“The FnV (fruit and vegetable) industry largely runs on touch-and-feel and pick-and-choose of the produce. In spite of the benefits supermarkets provide, pushcart vendors continue to thrive, but these vendors haven’t evolved. And that is why FreshWorld was founded, marrying the art of street vending with the science of modern retailing was the thought,” – Rajiv Rao, founder and CEO, FreshWorld
The fruits and vegetable retail market is the holy grail for many of India’s hyperlocal and delivery startups. The likes of Bigbasket, Grofers, Amazon Fresh and now even Jio Mart, Zomato and Swiggy are already vying for a big slice of the market. Even then fresh produce delivery has suffered from many challenges such as unpredictable inventory, tedious returns processes, quality of the produce and high delivery costs. Plus, there’s the customer experience that Rao indicated above.
Which is why pushcarts and roadside vendors — who still dominate the FnV market in India —, have an advantage. Customers know what is available, can touch and feel the produce and also choose the produce that they like instead of not having that flexibility and luxury with online delivery.
Realising the challenges, Rao said that combining the convenience of doorstep deliveries with the instant gratification of traditional carts is the ideal solution. And so in 2014, FreshWorld was incorporated working on a battery-powered smart cart delivery model with optimal delivery costs. These carts can be located through a mobile app, allowing users to plan and place their delivery orders. Furthermore, the company allows the customers to both choose for an instant delivery under two hours or within a preferred delivery time slot.
With Covid-19 changing the retail dynamics, many of these roadside handcarts had to wind down their business. This was not a concern for online grocery delivery platforms, considering that while the country was in lockdown, only essential products such as grocery and fruits and vegetables were allowed to be delivered.
Tapping on this opportunity, the space saw the entry of Swiggy, Zomato and JioMart as well as other startups. Many existing players from the industry also partnered with these platforms to meet the rise in demand of the fruits and veggies.
Even FreshWorld went this strategy to reach and satisfy its loyal customers. But this was not the only challenge for the startup. Till December 2019, the startup had 40 carts but in January 2020, to swap the battery stack of the carts from lead acid batteries to lithium ion ones, many carts went for refurbishing and as a result, its number of operating carts dipped. Adding to that, most of the delivery executives of the startup on announcement of lockdown returned back home due to Covid-19. So, the startup formed partnerships with hyperlocal platforms as well as Hoopy — a bike-based delivery platform — to leverage their resources and counter the dearth of delivery executives as well as ensure on-time delivery of their orders.
“We developed an omnichannel strategy. Normally, we have carts which are mobile which unfortunately were not available during lockdown but we have our own app and partnered with hyperlocal players such as Dunzo, Swiggy and Zomato to have their delivery partners pick up the FnV from our hubs and deliver to customers who order on our store,” elaborated Rao.
Thanks to the partnerships with hyperlocal platforms, FreshWorld saw up to 500 orders per day after the government announced relaxations in the lockdown from 50 orders per day in the beginning of 2020.
Deep Dive Into FreshWorld
“A large part of the Fnv industry is unorganised. Approximately 20-25% is organised, comprising of online and storefront retailers, even then pushcart operators command a 30-35% market share which indicates that it is relevant but the truth is it has not upgraded since the past many years,” said Rao when asked about what are the major challenges he saw in the FnV industry.
He believes that the model counters all the challenges that the customers face with the pushcart vendors, guaranteeing fresh and good quality produce for the customers, at a reasonable price point. Additionally, the customer does not have to wait for the vendors, they can use the mobile app and know exactly when the cart will arrive at their doorstep.
And that is how the startup positions itself — as ‘an upgraded 2020 version of a pushcart operator’. According to Rao, FreshWorld carts have a display and storage capacity of 350 Kg, which is enough for the company’s one-day operations. He also claims that the carts consume only three units of power every day which costs around INR 20 per day and INR 600 per month in Bengaluru.
“The cost of building a single cart is INR 2.5 Lakh and once in every 18 months, we need to swap the batteries, which costs us around INR 50K,” elaborated Rao on the startup’s spending per cart. These carts are integrated with all functionalities of a physical store including an android-based point of sales (PoS) platform, a Lenovo tablet, a Bluetooth thermal printer, digital weighing machine, and GPS device with vehicle tracking service.
Operating on a hub and spoke model where one cart is assigned a regional hub, where it fulfils all orders in a 5 Km radius, FreshWorld procures its products from both farmers and intermediaries.
The startup has combined this cart model, with an app, “We have recently launched a customer app model which works on the hyperlocal model such as that of Ola and allows the customer to see the closest cart on the app. We believe our ‘digital order and traditional fulfillment’ will form a strong and differentiated business model and this will help us in achieving our goal of being an innovative and disruptive FnV retailer,” said Rao.
Rao said that the company is following all norms as directed and advised by the government — including use of face masks, sanitisation and social distancing protocols for both employees and farmers — to ensure the hygiene of the produce and the safety of its customers. It has just one person at its hub overlooking the inflow of orders and engaging with the delivery partner. Additionally, it also directed all its employees and delivery partners to use the Aarogya Sethu app.
Functioning between 7:30 am to 2 pm in a day, the startup told Inc42 that it is doing 20 bills per day with an avg of INR 225, with just 10 carts. Whereas, earlier the numbers were over 25 bills per day with an avg of INR 170, with 40 carts.
FreshWorld’s Plans In Post Covid World
In October 2019, RedSeer estimated that online food and grocery retail will touch $10.5 Bn by 2023. Covid-19 has definitely given a further boost to this fact, considering that the majority of the country has been in lockdown since the past few months. And while Unlock 1.0 has already been implemented, there is still a fear of safety in the consumers and thus they are avoiding going out or buying from mandis.
“The existing conditions and fear in consumers will now alter consumer behaviour and those who did not visit our cart earlier will now commence buying from it as they will prefer to shop without having to step out to visit a supermarket but still get to pick and choose FnV at home in a safe environment,” said Rao with the belief that the startup’s model is well equipped to overcome the challenges posed by the pandemic.
FreshWorld resumed operations after the lockdown in mid-May and is working on remodelling and refurbishment for its carts. It said that it is moving towards lithium-ion batteries — which tend to have a higher energy density, voltage capacity and lower self-discharge rate, making them more power efficient as compared to other battery types — for which it has proof of concept. The startup told Inc42 that it has already rolled out these on 5 carts and aims to roll out at least 30 carts with these batteries on a lease model by September 2020.
In April, the startup had acquihired Royale Fresh — Bengaluru based meat delivery platform — which it said fit perfectly into its vision. “Our cart model will provide us with significant capability to easily upsell/cross-sell products across both our platforms and help scale faster. Meat compliments our current FnV offerings and the initial traction seen from customers bears testimony to the fact,” said Rao on the plans with the acquihire. He added that the integration processes and training and upskilling of the field teams is currently underway.
With such an increase in its orders, sales and its integration of Royale Fresh, the startup is confident that it will be able to scale across Bengaluru and launch in Delhi NCR over the next 18 months.