When Freshtohome began operations in Bengaluru in 2015, not even its founders expected it to become one of India’s top online retailers for meat products. But the company’s journey since its inception has been staggering, making it the blueeyed boy of investors.
Today, Freshtohome, through its online grocery platform and its offline stores and with a 5,000-person direct and indirect workforce, delivers over 2 million orders every month across all meat categories in 160+ cities across India and the UAE.
The retailer has managed to raise $256 million in investments till date and is on way to rapidly expand its online and offline operations in India and the UAE.
A fascinating tale of how two entrepreneurs came together to revive a doddering enterprise and turn it into a bellwether of India’s meat retailing industry.
In 2012, when online meat retail was a distant glimmer in the eyes of even farsighted entrepreneurs in India, Mathew Joseph hit upon the idea and decided to run with it. In an intuitive leap of faith, he launched an e-commerce platform in Kerala called Seatohome, which was designed and tailored to deliver fresh fish to customers across India.
The business opened on a promising note with high hopes for the future. Delivering fresh residue-free fish from the harbors of Kochi to the customers in Bengaluru and Delhi, it was expected to grow into strong shape with time. But for various fortuitous reasons and circumstances, it failed to scale up and eventually the walls began closing in on the venture barely two years into operation.
However, during its brief commercial journey, Seatohome managed to pull in a tidy number of loyal shoppers to its platform, one of whom was Shan Kadavil, CEO & Co-founder, Freshtohome, who was then India Head of Zynga, a globally renowned developer of popular social games.
When Shan sensed that his trusted site for buying Seer Fish and Black Promfret was closing down and in dire need of life support, he reached across wanting to know why Seatohome was heading for the exit gates. “He drilled down the fact that fish retailing in India is a $50-billion plus market – more than the size of the Hollywood movie industry. He suggested a few lifebuoys and persuaded me not to shut down the venture,” recounts Mathew Joseph, Founder of Seatohome, who is now COO & Co-founder, Freshtohome.
The meeting between the two entrepreneurs was like a match made in heaven and it brought them together to walk down the aisle and open a new chapter in their business odyssey. Together, the two went into rebuilding a business that was on its last legs. Bringing an energizer bunny like stamina and a monk-like focus to the wilting business, they eventually turned it around over the next few months and rebranded it with a new moniker – Freshtohome.
A Powerhouse of Meat Retailing
The Bengaluru-headquartered newly minted Freshtohome – having taken the torch of online fish retailing from Seatohome – embarked on its business journey by adding some new pages to its predecessor’s playbook and flipping the script slightly. “We brought in a few more items such as poultry and mutton, which had a galvanic effect on customer traction,” says Joseph, adding that the impact on business was mesmeric.
Customer traffic on the rebranded Freshtohome whizzed past 85,000 shoppers, leagues ahead of 4,000 buyers who once supported Seatohome, and the added momentum came within 15 months of planting the new brand’s flag. “While the venture began to grow at a tearing speed, the strike rate of repeat customers hit a stonking 80%,” recalls Joseph.
The humongous customer repetition rate convinced both founders that their business concept was on its way to hit all the right success buttons in the marketplace, which was showing an ever-increasing demand for animal proteins. What also helped was that over 70 percent of the Indian population consumes meat in some form, with fish being the most consumed. Notably, the pescatarian trend is more pronounced in eastern and southern India – over 98 percent of West Bengal and Andhra Pradesh’s population consumes meat.
Today, Freshtohome, through its online grocery platform and its offline stores and with a 5,000-person strong direct and indirect workforce, delivers over 2 million orders every month across all meat categories in 160+ cities across India and the UAE. The company ventured into the offline space in 2021 by opening physical stores across cities and currently operates 25 such stores with their maximum concentration in Bengaluru.
Further, for offline expansion, Freshtohome plans to open 100 more stores in FY24. These will be company owned existing dark stores or hubs, which will be made over into spanking new retail outlets. The brand first launched its offline stores in Bengaluru and says that about 20 per cent of its new consumers are drawn from these retail stores. On the revenue front, the company’s current sales turnover is witnessing a sharp ascent, hitting Rs. 1,100 crore in GMV (Gross Merchandise Value) on an annual recurring revenue basis.
