Thread by @anmolm_

Thread on #MilkTech

1/ An area of Indian startups that I have always been interested in is MilkTech and more specifically daily hyperlocal deliveries. Milk is a daily essential to a lot of Indians so it makes sense to purchase it every day.

2/ Also, a majority of the milk sold in India is sold in pouches and goes bad in 24-48 hours so consumers have to purchase it quite frequently (as opposed to milk in the US which is treated by UHT and has a significantly longer shelf life).

3/ The core idea behind these hyperlocal delivery startups is that a consumer chooses how much milk they want delivered and how frequently (~1-2L/day/household) and the logistics arm of the startup delivers it every morning.

4/ The idea makes sense when a singular company has a great enough penetration in a neighborhood so each incremental delivery is cheap. Moreover most MilkTech companies also expand into other groceries (and potentially other services?) for multiple revenue streams.

5/ Plus, there is a high LTV associated with milk delivery because it's a product consumers consume every single day and unless they had a terrible experience on a platform they will continue to use it.

6/ The main players in the Indian space are @DailyNinjaApp, @getdoodh, @HelloMilkbasket and @SuprDaily which were coincidentally all launched in 2015. They all are based in a metro (BLR, MUM, NCR) and have a significant overlap in areas served.

7/
* @DailyNinjaApp raised their seed round in 2016, and raised a total of $10M from the likes of @Sequoia_India, @matrixindiavc and @SaamaCapital

* @getdoodh raised a $2.2M seed in Feb 2018 from @OmnivoreFund who doubled down in the company in a $10M Series A round.

8/
* @HelloMilkbasket raised their seed in 2017 from @BlumeVentures, and have raised a combined $20M including @Kalaari and @MayfieldFund

* @SuprDaily, on the other hand, was part of @ycombinator's Winter 2017 batch and was later acquired by Swiggy in 2018.

9/ The pros of #MilkTech are definitely the high LTV:CAC ratios as well as having users interact with their platform on an almost day-to-day basis (very high engagement).

10/ I think the Indian Milk space is probably one of the few industries with such a high engagement when it comes to physical products. Most people don't order food (Zomato, Swiggy) or shop online as frequently as they consume milk.

11/ But the biggest downside is the low margins. I don't expect any of the startups to be making more than 5% on the milk's MRP. And combined with subsidizing delivery costs and being in a super competitive market, most of these companies probably won't be profitable for a while.

12/ But I'm still largely bullish about the sector. While most companies use milk to build up a userbase, I would assume that they make most of their revenue (and profits) off other grocery items which have higher margins.

13/ It would be cool to see if these companies can expand vertically into other daily services with potentially higher margins. Will also be interesting to see these companies move into Tier 2 & 3 cities in the future as they have mainly focussed on the metros so far.

14/ Coming to my fascination with the space, it began in the winter of 2016 when Demonetization was announced. Most consumers either walk to Daily stores every day or have their corner grocery store deliver milk to them.

15/ The problem with this was during DeMo, no one really had cash. So consumers couldn't buy milk from retailers who couldn't purchase milk from wholesalers unless they agreed to give it on credit.

16/ I had only heard of @SuprDaily during this time (which was based in Mumbai) and decided to build a similar platform for my neighborhood which I operated over the summer of 2017 (doodh.delivery).

17/ I was able to scale it to about 30 daily customers delivering over 50L of milk daily which I would deliver myself in my neighborhood and an adjacent one. But I soon realized that this kind of idea would only work at a massive scale and with an efficient supply chain.

18/ It was still very interesting to explore the space from an operational standpoint and I learnt a lot about the logistics and grocery sectors in India.

/thread
Would love feedback/thoughts on the future of #MilkTech and daily hyperlocal services?

@VaniKola @avnish @sanjotmalhi @arpiit @sajithpai @AshLilani