CityMall’s Revenue Grows, but Losses Soar in FY24
CityMall, the social e-commerce platform catering to smaller cities and towns in India, reported a significant 23% year-on-year growth for the fiscal year ending March 2024. Despite achieving a gross merchandise value (GMV) of Rs 427 crore, the company continued to face mounting losses, which grew by 10% compared to the previous year.
The growth in GMV reflects the rising demand for CityMall’s offerings, which include lifestyle, grocery, and other essential products sold through a network of community resellers in tier II and III cities. However, the company’s financial health remains fragile, with its operating expenses outpacing revenue growth, putting a strain on its profitability.
A Look at CityMall’s Financials: Growth vs Losses
CityMall’s financials for FY24 show an increase in gross revenue to Rs 427 crore, up from Rs 346.4 crore in FY23. This 23% growth in GMV underscores the company’s expanding reach in underserved markets, as more consumers in smaller cities flock to its platform for essential goods. However, revenue from product sales, which made up the bulk of the GMV, accounted for 91.62% of its total operating revenue.
While the company saw an impressive increase in product sales revenue, up by 17.1% to Rs 391.5 crore, it still struggled with profitability. Despite the rise in income, CityMall’s total expenses surged by 17.7% to Rs 615.2 crore, largely driven by a 20.4% increase in the cost of procurement of products, and a 45.5% rise in transportation costs.
The company also generated additional income of Rs 32 crore from interest on deposits and investments, which helped push its total income to Rs 459 crore, up from Rs 378 crore in FY23. However, this wasn’t enough to offset the growing losses, which amounted to Rs 159 crore in FY24, up from Rs 145 crore the previous year.
Key Expense Drivers: Procurement and Logistics
Procurement costs have been the largest contributor to CityMall’s rising expenses. With product procurement costs increasing by 20.4%, the company faced higher pressures on its margins. The sharp increase in transportation costs, which rose by 45.5%, is another area that has impacted the company’s bottom line.
CityMall’s employee benefit expenses also rose by 7.7% to Rs 91 crore, though they accounted for a smaller portion of the company’s expenses. The rise in employee-related costs can be attributed to the growing scale of operations, as the company adds new talent to support its expansion efforts.
The increase in operational costs highlights the challenges of scaling an e-commerce business in underserved markets. While CityMall’s platform continues to grow in popularity, particularly among customers looking for affordable and accessible products, managing costs has become a key challenge in its bid for long-term profitability.
Competitive Landscape: CityMall vs DealShare
CityMall isn’t alone in the crowded social e-commerce space. One of its key competitors, DealShare, faced its own set of challenges in FY24, including a significant 75% decline in gross scale. However, DealShare managed to reduce its losses by 66%, showing that while the sector is fraught with competition, there are companies finding ways to navigate the difficult financial landscape.
CityMall’s losses stand in stark contrast to DealShare’s improved loss figures, raising questions about the company’s ability to turn a profit despite its expanding revenue base. This highlights the ongoing struggle for e-commerce companies that target smaller cities, where lower margins and logistical challenges remain a significant hurdle.
Looking Ahead: CityMall’s Future in a Growing Market
While CityMall has made significant strides in revenue generation, the company’s mounting losses reflect the harsh reality of scaling operations in India’s smaller towns and cities. The company’s reliance on community resellers and its focus on affordability have allowed it to tap into a growing market of price-sensitive consumers. However, without addressing its cost structure and improving its efficiency, the company could face more challenges in the coming years.
CityMall has raised over $110 million in funding, with its most recent Series C round raising $75 million in March 2022. With major investors like Norwest, Elevation Capital, Accel, and Jungle Ventures backing the company, it remains to be seen whether these funds will be enough to help the company turn profitable in the near future. For now, CityMall continues to ride the wave of India’s growing e-commerce market, but with a watchful eye on its bottom line.
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