Satvacart breaks even at unit level in 14 months

At a time when many online groceries are bleeding cash and shutting shop, e-grocery retailer Satvacart.com says it has achieved break-even at the unit level for both its business verticals, subscription and non-subscription.

Also, "we are currently in talks with large e-commerce players, venture capital funds, family offices and high net worth (wealthy) individuals for raising $2 million for business expansion", said Rahul Hari, founder and chief executive.

The company follows a hybrid business model, sourcing from neighbourhood stores while also maintaining its own inventory.

Satvacart is backed by Palaash Ventures and several angel investors. These include senior executives from the insurance, consulting, hospitality and investment banking sectors. It sells around 4,000 products through an inventory model.
 

It is at present only in Gurgaon but plans to expand to other areas in then National Capital Region in the next six to eight months.

"Started around the same time as Grofers and Peppertap in 2014, (we) chose to keep operations within the same city (Gurgaon), inspired by the business model of FreshDirect in the US, one of the largest e-grocery companies in there. They started in the Queen's area of Manhattan and restricted their operations to that area for a very long time," the company says.

Satvacart is the only e-grocer in the country with a subscription-based model. In February, it had announced break-even at the unit level for its non-subscription business. "We have become India's first e-grocery player to achieve unit-level break-even for the overall business within 14 months of launch," Hari said.

Satvacart, he said, had launched a prepaid subscription model in January and managed unit break-even there within 60 days. It has subscribers from 100-odd housing societies within Gurgaon. This prepaid model significantly improved the cash position. With the increased number of deliveries through subscriptions, the cost per delivery, says the company, fell 90 per cent, from Rs 300 earlier to Rs 25 currently.

"Optimised margins through the fruit and vegetable supply chain, and reduction in discounts on low-margin products, gave a significant boost to the contribution margin. Launch of a private label, Satva Special, further added to the margins and led to unit break-even for both verticals," Hari said.

Adding: "Now, we will be targeting overall break-even within the next eight months, by going deeper within Gurgaon. Once we achieve this, we will be at a stage where our business will be sustainable without any external funding."