B2B ecommerce startup ShopKirana's FY23 revenue climbs 50% to Rs 682Cr; Know the losses

ShopKirana, a B2B ecommerce platform, has made significant strides in the fiscal year 2023. The startup, which later rebranded to Direct, raised $38 million in a Series C funding round, boosting its valuation to $150 million in January 2022.

The funding round, which was led by investors including Info Edge and Oman India Joint Investment Fund, has been pivotal in ShopKirana's growth, allowing it to expand its business across major Tier-II cities in India.

Revenue surge and operational expansion

The Indore-based startup reported a 51% increase in its gross merchandise value (GMV) in FY23. Its gross revenue soared to Rs 682 crore, up from Rs 452 crore in the previous fiscal year.

The notable growth is primarily attributed to the sale of products, which forms the core of ShopKirana's business model. The company, founded in 2015 by Sumit Ghorawat, Deepak Dhanotiya, and Tanutejas Saraswat, connects retailers and brands directly, facilitating order placement, inventory management, and payment processes.

Strategic business model

ShopKirana's unique approach involves working directly with brands, aiding in distribution networks and market intelligence. The strategy has enabled the platform to cater to 50,000 Kirana stores across eight cities, including regions in Madhya Pradesh, Uttar Pradesh, Rajasthan, and Gujarat. 

The challenges

Despite the revenue growth, ShopKirana faced financial challenges in FY23. The cost of product procurement, which accounts for 90% of the total expenditure, rose to Rs 687 crore, contributing to an overall expenditure increase of 49.32% to Rs 766 crore.

Consequently, the company's losses grew by 33.9% to Rs 79 crore. Its Return on Capital Employed (ROCE) and EBITDA margin stood at -65% and -11%, respectively, indicating a need for strategic financial management in the coming years.

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