On the merchandise front, Freshtohome sells over 2000+ SKUs with price points starting from Rs. 149, covering a range of products: chicken, duck, mutton, fresh water fish, marine water fish, shell, ready-to-cook items, alongside its signature Clean Label snacks. The Clean Label snacks are India’s first preservative-free and chemical-free ready-to-cook and ready-to-fry meat products. For gourmet lovers, the retailer offers a wide range of gourmet vegan hara bhara kebab, gourmet tuna burger patties, marinades, among other products. “Every meat lover in the country who chooses preservative-free and chemical-free meat is our customer. We aim to make chemical-free and preservative-free meat accessible for the next million customers. We have been growing 30-40% y-o-y and even registering 100% growth in certain regions in the last few quarters,” says Joseph.
Changing the Game
According to Redseer Consulting, India’s overall meat market comprising meat, fish, and seafood was worth Rs. 3,30,000 crore in gross merchandise value in 2019 and set to grow to more than Rs. 4,60,000 crore by 2024. Reports suggest that the Indian non-poultry meat market reached a volume of 3.9 million tonnes in 2021 and expected to reach 4.4 million tonnes by 2027, exhibiting at a CAGR of 2.4% during 2022-2027.
However, as industry experts point out, the growth and expansion rates for the category can be yanked into higher gear if the industry can be persuaded to junk some of its cobwebbed and retrograde practices and snap out of its regulatory stasis.
For someone like Joseph who, from his perch at Freshtohome, has a ring-side view of the industry, a serious lack of transparency and weak regulatory sandboxes have proved to be the biggest bugbear pulling back the progressive tide that could help lift all stakeholders’ boats for India’s meat, fish and seafood industry. Citing an instance, he says that a typical fish supply chain in India has over three middlemen, as a result of which the product takes at least 3-4 days to reach the end-user.
“In fact, the whole business is riddled with the highhandedness of the middlemen who grab about 30-40% of the overall margins. But fishermen have little choice but to largely depend on the middlemen to sell their produce,” notes Joseph, adding that Freshtohome decided to take on these challenge head-on. Using cutting-edge technology as its spear-tip, the company has gone all out to cut through the problems and barriers. “In fact, the whole business is riddled with the highhandedness of the middlemen who grab about 30-40% of the overall margins. But fishermen have little choice but to largely depend on the middlemen to sell their produce,” notes Joseph, adding that Freshtohome decided to take on these challenge head-on. Using cutting-edge technology as its spear-tip, the company has gone all out to cut through the problems and barriers.
First up, the retailer has integrated technology across the full stack of its business operations – right from sourcing to supply chain and delivery mechanism. From sourcing to last mile delivery, the company avows adopting technology at every stage of the supply chain. Technology also plays a key role in executing quality checks, enhancing shopping experience on the app, and building customer satisfaction. “Although the market appetite for branded fish and meat players in the D2C space is large, there stood several gaps in the industry, which we set out to plug with new and novel business paradigms,” avers Joseph.
Freshtohome counts its sourcing method as a key differentiator of business. Typically, the produce is shipped from farms or coasts to processing centres in cold boxes moved by temperature-controlled trucks. The raw material is processed and packaged according to the orders and sent to different factory hubs for last mile delivery. To make the flow smoother, Freshtohome through its partners has built a strong cold storage and supply structure. The company has tie-ups with over 4,000 fishermen across 150 coasts and it has over 60 collection centres at harbours. “We have enabled over 3,500 last-mile riders registered on the platform for deliveries and 200+ hubs across India and Dubai. The complete control over the supply chain ensures that we have unmatched quality at mass market prices in comparison with others,” says Joseph.
What’s the market growth potential for players like Freshtohome?
The D2C market across the globe has registered phenomenal growth in the last two years, pivoted by the change in consumption patterns of consumers, particularly post Covid. According to industry reports, the Indian D2C market is expected to grow at a CAGR of 34.5% during the forecast period, 2022-2027. The growing market size showcases the massive scope that the segment has to offer its players. In recent years, it is proven that a direct-to-consumer strategy can transform and revolutionize businesses.
