Lahore-based online grocery platform GrocerApp has raised $5.2 million in a Series A round led by Dubai-based investment firm Hayaat Global, it announced today. New York-based Millville Opportunities Fund; Middle Eastern investors Wamda Capital, Jabbar Internet Group, Nama Ventures; China’s Haitou Global; and Pakistan’s Lean Bricks and Walled City Co., and some angel investors including Asif Keshodia, Khalid Alami, Ziyad Alami, and Jon Puckhaber also participated in the deal. The round follows GrocerApp’s $1 million seed investment in September 2020.
Founded in 2016 by Ahmad Saeed, Hassaan Sadiq, and Rai Bilal, GrocerApp enables users in Pakistan to orders their groceries, for same-day delivery (in most cases) through its web and mobile apps. Started with Lahore, GrocerApp had expanded to Islamabad and Rawalpindi late last year and has now also launched in Faisalabad. With the latest funds, the startup will continue to fuel its expansion across these four cities and launch in Karachi, the largest city of Pakistan, by the end of the third quarter this year, GrocerApp’s co-founder and CEO Ahmed Saeed told MENAbytes.
In nine months – from July 2020 to March 2021 – GrocerApp claims to have grown 300 percent in terms of monthly orders and revenue. Its annualized revenue, the startup said, now exceeds $15 million. One-fourth of GrocerApp’s business now comes from Islamabad and Rawalpindi, the twin cities where it launched about nine months ago, Ahmed stated in a conversation with us.
In a statement, commenting on the investment, he added, “We owe our success to the vigorous efforts of our brilliant team enabling us to rapidly scale in such a short span of time while maintaining sustainable and healthy unit economics. We are thrilled to have experienced investors as partners helping us not just with capital, but their operational and domain expertise, making GrocerApp a leading ecommerce platform in Pakistan. With the new funding round, we plan to quickly expand our offerings to strategic cities in Pakistan as well as expanding new business initiatives in the online grocery retail segment.”
GrocerApp is one of the pioneers of online grocery in Pakistan but now faces competition from rivals like Airlift, Cheetay, and Delivery Hero-backed Foodpanda – all of which have launched now commerce services to deliver groceries in 30 to 45 minutes from their mico-fulfillment centers, as well as hypermarkets that have set up their online grocery platforms.
Ahmed believes their model of storing inventory at large fulfillment centers and bundling multiple orders together for delivery (in cargo rickshaws) is more sustainable with much better unit economics than now commerce, in emerging markets, “We offer the largest assortment at best prices. That’s our pitch to the customer. The majority of the customers that we’re serving use GrocerApp to buy the grocery for an entire month or stock it up on a weekly basis. If a customer places an order by 3 pm, they would receive it on the same day, in most cases, and they’re very happy with that,” said the GrocerApp CEO, speaking to MENAbytes, adding that their average order size is $16.
Muhammad Ikhlaq, Chairman Hayaat Global, said, “GrocerApp’s team is battle-hardened as it has been in the grocery segment for over four years and knows the arduous grocery vertical well. The team has scaled operations with minimal relative funding maintaining momentum with competitors, indicating the ability to succeed without relying solely on cash burn. We are excited to back this seasoned team and the capital injection will catapult GrocerApp into a dominant market position.”
Asif Keshodia, Director at GrocerApp, said: “We’ve created a seamless infrastructure to receive orders, begin fulfilment, and complete delivery. GrocerApp has grown 3x in a matter of months – a testament to the fact that we’re gratifying thousands of customers every day. We believe it has the potential to be the largest retail company in Pakistan which is why we’re committed to pushing our innovations even further.”