CityMall, an Indian e-commerce startup specializing in affordable grocery delivery for smaller towns, has successfully raised $47 million in a Series D funding round. This round was led by Accel, with continued support from existing investors such as Waterbridge Ventures, Citius, General Catalyst, Elevation Capital, Norwest Venture Partners, and Jungle Ventures.
This latest funding comes three years after CityMall’s $75 million Series C round led by Norwest Venture Partners. Despite the company’s growth, its valuation has remained steady at $320 million during this period. Sources familiar with the deal indicate that investors evaluated CityMall’s recent annual revenue, applying a nearly 4x multiple as a benchmark. To date, the company has amassed a total of $165 million in funding.
Investors acknowledge that the previous valuation was influenced by a more optimistic market environment. However, they remain confident in CityMall’s potential. Pratik Agarwal of Accel stated, 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 surge in quick-commerce services in India, with companies like BlinkIt, Zepto, Swiggy Instamart, and Tata-owned BigBasket striving to deliver products within minutes. In contrast, CityMall targets budget-conscious consumers who plan their grocery purchases in advance, rather than seeking immediate deliveries. CEO Angad Kikla explained that their app offers about half the product selection (SKUs) of a quick-commerce app but double that of an offline value store.
Kikla emphasized the low penetration of online grocery shopping in India, noting that most consumers are price-sensitive when purchasing groceries. He likened CityMall’s approach to that of Dmart in the online space, aiming to cater to this value-conscious demographic.
Founded in 2019, CityMall initially relied on community leaders in various cities to promote its services, collect orders, and manage last-mile deliveries. During the early stages of the COVID-19 pandemic, as online grocery shopping gained traction, some customers required personalized assistance. Subsequently, the company streamlined operations by utilizing community leaders solely for fulfillment, thereby reducing costs.
CityMall’s strategy involves developing private labels and partnering with manufacturers to offer products at lower prices than competitors, while achieving margins through operational and supply chain efficiencies. Unlike quick-commerce platforms, CityMall does not impose handling or delivery fees, typically delivering orders within a day to accommodate customers who do not require immediate service.
The company’s 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). Operating in 60 cities, including Delhi NCR, Uttar Pradesh, Haryana, Bihar, and Uttarakhand, CityMall plans to expand into adjacent cities to optimize its existing warehouse infrastructure.
Despite steady business growth over the past three years, CityMall reported over 30% negative EBITDA margins for the last financial year, according to research firm Entrackr. The company claims operational profitability but has not provided a timeline for overall profitability.
CityMall operates in a competitive sector, facing challenges from local stores, online grocery platforms, and quick-commerce services. Bloomberg Intelligence projects that quick-commerce platforms could capture 20% of India’s e-commerce sales by 2035.
Manish Kheterpal, co-founder of Waterbridge Capital, an investor in multiple CityMall funding rounds, noted that quick-commerce platforms often encourage impulse purchases through marketing. In contrast, CityMall’s lower operating costs provide a competitive advantage. Kheterpal 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 a low cost of distribution that results in building a healthy gross margin.
Bernstein Research indicates that food and grocery dominate India’s largely unorganized retail sector, estimating that online grocery shopping will account for 12% of e-commerce sales by the end of this calendar year.
While quick-commerce services are expanding rapidly, companies operating beyond metropolitan areas face higher per-order costs, according to strategy firm Redseer. CityMall’s approach suggests that value-conscious customers will prefer its platform over quick-commerce options due to lower fees and product costs. By combining this with reduced delivery expenses, the company aims to achieve better economies of scale by serving a larger user base.
