Recently crowned unicorn and social commerce app Meesho plans to use funds from its latest $300 million fundraise to foray into the hotly contested online groceries business over the next 18 months.
The Bengaluru-headquartered startup will focus on bringing small-time grocers in tier 2 and 3 cities online, taking on deep-pocketed giants like Amazon, Reliance, Facebook, Walmart-backed Flipkart and BigBasket for a piece of this large unorganised retail pie in India.
"Eventually, our goal is to enable all kinds of small businesses to come online. But, for the next 18 months a high amount of focus will be only on grocery. There, our focus is to bring kiranas online," Meesho CEO Vidit Aatrey told BusinessToday.In.
India's fast-growing e-commerce market is seen growing by 30% a year to $200 billion by 2026. Further, the pandemic accelerated e-grocery sales in the country as Indians began buying essential items online in a bid to avoid catching the coronavirus.
Calling grocery one of the largest small business formats in the country, he said the team is trying to figure out how to bring kiranas online by offering services starting from sourcing, logistics, access to selection, affordability of products, digitising their stores and enabling easy buying experience for customers.
"We will invest a lot in technology to make that process easy. So far, online grocery has been a largely tier-1 phenomenon. There are no large e-commerce grocery players in smaller cities. That's a large space we'll go after," he said.
BigBasket, in which the Tata Group is reportedly trying to buy a majority stake, and Amazon India provide quick delivery of groceries in the larger cities.
Billionaire Mukesh Ambani's Reliance, in which Facebook picked up $5.7 billion-worth stake last year, is also fast expanding its presence in this business with its JioMart online platform. The social network giant's backing is likely to help Reliance connect grocers on its platform to Facebook-owned WhatsApp's 400 million-strong user base.
Meanwhile, Walmart-backed Flipkart has expanded online grocery sales to more than 50 Indian cities and intends to reach over 70 locations by September 2021.
Aatrey said Meesho will also grow its team, especially the technology and products roles, over the next two years to meet the new goals. "We want to double our technology team over the next 18 months. These are big investment areas to use the new capital we've got."
He said Meesho will hire from engineering colleges across the country, including regional colleges. "We go everywhere where the right talent is."
The social commerce app, which connects 13 million small businesses to customers across the country through social media platforms like Facebook and Instagram, largely has women entrepreneurs selling fashion and apparel items. The app wants to reach 100 million individual businesses. It recently raised $300 million from SoftBank Vision Fund 2 at a valuation of $2.1 billion.