Highlights
B2B E-commerce Platform ShopKirana Faces Challenges in Scaling
B2B e-commerce platform ShopKirana has encountered difficulties in expanding during the recent fiscal year, with a reported gross revenue decline of over 6%. Nonetheless, thanks to strategic changes, the Info Edge-supported company successfully cut its losses by more than 30% in FY24.
According to its consolidated financial statement filed with the Registrar of Companies (RoC), ShopKirana’s gross revenue fell by 6.26%, amounting to Rs 639.16 crore in FY24 compared to Rs 681.81 crore in FY23.
Overview of ShopKirana
ShopKirana operates as a B2B e-commerce platform that links retailers with brands via a mobile application. It assists users in various functions including:
- Order placement
- Inventory management
- Delivery route optimisation
- Payment processing
In addition to procurement assistance, the platform offers financial services such as banking products and loan options.
Revenue Breakdown
ShopKirana’s revenue primarily comes from product sales, totalling Rs 637.32 crore, which accounts for 99.71% of operational revenue. This reflects a decrease of 6.3% compared to Rs 680 crore in FY23. Revenue from services saw significant growth, increasing by 85.29% to reach Rs 1.26 crore, while non-operating revenue contributed an additional Rs 4.2 crore, leading to a total revenue of Rs 643.37 crore for the last fiscal year.
Expense Overview
On the expenses front, the cost of materials, which is the largest expenditure, dropped by 7.14% to Rs 627.3 crore. Employee benefits expenses were also reduced by 17.65% to Rs 35 crore. Transportation and other expenditures decreased by 23.57% and 24.95%, respectively. Consequently, ShopKirana’s overall expenses fell by 8.81%, amounting to Rs 698.63 crore in FY24.
Loss Reduction and Financial Metrics
Ultimately, ShopKirana managed to lower its losses by 30.5%, recording a loss of Rs 55.25 crore in FY24. Key financial metrics included a return on capital employed (ROCE) of -69.6% and an EBITDA margin of -7.85%. The company spent approximately Rs 1.09 to generate each rupee of revenue in FY24. By March 2024, ShopKirana reported current assets of Rs 90.75 crore, including Rs 27.8 crore in cash and bank balances.
Funding and Competitive Landscape
As reported by various sources, ShopKirana has raised a cumulative total of $50.46 million in funding thus far. Prominent investors include Info Edge, Sixth Sense Ventures, and the Oman India Joint Investment Fund.
ShopKirana faces significant competition from Jumbotail and Udaan. Notably, Udaan, backed by Lightspeed, is the largest competitor in this sector, having recorded a gross merchandise value (GMV) of Rs 5,706.6 crore in FY24. Meanwhile, Jumbotail has reported a revenue of Rs 850 crore in FY23 but is pending its annual report for FY24.
Despite this competition, no player in the market has reached breakeven, indicating the challenges within the sector. While the appeal of this market is apparent, it seems that many companies have underestimated the pressure on profit margins. B2B platforms often present a more regulated market with stable performance; however, low margins are a persistent issue. This situation has compelled these companies to focus on minimising losses, sometimes at the expense of growth. Additionally, the standard approach of providing financial solutions in the B2B space is not currently viable, leaving these firms to navigate a landscape increasingly threatened by rapid-commerce models. This scenario presents a pressing need for a significant shift in strategy or an exploration for new revenue sources.
