grocery and perishables every day. Claiming to touch customers’ up to 25 times a month, the company operates in Bengaluru, Pune and Hyderabad. “We have partnered with over 50 milk brands including organic dairy farms to cater varying needs of customers. With over half a million deliveries a month, we have been able to maintain a customer retention rate of 85%,”said Aakash Agarwal, co-founder, Doodhwala.

Investors see an increase in scale in the daily delivery space, owing to changing dietary patterns – increased dairy consumption and customers demanding variety, which the startups are able to tap.

“Besides, the consumption is increasing and customers are looking for variety such as A2 milk, etc. and also look to have their everyday grocery needs taken care of by a single platform. With technology helping delivery, the segment is bound to grow,” said Jinesh Shah, founding partner, Omnivore Partners.

Industry players say that the primary difference between full-fledged grocery startups such as Big Basket and these players is the number of touch points. While the former category sees purchases of up to 3-4 times a month, these startups operate on a daily basis – with an average of 20 orders per month per customer.

“We pivoted the model in 2015, catering to the daily grocery needs of consumers. We are like a mom and pop store, catering to customers’ needs every day, early in the morning. With the gaining attention in the sector, we raked in $10 million this year alone raising money from Unilever and Kalaari,” said Anant Goel, founder, MilkBasket. He adds that while milk is an important factor in the daily delivery space, maintaining profit margins becomes difficult and bringing in grocery has solved the problem.

Stay informed with the latest Business News on Times of India. Explore the list of Bank Holidays, stay informed about Budget 2025, discover the new Income Tax Slabs, and use the Income Tax Calculator for hassle-free tax planning.

Unlock Investment Potential: Enroll in ET's Stock Valuation Workshop - Batch 3. Secure Your Spot Now!