After raising around $90 million from American investor Tiger Global early last year, fresh produce supply chain startup Ninjacart raised an undisclosed amount from Walmart and Flipkart in December. The deal is significant, with both Walmart and Flipkart trying to strengthen their direct sourcing of fresh produce for Walmart India’s Best Price B2B cash-and-carry stores and Flipkart’s online grocery business Supermart.
Ninjacart delivers up to 1,500 tonnes of fruits and vegetables to retailers daily, with the highest demand from kirana stores. In an interview, Thirukumaran Nagarajan, CEO and co-founder of the agri-tech startup, which also counts Accel, Nandani Nilekani and Qualcomm Ventures as investors, spoke about growing profitably and the huge potential and investor interest in the fresh fruits and vegetables business. Edited excerpts:
How does the association with Walmart and Flipkart help Ninjacart?
There are a lot of synergies when working with Walmart and Flipkart in terms of ensuring the supply chain is stabilized, implementing best practices and efficiencies and expanding the customer base and reach.
What is Ninjacart’s strategy for 2020?
Last year was an interesting one for us. We went from two to seven cities, hired people and raised capital from new investors such as Tiger Global and Walmart. In 2020, we are very close to break-even in key cities. We plan to break even in Bengaluru by mid-year, and later, in Chennai and Hyderabad. We believe the fresh produce market is very huge and the only way to go after the business is to be profitable. We have been working on efficiency, improving every component so that we are on the line of profitability. We will expand into newer cities but it will be different from the way we entered the earlier cities.
Given the high investor interest in this business, is it tempting to grow fast?
We have had the support of big investors like Tiger Global and Steadview Capital and more investors want to come in. But, as a company, we strongly believe that we have to prove it to ourselves before embarking on the next lap of growth. Between January and June last year, we grew nearly six times in volume and revenue. Then we realized that the (fresh produce) market is big and the potential to scale is so huge, we can grow fast. But what makes real sense is to grow at a certain speed, but with efficiency.
Do you see many firms entering the sector?
Yes. Everyone wants to get into vegetables and fruits. Grocery is a large category for online retailers and many are present in the ‘dry’ category. Now everyone wants to jump into the ‘wet’ grocery space too because it’s huge. There are precedents in developed countries to run the ‘dry’ grocery business, but not so much in vegetables and fruits. Ninjacart has given confidence to people that it can be done successfully.
How does an incident like the 2019 onion crisis impact your business?
We deliver around 1,400-1,500 tonnes of fruits and vegetables daily, but suddenly no one was buying onions. It does impact because overall volumes go down, as much as 15%. Stores are ordering much less. Demand for onions has not gone up and the quality is not good. Since onion prices are high, farmers who have grown onions are harvesting it much earlier. The price keeps fluctuating, but we are expecting them to stabilize in February. But when onion prices rise, farmers will want to grow only onions next season and prices would crash. So, we study these cycles and tell our farmers what these trends look like.