Lightspeed doubles down on Wheelocity as it pivots to rural India commerce

While India’s urban population is shifting from mom-and-pop stores to quick commerce platforms, its rural side — home to more than 800 million people — still heavily relies on offline businesses for daily consumption. Wheelocity aims to transform that untapped market to let people living beyond the top 200 cities of the country easily shop online.

The Chennai-headquartered startup, founded in September 2021, has pivoted from the earlier B2B supply chain business for quick commerce platforms into building a platform to solve e-commerce access for people living in semi-urban. and rural areas, commonly referred to as “Bharat.”

For a long time, e-commerce giants Amazon and Walmart-owned Flipkart have tried to tap rural India to get deeper into the world’s second-biggest internet market after China. The region has also attracted startups including Meesho and Rozana. However, Wheelocity founder and CEO Selvam VMS told TechCrunch that none of them could crack that space due to the access problem.

“Our approach to solving this problem is extremely unique,” he said in an interview. “We are focused on building a 100x better alternative for our consumers.”

Wheelocity has begun the shift by providing freshly produced goods including vegetables and fruits and groceries through its app. However, unlike traditional e-commerce platforms that sell products online, the startup has taken a “phygital” approach. This includes electric three-wheelers to let the startup take its products into villages physically daily to help gain the trust of consumers. These vehicles let consumers place orders using Wheelocity’s app and get deliveries on their doorstep.

Once they get used to it, consumers will start using the Wheelocity app at home, VMS predicted.

The executive added that, unlike Wheelocity, which offers doorstep deliveries daily, other e-commerce platforms use their take as long as a week to get products delivered in the same region. This makes it a challenge to deliver fresh consumable items and groceries.

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Wheelocity uses its existing supply chain, built for the earlier B2B business, to offer customers freshly produced goods and groceries faster. After procuring them from third parties including farmers, the products reach consumers with Wheelocity’s branding.

VMS sees the shift, which silently started in October 2023, as a $1 trillion-plus opportunity. He didn’t disclose the business-related figures but said the startup had a “very, very good retention.”

The startup currently offers its e-commerce platform in 3,500 villages in central Tamil Nadu and owns 1,000 electric vehicles to allow physical order-placing and deliveries. It has already established an operations office in Tamil Nadu’s tier-II city of Trichy to understand consumers’ buying behavior better and get their feedback. Next, it plans to scale the business to 20,000 towns and villages and expand it to all five southern states of India within the next 12 months, taking its platform to 10 million consumers.

Lightspeed, Wheelocity’s existing investor, has backed the latest move by leading its Series A2 round of $15 million. In July 2022, the VC fund had led the startup’s $12 million Series A round.

Alteria Capital, Anicut Capital, and VMS also participated in Wheelocity’s fresh round. Further, the round includes an undisclosed amount of debt, primarily to fuel the financing of its electric fleet.

Lightspeed partner Rahul Taneja told TechCrunch that the VC fund decided to reinvest into Wheelocity as the market size was significantly large and untapped and the startup created a unique business model, “which allows profitable coverage of the areas which were historically not possible.”

The founder’s quality and passion for building a “profit-making business” before pivoting also helped convince Lightspeed to close the deal, Taneja said.

Moving focus to smaller towns and villages in India has been an emerging trend in the VC market, as consumers in those areas often have disposable income and intent to buy. Earlier this year, Accel also started looking at the region to hunt for future unicorns.