Which are the opportunities that can be profitably tapped and exploited?
Defining the value proposition is as vital as defining the growth plan for D2C brands. Your propositions are your key differentiators, which will help gain the attention of new customers and eventually lead to building a loyal customer base. Your product/service must address the gap in the market and have a high impact value in the lives of your stakeholders. Solid, key value propositions will build businesses and propel growth.
A key advantage for D2C brands is their understanding of the pulse of their customer segment and the agility to build customer centric solutions. Also, a key differentiating factor for D2C brands is not offering mass solutions like bigger FMCG brands that may not always address the pain points of every individual customer. Hence, there is vast scope for personalization and to build customer-driven solutions.
Briefly, spell out the D2C strategy of Freshtohome.
At Freshtohome, our D2C strategy is straightforward. By cutting out the middleman and through direct sourcing, we have been able to achieve higher profit margins of about 30-40% and we have been able to pass this price benefit to our customers. Through direct sourcing, we control the quality and follow over 100+ quality checks that are our standard quality control protocol. Such differentiators allow players to reinvest in the business, improve products and services, and as well as expand the customer base.
He adds that Freshtohome, through its partners, has disrupted the supply chain management with tech-driven solutions. The company professes to guarantee a round-the-clock cold chain, which keeps the products within a range of 0-4 Celsius degree through IoT-based in-built sensors. This is a tough task to accomplish for its competitors who buy from vendors in the city. “Our facility centre maintains 0-4 degree temperature to sustain the freshness of the produce. We do not compromise on quality and an example is the fact that our last mile delivery is temperature-controlled. From the time the produce is sourced from the coast to the time it reaches a customer’s doorstep, we ensure the freshness is maintained,” says Joseph.
Also, the company’s straightforward D2C strategy has allowed it to cut out the middleman and achieve higher profit margins of about 30- 40% through direct sourcing. The Freshtohome platform uses AI-based technology (called Commodities Exchange), which allows fishermen or farmers to electronically auction their produce directly to its partners, thus shortening and simplifying their supply chain for maximum efficiency.
“A key challenge in our early years was convincing the fishermen to trust our patented AI technology platform – Commodities Exchange – to sell their catch and bid electronically. Since traditional bidding did not use tech intervention, we had to convince them that there was more value in engaging in business with us and selling to the customers directly. As a result of eliminating the intermediaries, we could pass on the price benefit to all the fishers in our community and our customers thereon, and fishers now earn 20-30% more by bidding with us,” says Joseph.
While direct sourcing has also allowed Freshtohome to control the quality and pass on the price benefit to customers, it has also helped the retailer to lay down over 100+ quality checks as part of its standard quality control protocol. The quality checks during the process include those for standard chemicals, antibiotics, and preservatives and they make sure that customers get the best stuff.
“We have pioneered the revolution of making chemical-free and preservative-free meat affordable and accessible to more than 3 million meat lovers in India and the UAE,” avers Joseph, adding that such differentiators have allowed Freshtohome to reinvest in the business, improve products and services, and as well as expand its customer base. “By putting in place all these steps and measures, Freshtohome has disrupted the supply chain management by eliminating the intermediaries, running over 100+ standard quality control procedures, and enabling the delivery of fresh catch in less than 24- 36 hours.”
Future Moves
About two months ago, even amidst a protracted funding winter by investors, Freshtohome still managed to snag $104 million in a Series D funding round led by Amazon Sambhav Venture Fund. The company likes to call itself as a “Proficorn” saying that it commands an operating margin profitability, which explains how it has been able to buck the inclement frosty weather for fresh investment.
The latest funding round also saw participation from E20 Investment, Mount Judi Ventures, as well as existing investors such as Investcorp, among others. The company says it will use the fresh funding to expand its presence in the domestic market, especially in the 100 cities that it entered over the last 18 months, as well as in the UAE.
“With Series D round, Freshtohome has raised a total of $256 million in investments till date. We will continue to invest in geo expansion and in strategic growth levers. Our strategy involves launching offline retail stores, a wide range of ready-to-cook snacks, private labelling, and similar other products that are aligned with potential customer demand,” says Joseph, laying out Freshtohome’s charted path in the days to come.
