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14 December 2022
Pakistan’s Krave Mart gets real on quick commerce
E-commerce & mobile retailPakistanStrategy
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.”
“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.