Pakistan’s Krave Mart gets real on quick commerce

Convenience and realistic delivery times are helping Krave Mart, a Pakistan-based quick-commerce startup, achieve sustainable growth that isn’t dependent on subsidies from venture capital. 

Why it matters

Around the world, grocery delivery apps found a moment during the pandemic lockdowns, but the economics of services promising ever-faster delivery times have been questionable.

Pakistan’s Airlift, for example, closed after burning through $85m in 11 months. Krave Mart, however, has raised $6m since it started last year and still has 60% of that in the bank.

How is Krave Mart different?

• “We started working on unit economics from day one,” co-founder Kassim Shroff told Rest of World, explaining that 10-minute delivery is not a practical offer without huge sums of money or high order rates. “We started increasing our delivery time,” he said: 30 to 40 minutes is now the norm.
• Additionally, the Krave model is built on convenience, with assortment being key, along with a focus on building out a range of own brands in high-margin categories. 
• Krave Mart identifies a minimum cart value to make an order profitable, typically consisting of at least three to five items, and designs its app accordingly.
• Currently the business operates just 22 dark stores of which 10 are positive. “Airlift was doing a 1% margin on a $7m gross merchandise value (GMV),” Shroff observed. “We’re doing a million dollars in GMV a month, on a 26% margin in November 2022. There’s a huge difference in how we built the business where 75% to 80% of our users pay delivery fees.”

Key quote

“When you make a business plan, you say these many people will pay, and we’ll collect 99 rupees [as] shipping fees. But the important thing is, how many people are paying that 99 rupees? For us, 75% of the people pay shipping fees, which is why our margins are better than the rest” – Kassim Shroff, co-founder, Krave Mart.

Sourced from Rest of World