Teardown | CityMall
Founded in 2019, CityMall is a social eCommerce platform in India that has raised over $110 Million.
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Founded in 2015, CityMall is a social eCommerce platform in India that focuses on delivering more than 3,000 lifestyle, grocery, and curated products to customers through a network of community resellers belonging to smaller cities and villages in India.
These resellers, known as ‘community leaders’, can set up virtual stores on WhatsApp and sell products to their close networks through peer-to-peer referrals. The company’s aim is to build a decentralized eCommerce ecosystem for the next 200-300M internet users living in the rural areas of India.
CityMall has managed to raise over $112M funds in a span of 4 years. The company’s last funding round was in March 2022, where it raised $75M in a Series C round led by Norwest Venture Partners, bringing its valuation to $320M.
Business Overview & Products
CityMall works by empowering individuals in Tier 2, 3, and 4 cities of India to become micro-entrepreneurs by enabling them with the infrastructure to re-sell products from manufacturers. These individuals are known as community leaders on the platform.
CityMall provides income opportunities to community leaders by allowing them to create virtual stores on WhatsApp, where they can sell products and groceries to their local network.
Community leaders are provided with products across a few key categories including Grocery, Fresh and Packaged FMCG, Electronics, Fashion, and Cosmetics amongst others.
How It Works
Once an order is placed, CityMall ships the products to community leaders who then deliver the items to end consumers. At times, the customer collects them from the leaders instead. This process has proven to be cost-efficient for the company, as it saves on delivery and logistic costs. CityMall has slowly started building out its own logistics network to get products from manufacturers to community leaders.
In order to keep sellers motivated, gamification has been added to the app so that leaders are constantly on a quest to bring more users on board. This essentially means that depending on the number of customers they have acquired and the number of sales they have made, sellers are promoted to different levels. For instance, upon reaching level 4, the community leader is promoted to Silver Director.
Consumers can either place orders through WhatsApp or the CityMall app. Most customers prefer using the app due to a combination of super cataloging as well as the availability of new deals and discounts every day. If these incentives aren’t enticing enough, the app also has interesting features like a daily horoscope, which prompts users to open the app every single day.
CityMall is paid directly by community leaders, who then collect payments from end customers. Some community leaders will give credit to their trusted customers out of their own pockets.
Business Model & Pricing
CityMall has 2 revenue streams, which include earning money through commissions from sales and also charging resellers for displaying ads on their platform in a bid to boost their visibility. Brands on the platform are hyperlocal and tailor their prices to cater to the price-sensitive rural population. Resellers earn a 4-6% commission as soon as they deliver their orders. In Jan 2022 this was estimated to be about 40% of household income for resellers.
In 2021, CityMall reported operating revenue of INR 14.95 crore ($1M), which according to reports was a 25x growth from its revenue in 2019. In the same period, it incurred losses of INR 10.4 crore ($1M) as well. According to company claims, this was the first time it had generated income since operations began.
As of March 2021, CityMall had managed to create a network of 20,000 community leaders that cater to over 200,000 customers in 8 small cities and towns in India. The company plans to expand to 75 districts in the next 18 months. In January 2022 Co-Founder Angad revealed that the CityMall platform was growing 35% month on month.
Founder(s) & Team
Naisheel Verdhan – Co-Founder at CityMall. Naisheel, an IIT graduate previously founded Codalyze Technologies and EdRoot Analytics where he served as the Chief Technology Officer.
Angad Kikla – Co-Founder at CityMall. Angad, an IIM graduate previously co-founded BeatRoute Innovations and HAWKR. He also worked as a Consultant at Accenture.
History & Evolution
In early 2019, CityMall was co-founded by Angad Kikla, Naisheel Verdhan, and Divij Goyal with an aim to create a chain of virtual stores on WhatsApp for the next 300 million internet users in India through a network of neighborhood community leaders. Through their platform, the founders wanted to solve two major problems prevailing in the retail industry, customer acquisition, and logistics. Soon after its inception, Divij Goyal left the company in February according to his Linkedin profile.
Initially, the idea was to sell low volumes of long-tail (i.e., hard-to-find) products on WhatsApp. For instance, the company sold hair curlers imported from China that were comparatively cheaper than Indian hair curlers. However, soon the duo realized that everyday convenience items like a packet of Maggi Noodles were easier to sell and had a higher demand as well. That’s when they transitioned to selling groceries and converted their group buying customers into community leaders who would now earn their income through commissions.
Within a few months of launch, CityMall grew from 50 orders a day to 750, while growing 50% every week.
Towards the end of 2021, the company announced its plan to foray into the fresh groceries delivery market. This is CityMall’s 2nd attempt to enter this space, as it had previously struggled with supply chain issues despite attracting demand the first time around.
CityMall’s competitive edge is its strategy to target mid-level sub-urban and rural communities in their local languages. Usually big retail players don’t tailor their services to cater to such markets and that’s what makes CityMall different.
The company has launched an open forum called Parivaar on their app, where community leaders can ask, tell, share and discuss information with like-minded individuals. With this initiative, the team hopes to empower leaders to share their insights and feedback.
India’s social commerce market was valued at $800M in 2021 with Instagram, Facebook, WhatsApp, Trell, and Chingari dominating the industry. Moreover, 55% of the market’s customer base belongs to tier II and III towns which contribute nearly 80% of the gross merchandise value.
According to a report by consulting firm Accenture, India has the fastest growing social commerce market and is expected to grow to $17B in gross merchandise value at a CAGR of 59% by 2025.
Suggested Next Reads
Forbes India - CityMall Wants To Change How Small-town India Buys Groceries (Forbes India, March ‘21)
Buoyed by strong growth, community-buying platform CityMall looks at expansion - The Hindu BusinessLine (The Hindu Business Line, November ‘21)
How CityMall, an Indian Social Commerce Startup, Succeeded - Success Story (Sugermint, March ‘22)