Otipy - From farm to home in 12 hours

About the product: Otipy operates a community group buying (CGB) model for fresh produce and grocery delivery in India, leveraging AI/ML prediction models to bring down wastage from 30% to 3%. The company connects farmers, community leaders (resellers), and end consumers through a technology-enabled platform that ensures delivery within 12 hours of harvest.

The core value proposition for Otipy is to Wake up to farm-fresh produce: Responsibly grown by partner farmers, harvested daily, and delivered straight to your door by 8 AM.

• Fresh Produce - Users appreciate that produce received in the morning appears to be freshly picked, which aligns with Otipy's promise of farm-to-home delivery. The fresh produce also helps with better shelf life of products compared to regular markets.
• Convenience - Convenience of ordering through the app and early morning deliveries before the food is prepared is a significant benefit. Users enjoy the ability to receive fresh produce directly at their doorstep, which saves time compared to visiting local markets.
• Subscription - It offers a subscription service that allows customers to receive regular deliveries (daily/alternate days/weekly/custom), making it easier for them to maintain a steady supply of fresh produce.
• Traceability - Time and location of harvest adds an element of traceability and also ensures that users know reliably that it is being harvested freshly.
• Food Safety - Otipy ensures that they source produce only from verified farms where soil quality and pesticide usage are rigorously tested by their team. This quality assurance provides a significant advantage over traditional mandis, where such safety standards and testing protocols are often absent.

Current status of monetisation

The platform's subscription model, particularly strong in dairy products, demonstrates robust metrics with 80% first-month retention compared to 50% for non-subscribers. Subscribers show significantly higher wallet share at ₹1,500+ versus the overall average of ₹824, indicating strong product-market fit in this segment. The company has successfully increased wallet share from Month 1 average of ₹824 to Month 12 of ₹987 across all users.

The company maintains a negative working capital cycle, receiving advance payments through wallets or at the time of ordering (D-1 days). Payment terms to farmers typically range from 7-10 days, while FMCG partners receive payments in 20-30 days. This financial structure, combined with their AI-driven demand prediction model and community-based delivery system, enables Otipy to operate efficiently while maintaining quality and freshness of products.

From FY21 to FY 24:

• Their monetization strategy shows significant growth, scaling revenue from ₹19.73 Cr in FY21 to ₹169.23 Cr in FY24.
• The business generates revenue primarily through fresh produce (65%), followed by dairy & bakery (22%), groceries (11%), and other categories (2%).
• Gross margins have improved from 19% to 25% during this period, demonstrating increasing operational efficiency.

Snapshot of GM, CM2 and CM3 Margins:

(All figures in crores)

• Unit economics shows that Otipy current looses money on every order
• The Gross margin has increased steadily from 19% to 25%.
• The CM2 margins have reduced significantly from -29% to -4.4% showing efficiency in running the business.
• The CM3 margins have reduced significantly from -42% to -22% showing better efficiency in customer acquisition.

Key takeaways:

Otipy is a transactional product. Although they are charging for the product but they are not yet charging for the service. They are not yet monetising at an overall level because:

1. They're losing money on every transaction
2. Cannot cover basic operational costs even after gross margin
3. Unit economics are negative even before considering marketing costs

However, please note that this is not applicable for all the customers. Otipy is able to monetise the users:

• who have high AOV and frequency.
• who are recharging their wallet with a high amount. They are paying upfront (and letting go of the interest on those payments).

Monetization litmus test

Retention Graph ✅

The transacting user retention graph shows a flat line after month 10.

However the customers who are ordering from Otipy, they have increased their wallet share from M1 average of INR 824 to M12 of INR 987 as shown in the table below:

This shows a deeper engagement with the product for the users who are retained.

Deeper Engagement ✅

We do not have distribution between core, casual and power users. However, lets make an intelligent guess basis all the data we have from the investor presentation.

• Overall retention rate: M1 at ~50% and M12 at ~12%, Subscriber retention: M1 at ~80% and M12 at ~30%
• 38% are subscribers and 62% are regular users
• Average orders per month: 6.5 overall.
• Subscribers make ~12-14 orders/month. Regular users make 3-4 orders/month

2. Let's analyze the user segments based on frequency:

• Casual: 1-2 times/month
• Core: 2-3 times/week (8-12 times/month)
• Power: 3-4 times/week fixed schedule (12-16 times/month)

3. For subscribers (38% of total users):

• Given their high retention and order frequency, subscribers are likely split between core and power users
• Based on the order frequency data, I estimate:
• • 60% of subscribers are power users (22.8% of total)
  • 40% of subscribers are core users (15.2% of total)

4. For regular users (62% of total):

• Given lower retention rates and average 3-4 orders/month:
• Distribution estimate:
• • 40% casual users (24.8% of total)
  • 50% core users (31% of total)
  • 10% power users (6.2% of total)

5. Final distribution estimate:

• Casual Users: ~25%
• Core Users: ~46% (15.2% from subscribers + 31% from regular)
• Power Users: ~29% (22.8% from subscribers + 6.2% from regular)

Since 75% of the users are core and power users, they should be monetising the users.

