Dropshop has raised Rs 9.3 crore in a Pre-Series A round led by Inflection Point Ventures, one of India’s largest angel investment platforms in India. Existing investors Axilor Ventures and The Chennai Angels also participated in the round with 42.vc joining the round via AngelList. Funds raised will be used for strengthening the product and scaling up of operations for handling more FMCG brands and enter new markets like Chennai and Hyderabad.
Dropshop is a full-stack platform for FMCG companies to digitise their last-mile distribution - sales, logistics and credit to retailers. With this, the brands get real-time visibility into demand and supply gaps, fulfilment ratio, and drive targeted growth. With their in-house credit decisioning models and low KYC, they have enabled embedded credit of over Rs. 40 crore to more than 10,000 retailers in Bangalore over the last 15 months and are currently exploring partnerships with with NBFCs and fintech players to expand this service to small retailers.
Currently, Dropshop Network reaches 10,000+ retailers in Bangalore. It works with 5 of the top 10 FMCG companies in India including ITC, Marico, Reckitt Benckiser and Godrej Consumer Products and 40+ small and localized brands.
Dropshop clocks over 15,000 orders per month with Rs 4 crore GMV per month.
As per analysis of FMCG industry done by Technova and Modor Intelligence, the FMCG industry in India is close to $100B, growing at 14 percent CAGR. Thirty percent of FMCG market is concentrated in top 7 cities. Even the largest brands in the country see retailer coverage of 50-60 percent in urban areas. Around 15-20 percent market potential is lost post-demand capture due to inefficiencies in the last-mile supply chain and less than 50 percent retailers have access to some form of working capital. Thousands of small brands remain localised and sub-scale due to poor distribution network.
Dropshop has been building a distributed physical infrastructure which enables multiple brands to reach the market as compared to 100s of brands still running their retail distribution in a fragmented and siloed manner. Adding a digital layer of operational automation and data visibility brings in higher efficiencies and reduces redundancies, the firm said.
Udit Dhawan, Founder & CEO, Dropshop saids, “As one of the largest sectors in India, FMCG is still run over the backs of thousands of traditional distributors. This round of funding will allow us to build over our existing products to grow our brand portfolio as well as retailer base. Our immediate focus is to strengthen our team, product and processes for the next phase of growth, and we are delighted for the continued support of our existing investors and excited to have IP Ventures and 42.vc joining us on this journey. “
Mitesh Shah, Co-Founder, Inflection Point Ventures said, “FMCG companies are often faced with a critical issue of increasing margins without burdening their customers. Traditionally, they have adopted the approach of building distribution and last mile network in house. Given the geography of India, it is not viable business wise to create expensive distribution network across the country. This is completely untapped opportunity which Dropshop has identified and they are working aggressively to scale up. This is a new emerging area where we expect more startups to enter making it an attractive sector to invest in.”
Jignesh Kenia, Lead Investor, IPV said, “For FMCG companies, setting up their own distribution network across the country could be an expensive affair and this is where Dropshop comes into play. With the help of technology, they are able to cover 90 percent of the region compared to 60 percent to 70 percent which is covered by the Traditional Distributors. This helps in optimising distribution costs and increase in Sales for their Customers. The whole idea of tapping into FMCG distribution and logistics segment got us interested in leading this round."
