Year Ender 2021: Quick commerce, brand roll-up, D2C expand e-comm's scope beyond marketplaces

Just when you think e-commerce has reached its zenith of growth, a new vertical model or brand emerges as a strong disruptor.  Despite the overwhelming dominace of Flipkart and Amazon in the marketplace play, vertical commerce continues to grow and proves that growth has not saturated yet. In fact, vertical e-commerce has a fair share of contribution to this year's unicorn list.

Quick commerce

Of all the hot startup trends, quick commerce commanded the most mind space, on mainstream media as well as social media. While many continue to question the need for 10-minute grocery delivery, the concept of quick commerce is coming of age.

 Zepto, the new kid on the block, doubled its valuation in just 45 days. The five-month-old startup raised $100 million in a Series C round at a valuation of $570 million, a 2X jump from its valuation nearly 45 days ago when it had bagged $60 million. At the time of the funding announcement, Zepto's co-founder and CEO Aadit Palicha told BusinessToday.In that the start-up is planning to hire 800 people for its dark stores, supply chain, marketing, finances and operations in FY22-23. "We have grown aggressively and are now present across major Indian metros. The current funds infusion will further help us expand to towns and cities beyond metros. We have a strong 400 member team now and are hiring 800 more in 2022-23 across various verticals," the 19-year-old co-founder said.
Considering that its earlier avatar - hyperlocal grocery delivery - was almost written off not so long ago, quick commerce is making a strong case for the speed of delivery as its main differentiator.

Zomato, which withdrew from grocery delivery after two attempts, bought a 10 per cent stake in Grofers while its primary rival Swiggy said it will pump in $700 million in Instamart, its express grocery delivery arm. Swiggy claims Instamart now serves customers across 18 cities and doing over 1 million orders per week. By January 2022, it expects to make deliveries in 15 minutes by having the network of dark stores very close to the majority of its customers.

The potential opportunity has triggered such FOMO (fear of missing out) that eight-year-old Grofers rebranded itself to Blinkit to align with the trend.  "Once upon a time, a few months ago, we started on a journey to build the future of commerce with 10 minute delivery of most of the stuff our customers need in their daily lives. Today, we already process over a million orders a week, across 12 cities in India. And this is just a start. We learnt a lot as Grofers, and all our learnings, our team, and our infrastructure is being repurposed to pivot to something with staggering product-market fit - quick commerce," Albinder Dhindsa, CEO of Grofers, wrote in a blog post on December 13, 2021.

Tata-owned BigBasket and Google backed Dunzo are working on their express delivery models while cab hailing giant Ola, which had multiple stabs at grocery business, launched a 10-minute grocery delivery in Mumbai and Bangalore.

Some predict quick commerce to be the next game changer for e-commerce, some say it is nothing more than a bubble. Is it a fad or here to stay - 2022 will decide.

Brand roll-up

E-commerce roll-up model has become a strong investor destination in 2021 with a number of startups emerging in this segment.  These startups model their business loosely on US-based startup Thrasio, valued at $10 billion, which rolls up popular brands on Amazon's marketplace and help them grow. These startups acquire and scale up digital first brands across diverse categories including fashion and apparel, home and garden, beauty and personal care, food, and others.

Among them are Mensa Brands, 10Club, GlobalBees, and Goat Brand Labs which have attracted significant investments over the last one year.

Mensa Brands, launched by former Myntra CEO Ananth Narayanan, became India's fastest unicorn and the first e-commerce brand aggregator to become a unicorn when it secured a Series B funding of $135 million led by Alpha Wave Ventures.  The seven-month start-up has raised over $300 million in equity and debt so far.

GlobalBees secured $111.5 million in Series B funding on Wednesday led by Premji Invest with participation from existing investors including SoftBank and FirstCry. The funding round makes GlobalBees' the second Thrasio-style startup to turn unicorn this year after Mensa Brands.

In food, former Flipkart chief business officer Ankit Nagori's Curefit and Sequoia-backed   unicorn Rebel Foods are aggregating brands in a similar fashion.

D2C

Online beauty retailer Nykaa's blockbuster IPO and listing was a watershed moment for the direct-to-consumer (D2C) businesses in India. Nykaa's Rs 5,352-crore initial public offering was subscribed 82.4 times. Its shares were listed at a premium of 79 per cent to the issue price at Rs 2,001 per share and the company achieved a market cap of Rs 1 lakh crore on listing day. The listing made its founder, 58-year-old ex-banker Falguni Nayar, India's richest self-made female billionaire, and her family trust offices now have a collective worth of about Rs 54,831 crore. It's also quite notable that the company she founded in 2012 is the first profitable Indian start-up unicorn to hit the public market.

A handful of other startups in the segment raised large funding rounds from private market investors. According to data platform Venture Intelligence, D2C brands have garnered over $2 billion of investment across 105 deals this year.  

Meat startup Licious and beauty and personal care startups Mamaearth and Good Glamm Group entered the coveted unicorn clubs this year while some of the largest D2C investments this year raised by children's retailer Firstcry ($315 million) and omnichannel eyewear retailer Lenskart ($220-million).

It is expected that a lot more equity capital will flow into creating D2C brands in India in the coming year, especially in sectors such as beauty and personal care, food and beverage, and fashion.