D2C Company FreshToHome’s Net Commission Hits Rs 25 Cr from India in FY23

FreshToHome fish

Three points you will get to know in this article:

  • FreshToHome cut losses by 22% in FY23 despite lower revenue.
  • The company showed smart money management with a 23.5% cut in sales and marketing costs.
  • FreshToHome secured $290M+ funding for growth in a tough market.

Introduction to Freshtohome

Freshtohome Foods Private Limited company that specializes in delivering fresh fish, poultry, and mutton products directly to customers’ homes. They operate in various locations including India and the UAE. The company focuses on offering high-quality seafood and meat products, with a wide range of marine fish, shellfish, freshwater fish, poultry, and meat items available for delivery. They emphasize convenience, freshness, and quality in their service. Additionally, Freshtohome is active on social media platforms for customer engagement and provides a user-friendly website for ordering and accessing information about their products and services.

Financial Performance Analysis

FreshToHome, the popular online platform for ordering fresh meat and seafood, faced some challenges in expanding its operations, as indicated by a slight dip in revenue during the fiscal year ending March 2023. However, there’s a silver lining: the company, headquartered in Bengaluru, managed to slash its losses by an impressive 22% over the same period.

In FY23, FreshToHome’s revenue from its core operations experienced a modest decrease of 1.6%, according to financial records submitted by its parent company based in Singapore. The bulk of FreshToHome’s gross merchandise value (GMV) stemmed from the sale of its products, including meat and seafood. Additionally, revenue streams from sales commission and royalties played a significant role in bolstering the company’s financial performance in FY23.

Business Collaborations and Market Expansion

FreshtoHome, an innovative player in the food industry, explored various business collaborations both in India and the UAE. In India, the company’s earnings stood at a commendable Rs 25 crore from net commission and royalty alone. This translated to an impressive Rs 800 crore in Gross Merchandise Value (GMV) for the fiscal year FY23, as confirmed by their spokesperson.

Across the borders in the UAE, FreshtoHome adopted a cash-and-carry model, achieving significant success with Rs 100 crore in gross sales by the end of March 2023.

Expenditure Breakdown

In terms of expenditure, FreshtoHome demonstrated prudent financial management, investing Rs 323 crore in sales and marketing during FY23, representing a noteworthy 23.5% decrease from the previous fiscal year. Notably, the procurement costs constituted 17.3% of the total expenditure, amounting to Rs 93.5 crore for FY23.

The company’s spending on employee benefits, legal fees, delivery charges, contract labor, packaging, and other overhead expenses significantly increased its total expenditure to Rs 539 crore in FY23 from Rs 655.5 crore in FY22.

FreshToHome was able to reduce its losses by 21.7% in FY23, contracting from Rs 522.9 crore in FY22 to Rs 409.4 crore. The company achieved this by reducing its sales and marketing costs. Despite this improvement, the company’s ROCE and EBITDA margins remained at -82% and -3140% respectively. On a unit level, FreshToHome spent Rs 4.88 to earn a rupee in FY23.

Funding and Investors

FreshtoHome has garnered a hefty sum of over $290 million in funding up to this point. This includes a significant $104 million infusion from its Series D round, spearheaded by Amazon Sambhav Venture Fund back in February of last year. The primary investor in the venture is Iron Pillar, closely trailed by Raed Ventures.

Competitive Landscape

FreshToHome faces competition from players like Licious, Zappfresh, BBDaily, and Easymeat, among a handful of others in the market. In the financial year FY23, Licious experienced a modest 9.6% growth in its gross income, reaching Rs 747.7 crore from Rs 682.5 crore in FY22. However, the company’s losses remained steady at Rs 500 crore in FY23, mirroring the Rs 485 crore reported in FY22. The firm recently boasted about reaching an annual revenue run rate of $100 million, equivalent to around Rs 850 crore for FY24. Meanwhile, Zappfresh closed FY23 with revenue amounting to Rs 57 crore and managed to secure a nominal profit ranging between Rs 3-5 crore.

FreshtoHome isn’t alone in grappling with these challenges. It’s become clear that certain assumptions about the Indian market haven’t quite panned out, especially when it comes to the pricing of meat and its related products. Customers simply haven’t been willing to shell out the premium prices these companies ask for, making it difficult to establish lasting connections. As for FreshtoHome, shifting focus to the UAE might not happen on the same grand scale or with the same strategies. It’s likely they won’t invest as heavily in expanding into that market.

FreshToHome faced challenges with a slight revenue dip in FY23, but the company made significant strides by reducing losses by 22% and maintaining strong collaborations in India and the UAE. Financial prudence was evident through a 23.5% reduction in sales and marketing costs, despite a slight increase in total expenditure. The company successfully secured over $290 million in funding, marking its position for future growth. While facing competition, FreshToHome’s financial performance and strategic collaborations position it well for further expansion and success in the market.

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