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India’s first and fastest-growing community group-buying platform for fresh produce and daily essentials

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Started in 2020, Otipy was launched as an online fresh fruits and vegetables’ selling app with the aim to connect end-consumers with farmers through a community of resellers who handle the last-mile delivery of fresh farm products. 

Just two years into its operations, this online retailer has raced ahead to become India’s fastest growing community group-buying start-up for fresh farm produce with annual sales revenue of more than Rs. 120 crore and with very healthy gross margins in the region of 33-35%. 

By the end of this year, Otipy hopes to become the largest organized retailer in the country for fresh fruits and vegetables, leaving behind even established behemoths in this space like Mother Dairy and Reliance Fresh.

For those of us used to the ways of quick commerce grocery, getting a product delivered to the doorstep within 10-20 minutes flat is now a matter of routine convenience and urban mundanity. But the switch flips for the quick commerce players if a consumer wants a sack of farm-fresh cauliflowers or a bag of fresh ripe tomatoes at 7.00 in the morning! Even the fastest quick delivery whizkids will be left blushing in the face when fulfilling and delivering on orders for genuinely fresh fruits and vegetables at the crack of dawn.

Enter agritech start-up Otipy (operated by Crofarm Agriproducts Pvt. Ltd.), whose online app is optimized for quick delivery of fresh produce and other grocery items, and that too with the guarantee of freshness and at a more pocket-friendly price. Started in 2020, Otipy has raced ahead to become India’s fastest growing community group-buying start-up for fresh farm produce with annual sales revenue of more than Rs. 120 crore and boasts of very healthy gross margins in the region of 33-35%. 

Currently, Otipy moves than 110-120 tonnes of fresh produce from the farms to its consumers every day, which is higher than any other online retail player and second only to the daily tonnage moved by established fresh food retailers like Mother Dairy and Reliance Fresh. By the end of this year, Otipy hopes to sprint ahead of even these behemoths and become the largest organized retailer in the country for fresh fruits and vegetables.  

The parent company Crofarm was founded by Varun Khurana, 5 years ago, in 2016, as a B2B operation for the supply of fresh fruits and vegetables. Four years later, Khurana launched Otipy as the consumer arm of Crofarm. In the process, Otipy also became India’s first community group-buying platform for fresh produce and daily essentials. 

About 80% of Otipy’s product basket comprises fresh fruits and vegetables; dairy and bakery products make for another 5%; and the remainder is taken up by standard grocery products. This online app is now the leader among all the other online retail players in the Delhi-NCR region for providing fresh fruit and vegetables, thanks to its super-fast supply chain operations.  Today, Otipy delivers fresh and chemical-free fruits and vegetables along with dairy and grocery to over 5 lakh customers across Delhi and other towns in the NCR like Sonepat, Meerut, and Bhiwadi and was recently launched in Mumbai, Maharashtra.

How the concept turned into a compelling business model

Before founding Otipy, Varun Khurana was the Chief Technology Officer at Grofers, now rechristened Blinkit. The stint helped him gain a good grasp of the intricacies involving online retail and specifically the grocery category, including the management of fresh fruits and vegetables. 

Varun Khurana, Founder and CEO, Otipy

“My first business experience with fruits and vegetables was at Grofers where I experienced that the perishable nature of the produce makes the Fresh category very unique. Unlike traditional grocery items, stocking and retailing fruits and vegetables is a very risky proposition. After leaving Grofers, when I spent some time at the farms, I realized there were additional gaps in the supply chain from farm to consumers. Wastages are high for this category, which results in a huge price markup between the price that a farmer gets and what a consumer pays,” observes Khurana.

There’s a reason why retailing fruits and vegetables has always been a problematic category and is fraught with challenges. Supply chain operations around conventional retail are mostly geared towards sourcing and storing the product. So, when a consumer orders a grocery product, very often that item is already available on the store shelf or is lying somewhere in the warehouse and they get delivered according to their scheduled time slot. However, this part of the operations becomes counter-intuitive when it comes to storing and retailing fresh fruits and veggies for the reason that these products are perishable and have a very limited shelf life. They keep degrading in quality every passing minute that they remain in the warehouse and by the time an order comes in and they get delivered, the quality of the produce has already seen a significant deterioration.

