At a time when most online grocery businesses in India are partnering with neighborhood stores, or kiranas, Bengaluru-based group-buying grocery startup DealShare is luring users away from them.
Started in 2018 by Vineet Rao, Sourjyendu Medda, Sankar Bora, and Rajat Shikhar, DealShare targets low and middle-income families with daily and hourly flash deals. It claims these deals are 20–30% cheaper than what’s available in kirana stores. Plus, it promises steeper discounts if buyers share product listings on WhatsApp to whip up group purchases.
DealShare claims to have 1.5 million monthly active users who place 100,000 orders a day. It recently raised USD 144 million in a Series D round led by Tiger Global, with participation from WestBridge Capital, Alpha Wave Incubation, and Z3Partners. Partners of DST Global, Alteria Capital, and Matrix Partners India also pitched in. We spoke with Vineet Rao about DealShare’s group-buying and discounts strategy.
This interview has been consolidated and edited for brevity and clarity.
KrASIA (Kr): DealShare started on WhatsApp. Was the transition from WhatsApp to your own app smooth for your customers?
Vineet Rao (VR): We leveraged WhatsApp for three months to test our idea of social commerce and group-buying. Our target customers are well-versed with WhatsApp, so it worked well for us. We were doing 200 orders a day.
Our main concern was whether our customers would shop on our app as comfortably as on WhatsApp. After launching the app, we developed many iterations to ensure it was easy to use, especially for people who have never transacted online. We included local languages and integrated it with WhatsApp so customers can share product listings for mass buying to get discounts.
Kr: What is your strategy for discounts?
VR: Most margins for kiranas are lost to middlemen. We replace them by sourcing products from local factories and manufacturers. This allows us to provide discounts to consumers as well as turn a profit. Our assortment is small, and we only stock products that we think are relevant to our users. Instead of having multiple brands, we work with only one or two local brands. In certain geographies, we only have 1,500 SKUs.
We rely on our users’ social circles to create a high volume of sales. This is usually organized through flash sales, which make people check our app often. So, instead of intent-oriented shopping, we see discovery-oriented sales in our app.
Kr: Group-buying is not mainstream in India yet. How do you plan to change that?
VR: For group-buying to become mainstream, customers need to be comfortable with online shopping. In the US and China, only after customers got used to shopping on Amazon and Alibaba, did Groupon and Pinduoduo become big.
The concepts of group-buying and collective discounts are complicated for users in small cities. We incentivize customers who make group purchases, but we also let them buy just for themselves. And, we have community leaders who educate people and encourage them to try group orders. As we venture into smaller towns, community leaders will be the key for us to acquire users.
Kr: How will DealShare use its recent funding?
VR: A lot of capital will be put toward creating supply chain infrastructure. Currently, we have 30 warehouses across five states. We will add 200 more warehouses this quarter. Recently, we expanded our offerings from groceries to general merchandise and electronics. We will build our own private labels in these categories to increase our margins and create better deals.
“Tales from India’s Towns” is a series where KrASIA shines a light on technologies that are changing lives in smaller Indian cities, where 500 million internet users will come online in the next few years.