24x7Fresh betting on morning service to remain in biz

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New Delhi | October 06, 2015 12:52 AM

NCR has been split into zones for delivery. Bikers — 40 of them — take the respective orders from the warehouses and start delivering them to customers’ doorsteps, between 5.30 am and 8.30 am.

As competition within the online grocery market heats up, recently launched online grocery service 24X7Fresh is trying to make its mark. Randhir Kumar, born and brought up in Patna, is testing the breakfast business through a model of warehousing and daily delivery never done before.

“Nobody is doing this in the world. It is easy to be an online grocer, but to deliver items like milk, bread, eggs and newspaper, everyday in the morning is a tough job. It is a market that is dominated by local neighbourhood stores,” said Kumar.

Indeed, it’s a tough job to deliver it fresh every day. It requires stocking the inventory in the warehouse every night. Vans from milk producers like Amul and Mother Dairy deliver to the four 500-600 square-feet warehouses spread across the national capital region (NCR). The same happens with fruits and vegetables, delivered by farmers and vendors.

NCR has been split into zones for delivery. Bikers — 40 of them — take the respective orders from the warehouses and start delivering it to customers’ doorsteps, between 5:30 am and 8:30 am. Vegetables and fruits are delivered twice every week — Wednesday and Saturday.

However, the model is a little different than e-commerce firms who sell consumer products. Kumar doesn’t have the regular mode of payment. It is based on subscription — the money is taken upfront. Based on the product and quantity there are various packages on a monthly and weekly format. For example, a half litre packet of double-toned milk everyday, for a month cost Rs 589. Newspaper subscriptions start at Rs 145, eggs at Rs 140, vegetables at Rs 1,800 (twice every week) and fruits at Rs 1,500.

“Our aim is to provide everything that a household needs in the morning,” said Kumar. But, there is a catch — apart from taking an advance a week or a month, a customer also has to take at least two packages.

Unlike other online grocery businesses, Kumar not only locks in his customer, but also ensures sale of at least two sets of products, hence a higher ticket size. “Everyone is betting on discounts, but we are ensuring great service in morning delivery,” he said.

But, like all other businesses, even 24X7Fresh will have to pump in a lot of cash. Acquisition cost per customer is Rs 2,000. Then there is expansion of operations. Kumar has plans to have 15,000 products listed on the website, to become a full-service online grocer by November. From NCR it plans to launch in 30 cities, including hometown Patna, and other tier-II cities like Ranchi, Indore and Lucknow.

In the back-end, Kumar is working on a mobile application to be launched soon. Then there are investments in warehouses — from four warehouses; in its first phase 24X7Fresh will have 45 of them, and in its second 90. The number of bikers will go up to 3,000.

The company knows that it will require money soon. It is in talks with venture capitalists to raise $20 million. “We can get the amount right now, but we want the right valuation. So we are waiting to get some scale before raising the money,” he said.

From a daily transaction of 200 orders, Kumar expects to do 50,000 transactions by the end of the current fiscal.

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