While India’s urban population is shifting from mom-and-pop stores to fast commerce platforms, rural areas, home to over 800 million people, still rely heavily on offline businesses for their daily consumption. Wheelocity aims to transform an untapped market, making it easy for people living outside of the top 200 cities in the U.S. to shop online.
Founded in September 2021, the Chennai-based startup has shifted from its initial B2B supply chain business for a rapid commerce platform to building a platform that addresses e-commerce access for people living in semi-urban areas. A rural area commonly called “Bharat”.
Flipkart, long owned by e-commerce giants Amazon and Walmart, has been trying to tap into rural India to penetrate deeper into the world’s second-largest internet market after China. The region has also attracted startups including Meesho and Rozana. However, Wheelocity founder and CEO Selvam VMS told TechCrunch that access issues have prevented anyone from breaching the space.
“Our approach to solving this problem is very unique,” he said in an interview. “We are focused on creating alternatives that are 100 times better for consumers.”
Wheelocity began the change by providing freshly produced products such as vegetables, fruits, and groceries through an app. But unlike traditional e-commerce platforms that sell products online, the startup has taken a ‘phygital’ approach. This includes electric three-wheelers that allow startups to actually take their products to town every day to win the trust of consumers. The vehicles allow consumers to place orders using Wheelocity’s app and have them delivered to their doorstep.
Once they get used to it, consumers will start using the Wheelocity app at home, VMS predicted.
He added that unlike Wheelocity, which offers daily doorstep delivery, other e-commerce platforms take up to a week to deliver products in the same area. This has made it difficult to deliver fresh supplies and groceries.
Wheelocity uses an existing supply chain built for early-stage B2B businesses to deliver freshly produced goods and groceries to customers faster. We procure products from third parties, including farmers, and then reach consumers with Wheelocity’s brand.
VMS sees the shift that quietly began in October 2023 as a $1 trillion-plus opportunity. He declined to disclose any numbers for the business, but said the startup’s retention rate was “very, very good.”
The startup currently offers an e-commerce platform in 3,500 villages in central Tamil Nadu and has a fleet of 1,000 electric vehicles capable of physical ordering and delivery. It has already set up an operations office in Trichy, a tier-II city in Tamil Nadu, to better understand consumer buying behavior and receive feedback. Next, it plans to expand its operations to 20,000 cities and towns and across all five southern Indian states within the next 12 months, bringing its platform to 10 million consumers.
Wheelocity’s existing investor Lightspeed led a $15 million Series A2 round to back the latest move. In July 2022, the VC fund led the startup’s $12 million Series A round.
Alteria Capital, Anicut Capital, and VMS also participated in Wheelocity’s new round. The round also includes an undisclosed amount of debt to facilitate financing primarily for electric vehicles.
Lightspeed partner Rahul Taneja told TechCrunch that the VC fund decided to reinvest in Wheelocity because the market was significantly large and untapped and the startup had created a unique business model that “allows for profitable coverage in areas that have historically been impossible.” He said he had decided.
The founder’s qualities and passion for building a “revenue-generating business” before the transition also helped Lightspeed close the deal, Taneja said.
Shifting focus to small towns in India has been a new trend in the VC market. That’s because consumers in those areas often have disposable income and willingness to buy. Earlier this year, Accel began scouting the region for future unicorns.
