The round values Citymall at around $350 million, a senior company official said.
The funding will be used to expand across categories and geographies, and strengthen its back-end technology, said Angad Kikla, cofounder and CEO of Citymall.
“We plan to expand to 100 cities in next 18 months,” he told ET in an interaction. “We plan to enter newer states within India and will expand into fashion and general merchandise, too.”
Citymall expects gross merchandise value (GMV) on its platform to grow to $1 billion over the next 12 months. “The company’s GMV has been growing strongly at 30% month on month and we are seeing greater traction from our tier III and II markets,” Kikla said.
Investors who took part in the latest round include General Catalyst, Citius, Jungle Ventures (which has doubled down its investment in the company), Arena Ventures, Elevation, Accel and Waterbridge. Total funds raised by the company so far stands at $110 million.
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“We have been impressed by the strong product-market fit and hypergrowth that Citymall has demonstrated over the last few months,” said Niren Shah, managing director and India head of Norwest Venture Partners. He praised the firm’s “efficient customer acquisition and lower supply chain costs”.
Founded in 2019 by Kikla and Naisheel Verdhan, Citymall pioneered the community group buying model – or community commerce – in India. It targets the 500 million new-to-Internet users in tier II, III and IV towns where traditional ecommerce has failed to penetrate because direct-to-customer supply chains are not viable for low ticket size users living in remote towns and cities.
So, how does it work? To start with, Citymall enrols ‘community leaders’ who serve as its marketing and logistics partners in ecommerce-dark towns. These community leaders work on a commission-based model where they use their social network to invite friends and family members to form a shopping team to qualify for discounts, assist them to make purchases across a variety of categories including grocery, fast-moving consumer goods (FMCG) and fashion, and also manage the last-mile delivery of orders.
According to Kikla, the model has seen tremendous growth over the last 18 months. Almost 80% of Citymall’s users have never transacted on any ecommerce platform before, he said. “We plan to enter newer states within India and will expand into fashion and general merchandise, too,” he added.
More than 30,000 community leaders are currently on the platform.
Citymall competes with well-funded startups such as Meesho, Shopsy and Dealshare.
Alex Tran, managing director of General Catalyst, said, “Citymall is innovating at the intersection of two megatrends we’ve seen first-hand globally – an upgrade in consumption towards more assortment and better quality in many emerging markets, and the leapfrogging of commerce from brick-and-mortar to online, enabled by increasing connectivity. The next frontier for this is serving customers in Tier 2 to Tier 5 towns, where Citymall has proven strong product-market fit and growth.”