Building a supply chain optimized for freshness and quality

To get around the problem of the perishable nature of fruits and vegetables, Otipy has built a super-fast and super-agile supply chain, which significantly cuts down on the time it takes for the produce to reach the consumer after it is harvested. Thanks to its versatile supply chain, Otipy boasts of the industry’s lowest wastage which, at 3%, is 10x better than the conventional supply chain. Also, by leveraging its community leader model, Otipy operates at the industry’s lowest logistics cost — as low as Rs. 3/kg — from its warehouse to the consumer’s doorstep.

There are quite a few innovations that Otipy has built around its supply chain to meet its objective of offering “best freshness, best quality, and best prices”. “Our prediction mechanism makes it possible for us to know that, say, there will be a total order for about 4 tons of cauliflower on a specific day. Based on this prediction, we accordingly make the arrangement for the produce to be harvested by the afternoon, get it lifted off the farm, and transported to the warehouse by evening. Here, the produce is first quality-tested, picked, sorted, packaged and then dispatched for delivery, all in a matter of 4-6 hours,” says Khurana.

Other technological innovations embedded into Otipy’s supply chain include building both the software as well as the hardware required for full automation of the whole supply chain process manual. For instance, the company has invested in building and installing the complete software for quality scanning and QR coding of the products — with in-built traceability features going back to the farm level thus ensuring superior quality — and designing its own customized machines to facilitate faster sorting and packaging and reducing manpower dependency. By automating most of its processes, Otipy has been able to mostly eliminate the need for human intervention in the handling of products while maximizing health and hygiene standards.

Offering an unbeatable value proposition for customers 

The delivery model and method of a community group-buying platform like Otipy might look uncannily similar to that of quick commerce convenience players, but there are certain fundamental differences between them. As a developing country, the proposition of a “value offering” naturally holds a bigger appeal for Indians than for a convenience proposition of 10-20 minutes “quick delivery”. Even well-heeled Indians are very value-conscious and any offer that comes laden with the promise of being a better product at a better price is quite irresistible. And that’s exactly the proposition that Otipy plays on and so far it has been able to turn the right pages off this winning playbook. 

“In the quick commerce delivery model, the entire supply chain is designed and centered around providing convenience for the consumers. In order to deliver on the promise of 10-20 minute convenience, the cost of supply chain operations for the quick commerce convenience players is fundamentally higher. They need to run and operate dark stores with delivery boys positioned every 3-4 km along the geographies they serve to fulfill the promise of delivering convenience. Hence, their supply chain costs are pretty high to achieve their selling proposition of providing convenience,” says Khurana.

 “Unlike the quick commerce players whose focus is on quick delivery once an order arrives, our focus is on optimizing the time between the harvest of the produce and the time of delivery so that there is no quality decay or degradation in the nutritional value of the produce. To realize this objective, we have worked on shortening our supply chain and making the turnaround time for the produce faster and quicker. This way, we have ensured that the produce reaches the consumers within just 12 hours from being harvested, allowing us to maintain the freshness of the produce,” adds Khurana.

By funneling the produce through the supply chain in the fastest possible time, Otipy delivers produce that is not only fresh off the farm but also come packed with higher nutritional value. At the same time, its shorter supply change results in minimal wastage of the produce. As there is less wastage, Otipy is able to save and earn more and are able to pass on the price benefits to our customers. This way, its consumer offerings not only come with better quality, but they also enjoy comparatively better pricing. 

Due to the much lower rate of the wastage of products and thanks to the accrued savings, Khurana says that the prices of Otipy farm products are about 15% lower compared with similar category of products sold in the neighborhood stores and about 5- 7% lower than the prices of similar products available at established supermarkets. 

Leveraging the “reseller” model for cost efficiency

Otipy’s business model helps to connect end-consumers to farmers through a community of resellers who handle the last-mile delivery of fresh produce. “We don’t sell through delivery boys but through our resellers who often tend to be owners of small businesses. For instance, a typical Otipy reseller might be a lady running her own beauty parlor or a boutique with the help of 2-3 assistants or helping hands. Or someone might be a home chef whose home-cooked food has a good following within his neighborhood or a real estate broker. These are the kinds of businesses that start not before 9-10 in the morning, which means that their owners have idle time and capacity on their hands early in the morning, which they can put to good commercial use by becoming our resellers. We offer about a 7% commission on the sales to our resellers, 70% of whom are female and, on average, a reseller makes about Rs. 15,000 a month. By recruiting these resellers, we are trying to make good economic use of their idle capacity in the morning hours in terms of labor and infrastructure and without impacting their regular activities and primary source of income,” says Khurana.

