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How milk-subscription based businesses are exploding with growth?

Milk subscription market is still at nascent stage but already fetching the attention from retail giants..

Tags: Doodhwala, Supr Daily, Swiggy, milk, subscription, Milkbasket,

BY Shipra Srivastava  |  May 30, 2018  |  comments ( 0 )  | 
How milk-subscription based businesses are exploding with growth?

In the month of January 2018, Doodhwala, a milk-subscription start-up had about 7000 milk subscribes. Since 2017, this number has grown by 100%. Supr Daily, yet another subscription-based micro delivery claims to complete more than one million orders till date. As per the information available on their website, so far the company has supplied over 1000 tonnes of unadulterated milk in the Mumbai alone so far. Moreover, last week, Milkbasket has risen $7 million in Series A funding led by Kalaari Capital. The company claimed to reach over 40,000 households in 180+ communities in Gurgaon.

No wonder, such exponential numbers has prompted many big retailers to try their hands in the emerging segment. As per the leading media reports, Swiggy, a food delivery aggregator may acquire Supr Daily. This acquisition (if happened) will certainly help the delivery aggregator in scaling up fast since it already has the robust supply chain of delivery guys. Swiggy was unavailable to comment by the time of filing the story.

 Moreover, Alibaba-backed BigBasket has held buyout talks with Pune-based RainCan, Gurgaon-based Milk Basket. Though, BigBasket has declined to comment on this development. Moreover, big e-retailers such as Flipkart and Amazon has already had already announced the aggressive plans to ramp up their grocery category.

So the question arises what is this subscription-based business all about, who are these companies and suddenly why are they gaining so much popularity? Why are investors so keen on them?

How does the subscription works?

Subscription-based business model is being used by newspapers and magazines for many years and recently websites also started doing this for monthly, quarterly, half yearly or annual based subscription. “Of late, many other businesses have been opting for this model too where the consumers are using few products on daily basis and in return, they offer a good discount on monthly or yearly subscription. This is a very tactical move to acquire customers for a longer period and in addition to one or two daily used products, many add-on products can be sold in this model,” said Amir Faizi, a Retail Consultant

Milk subscription is also no different, it is a simple exercise which allows you to choose your favorite brand, quantity, and frequency. You can make payment partially (let’s say after three delivery) or completely (after the month) and your chosen products will be delivered right to your door-step. So far, the milk subscription business is confined to metro cities but gaining immense popularity.

However, online dairy shopping in India is still in its early phase, as the majority still prefer the traditional way of buying fresh dairy products from nearby physical retail outlets. Hence, dairy brands could follow the hybrid model of leveraging both channels of milk distribution ensuring that they reach the consumers through all possible routes.

In an exclusive conversation with Indianretailer.com a few months back, Gaurav Haran, Chief Operating Officer, MilkLane said, “Online retailing of dairy products provides brands an alternate channel with a more targeted reach and reduced cost due to the elimination of many intermediaries between manufacturers and the retailer. It allows tapping of pre-existing subscribers and access to accurate data which can elevate marketing efforts while creating a national footprint in terms of reach.”

“The subscription has to come with a great offer for the customers, though it is still in nascent stage in coming days, all big brick and click players will start opting this to acquire customers for a longer period,” said Amir.

Also read: How milk subscription can be a profitable business?

How is this happening?

Technology is one of the biggest drivers of the shift that is happening in retail. And it’s true that subscription businesses poised to drive growth if you can strategize ahead of other retailers since this industry is still at a nascent stage. Milk subscription is a nascent business and does not have much competition in this space. However, it’s an industry that’s going to mature and reach a digitization level. So, the key to success is innovation coupled with technology and smart strategy.

Speaking on same Amir said, “In Gulf countries, many leading newspaper publications offer yearly subscription free for all customers, like they pay certain amount for annual subscription and in return the customer gets the same or higher amount of gift vouchers of big brands from the publication company, so the investment made by the customer in subscribing the newspaper is free as he or she is getting the gift voucher of the similar or higher amount.”

Investors’ hot favorite

There are some key investments which has happened in the span of last two years.

Company

Investor

Amount

Year

 

Milk basket 

Kalaari Capital along with BeeNext and existing investors

$7 million 

May 2018

 

Supr Daily

Undisclosed

 $1.5 million

June 2017

 

Doodhwala

impact venture fund Omnivore

$2.2 million 

February 2018

 

RainCan

 

 IIFL Holdings Ltd 

$ 2.7 million

July 2017

 

 

 

 

 

 

 


 

 

 

 

 





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