ShopKirana struggles to scale in FY24, narrows losses by 30%

B2B e-commerce platform ShopKirana has struggled to scale in the last fiscal year as the company’s gross revenue fell by over 6%. However, the Info Edge-funded company reduced its losses by over 30% in FY24.

Shopkirana’s gross revenue decreased 6.26% to Rs 639.16 crore in FY24 from Rs 681.81 crore in FY23, according to its consolidated financial statement sourced from the Registrar of Companies (RoC).

ShopKirana is a B2B e-commerce platform that connects retailers and brands directly through a mobile app and helps them in placing orders, maintaining inventory, optimising the delivery routes and making payments. Besides helping in procurement, the platform provides financial services such as banking and loan facilities.

The company’s revenue is predominantly derived from product sales, contributing Rs 637.32 crore (99.71% of operational revenue). The revenue from product sales declined 6.3% from Rs 680 crore in FY23. Revenue from services saw an 85.29% increase, reaching Rs 1.26 crore, while non-operating revenue added Rs 4.2 crore, bringing the total revenue to Rs 643.37 crore in the last fiscal year.

On the expense side, cost of materials, its largest expense, decreased by 7.14% to Rs 627.3 crore, while employee benefit expenses fell by 17.65% to Rs 35 crore. Transportation costs and other expenses also declined by 23.57% and 24.95%, respectively. Overall, Shopkirana’s total expenses dropped by 8.81% to Rs 698.63 crore in the last fiscal year.

In the end, ShopKirana managed to reduce its losses by 30.5% to Rs 55.25 crore in FY24. Its ROCE and EBITDA margin stood at -69.6% and -7.85%, respectively. On a unit basis, the firm spent Rs 1.09 to earn a rupee in FY24. As of March 2024, the firm reported Rs 90.75 crore of current assets including Rs 27.8 crore of cash and bank balance.

According to TheKredible, ShopKirana has raised a total of $50.46 million in funding till date. Its lead investors include Info Edge, Sixth Sense Ventures, Oman India Joint Investment fund.

Shopkirana majorly competes with Jumbotail and Udaan. Lightspeed-backed Udaan is the largest player in this space which posted Rs 5,706.6 crore GMV in FY24. Jumbotail, which reported Rs 850 crore revenue in FY23, has yet to file its annual report for FY24.

But with none of them close to breakeven, it remains a tough segment to be in. While the attraction is undeniable, we believe most firms  have  underestimated the margin pressure in the segment.  B2B anywhere tends to offer a more organised market with consistent numbers, but margins are usually an issue. That has left these firms scrambling to cut losses even at the cost of growth, no surprise considering their backers are not really known to offer the kind of blank cheque funding from say, a Softbank or even a Tiger Global or Prosus. The usual recourse in the B2B segment, to offer financing solutions is also not an option here, leaving these firms to offer support to a segment that itself is under fire from quick commerce as well. All in all, a situation ripe for a major pivot or at least a search for more revenue streams.