Quick delivery space is a tight race where many enthusiastic startups come and go. But hardly a few survive. While everybody talks about successful quick-delivery startups. But here we will cover the one that couldn’t catch up with the race of quick commerce. It is Fraazo. While its contemporaries like Flipkart Quick, Dunzo, Swiggy Instamart, and Zomato’s Blinkit survived. But it failed. Why? Mainly due to a lack of funding and decreased demand. Apart from that, there are many reasons for the shutdown of Fraazo. You will find it in this article.
What is Fraazo?
Fraazo is an online retail brand that provides fresh fruits and vegetables through quick commerce. It is a D2C greengrocer startup. It directly collects green produce from its partners and delivers it to your doorstep. As per their claim, they monitor every single stage of food production i.e., from farming to the packaging of food. Thus, they provide fresh veggies and fruits. You can browse the online platform of Fraazo to smoothly create your order basket, track your delivery, and pay through any medium.
A brief overview of Fraazo
|Type of Industrial Segment||Quick Delivery e-commerce (Greengrocer Startup)|
|Headquarters||Mumbai (Maharashtra, India)|
|Founders||Atul KumarVikas DosalaSumit RaiAashish Krishnatre|
|Areas Served (Initially)||Mumbai, Delhi (NCR), Pune, Hyderabad, Bengaluru|
|Estimated Delivery Time||90 minutes|
|Areas Served (Currently)||Mumbai|
|Revenue (FY 2021)||$2.5 million (Rs.20.96 crore)|
|Expenses (FY 2021)||$3.6 million (30.09 crores)|
|Profit/Loss (FY 2021)||Loss of $1.9 million (Rs.15.8 crore)|
How did Fraazo work?
Fraazo is an agri-tech startup with a motive to deliver fresh green groceries to your doorstep. The officials call it a “Farm-to-Fork” grocery startup.
Dark-store based model
Fraazo works on a Dark Store-based model where every dark store is certified by FSSAI. Those dark stores are capable of processing almost 2-3 tonnes of fresh vegetables and fruits daily. This increases the efficiency of the delivery. Thus, it provides a greengrocery delivery service better than its competitors. From where do they gather fruits and vegetables? How does their delivery system work? We will discuss them in the upcoming sections.
Partnership with Farmers
According to Fraazo, it safely delivers green groceries within 12 hours of harvest from the farm. They work on the D2C business model. We have briefly described it in three steps-
Step 1: Gather fruits and vegetables directly from farmers.
Step 2: Keep the gathered fruits and veggies in the collection centers (dark stores).
Step 3: Delivering the orders to your doorstep within 90 minutes ensuring proper hygiene.
Their vision was to provide customers with the best quality products and establish a trustworthy relationship with Indian farmers. However, they haven’t disclosed the number of partnered farmers.
A Part of VnF
Soon after the launch, Fraazobecame a part of VnF Ideas Private Limited. Fraazo took this step to scale its growth and development. VnF is a well-established and leading agritech player in Mumbai. Likewise, it also provides farm-fresh veggies and fruits to retail consumers and businesses. They claim to serve over 2 lakh households in Maharashtra (mainly in Mumbai and Pune).
Fraazo Grocery Stores in Maharashtra
- Mumbai: Powai, Andheri (East & West)
- Pune: Magarpatta, Hinjewadi, Koregaon Park
Operations & Supply Chain Management
The team of Fraazo claimed that they handle over 125 SKUs of fresh green groceries. SKU refers to stock-keeping units. Following are the technological aspects of Fraazo-
- Real-time tracking
- Route optimization
- Load factor analysis
- Farm mechanization
- Mapping down every retail center of Fraazo
- Digital payment system
- Minimal human intervention
The main motto of Fraazo is to provide fresh and hygienic products directly from the farm with minimal human intervention. Also, its app displays proper information regarding which products are available or not in the retail store of your location. Similar to other platforms, Fraazo greatly promotes a digital payment system. It significantly reduces the trouble of cash transactions.
Competitors of Fraazo
Numerous companies provide the same service as Fraazo. Therefore it sees them as potential competitors. The main competitors of Fraazo are-
- Zomato’s Hyperpure
- Flipkart Quick
- Dunzo (Backed by Reliance)
Is Fraazo closing down? Why did Fraazo shut down?
Employee layoffs in Fraazo, shutting down of dark stores, closing operations in other cities, etc. are some of the recent news. Do you know it laid off over 150 full-time employees recently? They belonged to various departments like operations, technology and product design, procurement, HR store managers, planning & growth teams, etc.
Not only that, but Fraazo has shut down over 50 dark stores pan India in the last few weeks. Coming to your query- “Is Fraazo closing down?” The answer is a bit vague. Other than Mumbai, all of its operations are closed in other cities. It is further scaling down its operations.
Fraazo is shutting down because it finds it difficult to cope with challenges. Some of the main challenges are funding and operational challenges.
Till now, Fraazo had four funding rounds and raised over $69.8 million. But later on, it became difficult to secure funds. The last round of funding was a combo of debt and equity. The lead investors were WestBridge, Sixth Sense Ventures, Equanimity Investments, and Apar Group. Although the startup intended to utilize the investment to strengthen its fulfillment networks and boost the business. Unfortunately, things don’t always go smoothly as planned. The loss of the company continued to rise. In FY 2021, its losses jumped to Rs.15.8 crore. As a result, the company had to lay off its employees, shut down the stores in several cities, and change the wages of employees to balance the costs.
1.Tussle with delivery partners
It had to deal with a rider’s strike too after changing the wage policy due to lack of funds. Earlier it used to pay Rs.500 per day and some incentives to the delivery riders. But due to a funding crunch, it changed the pay regime. Fraazo significantly lowered the pay to Rs.45 per day. As a result, it faced the rider’s strike last month after changing the wage policy. Following this, many off-role employees went on strike. All these things ultimately hit the sales of the cash-lacked startup.
2. Operational Efficiency
This was the major challenge that highly impacted the growth of Fraazo. They have 125 SKUs that can manage the demands of up to 5 tonnes per day. But it gets difficult when the daily demands surge to 25 tonnes per day.
3. Manpower and Transportation costs
The major cost heads of the company involve the procurement of vegetables and deployment of manpower across the supply chain. It accounts for 75-80% of costs.
This is the highest form of loss for any greengrocer e-commerce platform. Similar is the case with Fraazo. It has to deal with the following kinds of damages and wastages-
- Moisture loss
- Processing loss
- Physical wastage
- Transportation damages
Funding is a crucial factor that decides the survival probability of a startup. As you can see, due to a lack of funding and other challenges, Fraazo had to shut down its operation in major cities. Even in its core market i.e. Mumbai, it scaled down its operations by half (nearly 60%).