On-demand auto rickshaw aggregator, the Chandigarh-based Jugnoo, with operations in 35 cities and 10,000 autos, plans to cover 100 cities by December 2016. The company clocks 40,000 booking per day and charges 10% commission from the auto drivers who earn an average of Rs 70-80 per ride. Competition in the space comes from other aggregators like Ola Autos, mGaadi and Autowale, among others. Samar Singla, co-founder and CEO of Jugnoo discusses with FEs Hita Gupta the company’s expansion plans in tier II and tier III cities and how he is going to tackle delivery of fruits and vegetables with Fatafat. Jugnoo launched Fatafat in March 2015 only to shut it down in less than a year due to lack of demand. It relaunched the services in May. Excerpts:
You plan to expand operations to 100 cities. What kind of opportunity do you see in tier II and tier III cities?
We believe that smaller the city, bigger is the value add that we get from these cities because in a smaller city, the only option you have to commute is autos, you have no other option. In a city like Delhi, you still have options. So, in our opinion, smaller the city, the better traction we will have.
What is the split between payment through Paytm and cash for Jugnoo?
About 35% of the payments are done through Paytm and the rest is through cash.
What are the different verticals Jugnoo is operating in?
We have our delivery services which is called Jugnoo Fatafat, we have auto rickshaws, and our B2B delivery platform called Dodo. We also delivered meals about eight months ago but now it is no longer functional. Fatafat is only for delivery of fresh fruits and vegetables right now. We are buying fruits and vegetables from subzi mandis and farmers, packaging them and supplying them to the end source. But like a regular hyperlocal we don’t buy products from the nearest vendor because the quality of the product in that case is not good.
How is Fatafat faring?
The hyperlocal model is not working for many companies because of the logistics involved. But that problem does not exist for us and that is our edge. We relaunched the services in May and are currently present in just one city – Chandigarh. We will be launching it in two more cities – Gurgaon and Delhi by the end of June and a total of 10 cities in six months. For Fatafat we have set 20 warehouse in Delhi and about 50 in the whole of NCR. We will buy the products and get it to our warehouse where we will sort it and package it. From our warehouses it will be delivered by our auto rickshaw drivers. The products are branded under Fatafat. We hold inventory for up to 10 hours. Whatever you order will be owned by us for half a day.
What are your margins like?
We make around 30%. We don’t want to expand our categories to staples because kirana stores are already addressing those needs. We don’t want to sell things that are easily available. Good quality of fruits and vegetables are not available everywhere because of that we only want to focus here. We get about 200 orders everyday with an average ticket size of Rs 400.
When will you be raising the next round of funding?
Till date we have raised $16 million in funding – seed, series A and series B. We will start fund raising before the end of this year. We will probably be raising between $30-50 million or in that range in the next round of funding.