Why we invested in MilkBasket

Today, we are very excited to announce Kalaari Capital’s investment in Milkbasket — partnering with founding team Anant, Ashish, Yatish, and Anurag. Their journey towards building a great household brand for grocery shopping in India is exciting to us and we hope to foster a long-term relationship with Milkbasket and see this goal come to light.

Overview of the problem & market opportunity

Why invest in grocery shopping now? Isn’t it a competitive market with BigBasket, Amazon, Flipkart, and everybody else already ahead in the game? We asked ourselves these questions many times when we first started engaging with the Milkbasket team. But, a deeper look at the market still made it an exciting opportunity.

Food & Grocery is a $300B segment in India and is expected to grow to $1T by 2030. About 98% of this consumption today is serviced by the fragmented general trade channel or the 11M kirana stores in India. While the industry may seem overcrowded, the existing new-generation models are only scratching the surface. It’s still unclear what a uniquely Indian retailing model potentially serving100M+ households will look like. There is still a lot of evolution ahead for this industry.

A large, evolving market like this is bound to be competitive but at the same time it provides opportunities for new entrants. Through our interaction over last 6 months with Milkbasket, we were able to understand the uniqueness of their model and why customers love them.

Our investment thesis

The founding team at Milkbasket has more than 40 years of experience in supply-chain, strategy, retail and technology roles in large multi-national companies and startups. It brings together a blend of agile thinking and successful execution which we think is key to building a business like this.

Milkbasket is India’s first eCommerce app without a checkout or Buy button. Their users simply add whatever they want — next day groceries, fruit, milk, etc. — until midnight every day, and find it delivered at their doorstep the next morning.

This enables Milkbasket to capture both planned and unplanned purchases of a household which conventional grocery eCommerce models find harder to. The model allows for very high repeat purchases and frequency. On an average, Milkbasket customer cohorts display repeat percentages north of 95% (see image below). A household places more than 20 orders with them in a given month, making Milkbasket a part of everyday life.

While it appeared easy on the surface, there is a strong supply chain rigour that the company undertakes every single day. The delivery operations take place only in the morning — between 4am and 7am. High concentration of orders allows a deliveryman to deliver more than 50 orders in 2 hours’ time. This ensures that whatever customers order until midnight is lying outside their door next morning, even if it happens to be a 5-rupee pack of Parle-G biscuit.

From using data to predict inventory, innovative processes to manage the fulfillment center space for perishable and non-perishable categories, and picking & packing of an order past midnight, makes the Milkbasket supply chain more unique and cost effective than any we have seen.

Overall, we were impressed by a strong founding team, their focus on data-based decision making, operational rigour, and a persistent focus on customer delight, backed by a large market opportunity in the grocery space — culminated into us leading a $7M Series A round into Milkbasket. We are very thrilled to work with their team in building a great household name together. They currently operate in NCR and you will soon find them coming to your city!

Kalaari is committed to investing in great founding teams which are thinking uniquely to create impactful companies in India for India. If you know a company we should meet, we would love to hear from you.

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