Seven months ago, rural e-commerce start-up Boonbox was delivering consumer durables, among other products, to 3 lakh Indian villages across 16 states. It delivered 50,000 shipments and did business of Rs 25 crore each month, and registered cumulative revenues of Rs 500 crore in February. The company projected that it would hit the Rs 1,000 crore revenue mark by FY22. Then, the coronavirus pandemic struck.
As of today, the e-commerce player is focusing only on deliveries in around 25,000 villages in Tamil Nadu and Karnataka. While consumer durables like smartphones, refrigerators and washing machines accounted for a chunk of Boonbox's shipments, the company has been delivering only essential commodities in villages since March until mid-September. From average business of Rs 25 crore per month, Boonbox's cash registers have been ringing in only about Rs 7 to Rs 8 crore these days.
The company's founder and CEO, Ramachandran Ramanathan, is positive that things would improve by the end of FY21. "We expect the situation to improve in March," he says. “We will get back to our original number of villages serviced, and our original revenue run-rate.” However, the one facet of its business that Boonbox won't change in the new normal is its delivery of essentials to customers.
'Targeting Rs 100 crore revenue in FY21'
"We will resume delivering durables to our customers in Karnataka and Tamil Nadu by the end of this week, but we're keen on ensuring that our product portfolio is a combination of durables and essentials," Ramanathan says, "In effect, we are adding another layer to our categories." By the end of the fiscal, Boonbox says nearly a third of its total sales will be essentials. However, Ramanathan wants to take that contribution up to 50 percent, in the medium term.
Thanks to COVID-19, Boonbox has cut its FY21 revenue guidance down from Rs 250 crore to about Rs 100 crore. "If we hit Rs 100 crore, we would consider it a phenomenal job that we've managed to do," says Ramanathan. The start-up's present revenue run-rate would land it a little over Rs 80 crore in revenue for FY21.
Series-B funding deferred
It isn't just revenues and average ticket sizes that COVID-19 has impacted. Boonbox was on course for a Series-B funding round in September. In an exclusive chat with CNBC-TV18 in February, Ramanathan said that his start-up was in the market for approximately $20 million in funding. Those plans have now been shelved, indefinitely.
"Right now, we are looking at a short-term fund-raise of about $2 million, which will help us rebuild the business and hopefully take us to March levels," says Ramanathan, adding that the funding ecosystem has adopted a wait-and-watch policy even as investors have tightened purse strings. The company's target to hit cumulative revenues of Rs 1,000 crore by FY22 has been pushed to FY24.
What do rural customers want?
While selling essentials in a pandemic has brought with it a market that's always in demand, it hasn't been smooth sailing in terms of sales volumes. Ramanathan explains: "When we sold consumer durables, one sale had an average ticket size of Rs 5,000. Today, even if we sell a pack of essentials, the average ticket price per sale is much less.”
However, one of the major learnings that the start-up has taken home with it is the changing consumption patterns among rural customers. "One of the many insights we've picked up from selling essentials to villages is that our customers have stopped being as brand conscious as before," says Ramanathan. "Rural consumers are looking to save wherever they can, during the pandemic — we have noticed that a lot of customers are dialling down their purchase of meat, and opting for small snacks and edibles instead," he adds.
Among consumer durables, Boonbox expects the rural market to buy more refrigerators given the spike in preferences for home-cooked food and the survivalist instinct of stocking up and storage that has made its presence felt during the COVID-19 pandemic.