Indian Grocery Startup Citymall Raises $47M Series D Funding to Target Budget-Focused Shoppers in Tier 2 and Tier 3 Cities

Budget-focused Indian grocery delivery startup Citymall has secured $47 million in Series D funding, led by Accel, with contributions from existing investors including Waterbridge Ventures, Citius, General Catalyst, Elevation Capital, Norwest Venture Partners, and Jungle Ventures. The investment values the company at $320 million, a figure that has remained constant since its Series C round three years ago.

Investors cited Citymall’s significant growth potential as the reason for maintaining the previous valuation. Pratik Agarwal of Accel expressed enthusiasm about the online grocery market in India, stating, “We have been an investor in Citymall since the Series A, and we wanted to double down with this investment because we think online grocery shopping, and the value segment within that, is the largest consumer market in India.”

Citymall’s funding arrives amid a fast-paced quick commerce boom in the Indian market. Notable players like BlinkIt, Zepto, Swiggy Instamart, and Tata-owned BigBasket are vying to deliver goods within 10 minutes. However, Citymall intends to differentiate itself by catering to a distinct customer segment that prioritizes planned grocery purchases over immediate needs served by quick commerce apps.

The startup’s app offers approximately half the product variety of a quick commerce app but double the selection of an offline value store, as measured by stock keeping units (SKUs). Citymall CEO Angad Kikla explained this balance, stating, “We want to cater to that cohort. We want to think of ourselves as an equivalent of Dmart in the online world.”

Prior to COVID-19, Citymall leveraged community leaders for marketing, order taking, and last-mile fulfillment. During the early pandemic period, when customers needed assistance with online grocery orders, the company utilized these community leaders more extensively. Post-pandemic, they have focused on using them solely for fulfillment to optimize costs and operations.

Citymall’s strategy revolves around creating private labels and partnerships with manufacturers to offer goods at competitive prices while generating margins through operational and supply chain efficiencies. Unlike quick commerce startups, Citymall does not charge handling or delivery fees and typically delivers goods within a day for value-conscious customers who do not require immediate items.

Citymall reports that its primary user base consists of individuals earning between ₹15,000 to ₹80,000 per month ($170-$910), with an average order value of ₹450 -500 ($5-6). The company currently operates in 60 cities, including Delhi NCR, Uttar Pradesh, Haryana, Bihar, and Uttarakhand. Citymall aims to expand into adjacent cities to better leverage its existing warehouses.

Although Citymall has experienced consistent business growth over the past three years, it reported over 30% negative EBIDTA margins for the last financial year, according to Entrackr. The startup confirmed operational profitability but did not provide a timeline for overall profitability.

The company operates in a competitive sector that’s under pressure from local stores, online grocery platforms, and even quick commerce platforms. According to Bloomberg Intelligence, quick commerce platforms could capture 20% of e-commerce sales in India by 2035.

Manish Kheterpal, co-founder of Waterbridge Capital, a firm that has invested in Citymall multiple times, believes that Citymall’s lower operating costs compared to quick commerce competitors provide it with an advantage. He stated, “Citymall offers cheaper essentials to users who might order a few times a month. The company buys goods directly from suppliers and uses its community leaders to achieve low cost of distribution that results in building a healthy gross margin.”

According to Bernstein Research, food and grocery dominate India’s largely unorganized retail sector. The firm also predicts that online grocery shopping will account for 12% of e-commerce sales by the end of this calendar year.

Despite quick commerce’s rapid growth, companies operating beyond metropolitan areas face higher per-order costs, according to Redseer analysis. Citymall posits that value-conscious customers will choose its platform over quick commerce due to lower fees and product costs, coupled with lower delivery costs, enabling better economies of scale by serving more users.