The company has so far raised about $ 20 million in three rounds. One of them was closed just about a quarter ago.
“We’ll need another round of cash infusion to go national. Talks have been initiated, but details of funding, including equity structure, are yet to be worked out,” said Karan Mehrotra, CEO and co-founder.
LocalBanya, which was founded in 2012, raised $ 5 million from Mumbai-based realty development group Karmvir Avant Group last year. In 2013, it had raised an undisclosed amount form Bennett Coleman & Company Limited’ Springboard fund. Prior to this, the company had received angel funding from few investors.
LocalBanya.com, which operates only in Mumbai as of now, is projected to close fiscal year ended March 2015 with a revenue of about Rs 40 crore, according to industry sources. Mehrotra declined to comment on revenue details.
Over the next three to four months, Mehrotra said LocalBanya will cover most of the big cities.
“We operate a model which does not require much physical infrastructure. We connect with existing retailers and grocery stores. We do not compete with them. We work with them adding the newest online channel with the existing vertical,” he added.
LocalBanya.com, which competes with well-funded companies like BigBasket.com and MyGrahak.com, also has plans to tap the tier-II and tier-II cities in near future. “We may need to tweak our model as each of these smaller markets may demand,” said Mehrotra.
It has already running a pilot in Pune. LocalBanya will officially start operating in Pune in two weeks. Next will be Delhi and Hyderabad, followed by Bengaluru, Chennai, Hyderabad, Ahmedabad and Kolkata. The fresh round of round of funding will mainly be utilised for this expansion.
According to Mehrotra, the challenge is to build a robust last-mile infrastructure and get the right talent in place. Most of the investments for companies like Localbanya, said an analyst tracking e-commerce sector, go in territory expansion and getting the logistics ready in each new geography.
LocalBanya.com currently carries out about 850-900 deliveries per day in Mumbai, with an average ticket size of Rs 1,600. The portal offers over 14,000 products, and is focused on increasing this fast.
Earlier this week, technology giant Google and consultancy firm Bain & Co, in a joint study, revealed online sales in fast-moving consumer goods (FMCG) category would reach $ 5 billion (about Rs 30,000 crore) by 2020. This would make up about 5% of total FMCG sales in the country.
On the other hand, the grocery market in India is estimated at $ 10 billion and is growing at about 7-8% annually. According to 2013 report by consulting firm Technopak, food & grocery accounts for about 69% of the $ 490-billion Indian retail sector.