The number of resellers that Otipy employs keeps changing according to the performance and demand cycle of the platform. “In the recent path, the numbers have touched 500+ but there is also a constant change and churn happening. We keep adding or pruning the numbers based on our requirements and according to their capabilities in growing the buyers’ base and meeting growth targets. Those resellers who are not able to deliver on time or not able to expand their buyers’ pool are justifiably dropped and new replacements come in. We want to have resellers who want to stay with us in the long run by sharing our vision of creating a groundswell of goodwill and support for buying fresh farm produce and spreading the message of freshness,” says Khurana. 

Giving an example of the cost differential and wastage levels between quick commerce and reseller-based delivery models, Khurana says: “In a quick commerce grocery delivery model, it takes anywhere between 20-25 minutes for a delivery boy to fulfill an order and come back to his base station; by this estimate, it can take about 2 hours to fulfill just 4-5 orders. In our case, our reseller fulfills 25-30 orders within a 2-hour timeframe and s/he is able to do it just by utilizing their idle capacity in the mornings. It’s thus a no-brainer that our supply chain model is perfectly optimized for cost-effectiveness. It’s also the reason why we are able to offer better prices to customers and that too without burning a hole in our own pocket. Also, in a conventional retail supply chain, there is about 35% wastage of fresh fruits and vegetables whereas it’s only 3% in our model. This factor also allows us to offer better pricing for the products to the consumers.” 

Each Otipy reseller typically sends out 25-30 orders a day, received from the buyers in their community. For speedier and more streamlined delivery, Otipy arranges its fleet management in a way that each of its carts can deliver to at least 4-5 of its resellers when making the rounds. “It takes not more than 2 hours every morning for our resellers to distribute the produce among their buyers, leaving them with sufficient time to pursue their other business and activities. At the same time, we are able to make good on our value proposition of delivering better-quality produce with better freshness and more affordable prices,” points out Khurana.

The road map ahead

Otipy has plans to expand to other urban clusters away from its current epicenter around Delhi, Noida, Ghaziabad, Sonepat, Bhiwadi, Meerut, and Gurgaon. Over the next year and a half, its plans to expand its operations to cities like Bangalore, Hyderabad, and Chennai. The company is also looking to further expand and strengthen its footprint in the NCR region where there still exists much-untapped potential for further growth. “The NCR region has a population of about 3 crores with about 75 lakh households. Currently, we are serving only 5 lakh consumers, which means that there exists plenty of headroom to grow. Over the next 3-5 years, we have plans to expand across newer cities and geographies in India and possibly even reach out to some international markets and outposts as well, ” says Khurana.

He adds that the company has the resources to fund its expansion plans. “Our unit economics is pretty solid and it’s not that we need to burn a lot of money on customer acquisition and growth plans. Also, the investor interest in our business is pretty high. In our last funding round in March this year, which was a Series B round, we raised about Rs. 235 crore ($32 million) from investors led by Westbridge Capital, and with participation from SIG and Omidyar Network India.”

Otipy had earlier carried its series A funding of Rs. 76 crores ($10.2 million). “Our current capital is sufficient to see us through our growth plans for the next 4-5 years and we don’t face any headwinds on the financial front. However, we are open to future investments and capital infusion at the right valuation because that money will allow us to experiment with a lot of other things beyond our regular business plans,” says Khurana.

Apart from its current core focus on the fresh fruits and vegetable category, and dairy to some extent, Otipy also wants to enter and mark its presence in other grocery categories as well. In line with this objective, Otipy recently expanded its product portfolio with a line of bakeries under the brand name “House of Fresh”. “You can expect us to deepen our presence more into categories such as dairy and bakery and other perishables like flowers,” shares Khurana.

Like its fruits and vegetables, Otipy’s House of Fresh bread is freshly baked and is available in 12 variants and instantly delivered. “The breads are baked in the evening and delivered to the customers early next morning in an embossed packaging that shows the time when it was baked and packaged, making them India’s freshest breads,” says Khurana, adding that the House of Fresh breads have already surpassed the sales volumes of several other established bread brands and is on track to accomplish annualized sales of Rs. 1 crore plus. “We will keep introducing more such fresh farm products with the aim of providing access to such products to everyone in the country,” signs off Khurana.