An Indian startup that helps small stores compete with Amazon & Flipkart, bags $70 million

• Retail technology company Arzooo raised a whopping $70 million on Wednesday.
• The round witnessed participation from Japan-based SBI Investment, Trifecta Leaders Fund and others.
• India has the third largest retail market in the world after China and the US.

Retail technology company Arzooo — which helps small retailers compete with Amazon and Flipkart — announced on Wednesday that it has raised a whopping $70 million from Japan-based SBI Investment, Trifecta Leaders Fund and others.

The round witnessed participation from several global and Indian venture capitalists (VCs) such as Celesta Capital and 3 Lines VC, who previously infused capital in Arzooo’s Series A round. Tony Xu, the founder of Doordash, also made his first Investment in India by participating in Arzooo’s latest funding round.

“Arzooo’s business model is very capital efficient and can meet the increasingly diversified requirement of both retail shops and end customers. It is also great for them to have built a self-branded functional logistics system, which is one of the most important parts of the business,” said Yoshitaka Kitao, chairman and president of SBI investment.

It will utilize its latest funding to scale its technological capabilities focused on scaling store growth and market expansion for the platform. The company continues to deepen its vertical play in the $65 billion consumer electronics market in India.

Arzooo — founded in 2018 by ex-Flipkart colleagues and IIT-Kharagpur alumni Khushnud Khan and Rishi Raj Rathore — has powered over 30,000 retailers across 22 states to compete with bigger sellers and online marketplaces like Amazon, Flipkart, Snapdeal, Meesho and others.

The company equips partner stores with technology platforms to offer more selection to the customers, without having to invest in inventory. The platform also helps small retailers engage in competitive prices and offer attractive payments solutions to improve sales conversion in-store.

“While the last decade has been about the proliferation of new age economies, the Internet was still seen as a rival to offline retail and the retailer community has been at the receiving end for a while. Today, technology is making fast pace inroads into brick and mortar and we are excited to be at the forefront of this revolution while catalyzing it by enabling the next generation retail for lakhs of neighborhood stores,” Khushnud Khan, co-founder and CEO of Arzooo, said.

According to ‘India D2C Report 2022’ by Shiprocket and Confederation of Indian Industry (CII), India has the third largest retail market in the world after China and the US.

The retail spending per capita in India is $590 million, while the market is pegged at $821 million in FY21. The research firm believes that the Indian retail segment could be a $1,900 billion opportunity by the end of this decade. Meanwhile, e-commerce penetration in India is currently at 8% and is poised to reach 15% in the next five years.

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