1K Kirana raises $25 million for its hyperlocal shopping and distribution platform

1K Kirana, an Indian startup that operates an eponymous hyperlocal shopping app and retail distribution network, has raised $25 million in a new financing round as it attempts to help brands and neighborhood stores reach more consumers.

The three-year-old startup’s Series B financing was led by Alpha Wave Global, Info Edge Ventures and Kae Capital. A number of angel investors including Amrit Acharya, founder and chief executive of Zetwerk, also participated in what the startup said was the first tranche of a larger financing round.

Neighborhood stores dot tens of thousands of cities, towns and villages in India. They have survived — and thrived, despite — retail giants’ billions of investment in the country. But they struggle with securing inventories in large volumes and at good prices.

1K Kirana is attempting to solve it with a multifaceted approach. The startup serves as a distribution network for these stores, and also helps them with digital marketing to reach more consumers. 1K Kirana also operates an app for consumers, which they can use to discover, order, and pay for their purchases.

“We control their entire supply chain. We supply them the goods, we do the marketing, and we ensure that consumer footfall increases in the shop. These shops operate as a franchise partner and make money through commission instead of playing through the margin,” explained Kumar Sangeetesh, co-founder of 1K Kirana, in an interview with ProWellTech.

Consumers can either have the order delivered to their homes, or pick it up from the nearby store. If they have ordered an item that is not available at the store, 1K Kirana delivers it to the store.

The vast majority of items neighborhood stores sell are from the FMCG category. The challenge with operating in this category’s universe is that shop owners make a single-digit profit moving these items. The industry agrees that it’s a problem worth solving because these stores move the vast majority of their inventories, so reaching them – and by proxy, their consumers – is crucial for everyone’s success.

What 1K Kirana is attempting to do, at a fundamental level, is to help these stores significantly increase the number of items they sell, so that it’s feasible for them to scale. At the same time, 1K Kirana is serving consumers, giving them access to a larger catalog of items, more selections across categories, and discounts.

“In our case, I aggregate the stores’ supply demands, go to manufacturers, get the cost down, and pass the cost benefit to consumers,” said Sangeetesh, who added that 1K Kirana is not a kirana-tech startup, but a consumer play.

“The kind of impact 1K has created in a very short period of time in the lives of consumers and franchisee partners alike is extremely hard to achieve. The 1K Mall app has already enabled lakhs of non-urban Indians to shop online for the first time,” said Kitty Agarwal, Partner at Info Edge Ventures, in a statement.

“We believe the 1K team is building an iconic company that is transforming how non-urban India shops for their daily needs by widening their choices with higher quality, affordable options. The founding team is exceptional in their execution and we are very excited about strengthening our partnership with them.”

1K Kirana, which currently has a network of about 1,000 stores, says it has served over a million customers across more than 25 districts in Delhi, Haryana, Rajasthan and Uttar Pradesh. It plans to deploy the fresh funds to hire more tech talent to expand to extend the reach of 1K Kirana to over 100 districts, he said.

The startup will also look at different monetization opportunities, including with data, he said.

“Sangeetesh, Abhishek and Sachin have built a business that combines strong growth with attractive unit economics. We are excited to partner with them as they bring a modern retail experience to underserved consumers in India’s $600bn+ grocery market,” said Navroz D. Udwadia, founder and partner of Alpha Wave Global, in a statement.