Willingness to pay ✅

Survey Questionnaire

I tried to design a survey which doesn't have any leading questions and yet is able to get the willingness to pay aspect of the users.

Key observations:

1. Casual Users: More price-sensitive, less frequent orders, use multiple apps
2. Core Users: Regular Otipy users, balanced between price and quality
3. Power Users: Quality-focused, least price-sensitive, most loyal to Otipy

Purchasing Decision Factors Ranking of importance across segments

• Casual Users: 1. Price 2. Cleanliness 3. Touch/Feel
• Core Users: 1. Cleanliness 2. Touch/Feel 3. Price
• Power Users: 1. Touch/Feel 2. Cleanliness 3. Price

Membership models preferred:

• Casual Users: No membership. Don't want prior commitment to one platform.
• Core Users: Ready to pay Rs. 199 for unlimited free deliveries.
• Power Users: Happy paying Rs. 299 for unlimited free deliveries + 5% off on all orders.

The core and power users are willing to pay extra for the monthly deliveries.

GTM for monetisation

1. What your product is?

• Your daily fresh produce and groceries delivered by 8 AM
• Quality-checked fruits and vegetables from certified farms
• Hassle-free daily essentials delivered at your doorstep
• Your neighborhood's trusted grocery platform

2. How does it build trust?

• Consistency - Consistent fresh produce of high quality delivered at doorstep builds trust.
• Traceability - See exactly where your produce comes from with farm tracking
• Instant refund - Get instant refund if you're not satisfied with produce

3. Why should the customer choose your product?

• Wake up to farm-fresh vegetables at your doorstep
• Never run out of milk and bread with scheduled delivery
• Save more when you order more with wallet benefits
• No more quality surprises - every item quality checked
• Your morning routine, simplified
• Zero delivery fee above Rs. 100

4. How to best use your product?

• Schedule your weekly vegetable delivery - just set and forget
• Add milk subscription to your vegetable order - same delivery, no extra fee
• Load your wallet once, order stress-free for a month
• Place order by 11 PM for next day morning delivery

Customer Touchpoints

1. Customer Touchpoints:

• WhatsApp updates
• In-app notifications for order tracking and deals
• Early morning SMS for delivery updates
• Push notifications for order reminders

2. Key Messaging:

Product Value: "Wake up to farm-fresh goodness, delivered before your morning tea."

Trust Building:

• Share real photos from farm quality checks
• Testimonials from repeat customers along with photos/videos
• Community leader success stories on how it is changing their lives making the customers feel good.

Differentiation:

• Fresh produce from certified farms delivered next day before 8 AM.

Educational Content:

• Share seasonal produce guides
• Create storage tips for longer shelf life
• Share healthy recipes using fresh ingredients
• Weekly meal planning ideas using available items
• Video tutorials on checking produce quality

The messaging focuses on solving three core customer problems:

1. Quality uncertainty in fresh produce
2. Morning delivery hassles
3. Value for money in grocery shopping

Substitute Pricing

What are the core problems Otipy is solving as compared to its substitutes here:

Freshness Challenges:
Problem: Inconsistent and low-quality fresh produce with long farm-to-consumer cycles
Solution: 12-hour farm-to-home delivery ensuring peak freshness and minimal produce degradation

Product Selection Challenges:
Problem: Limited variety and inconsistent availability of fresh produce
Solution: High-quality product selection with comprehensive range of fruits, vegetables, and grocery items

Price Point Challenges:
Problem: High prices for quality produce or low-quality cheap alternatives
Solution: Competitive pricing with high-quality, sustainably sourced produce

Ordering Convenience Challenges:
Problem: Inconvenient and time-consuming fresh produce shopping methods by visiting the local vendor/supermarket/weekend vegetable market
Solution: Scheduled, app-based ordering with structured and predictable delivery windows

Quality Assurance Challenges:
Problem: Lack of transparency and consistency in produce quality
Solution: Comprehensive quality checks, multi-level QC, and lab testing of all produce

Traceability Challenges:
Problem: No visibility into produce origin, harvesting, and supply chain
Solution: Transparent sourcing with QR code tracking of each product's journey from farm to home

Delivery Options Challenges:
Problem: Unreliable and inconsistent delivery methods of e-commerce apps
Solution: Scheduled deliveries with predictable timing and reliable logistics

Sustainability Impact Challenges:
Problem: High food wastage and unsustainable agricultural practices
Solution: Reduced wastage (from 30% to 3%) through intelligent demand forecasting and community-based model. Sourcing of produce from certified farms only.

Who to charge?

High R-F

Medium R-F

Low R-F

1. DEFINITELY CHARGE FOR SUBSCRIPTION:

a) Champions (R:5, F:5):

• Why:
• • Already ordering 13-15 times/month
  • High monthly value (₹1,950-2,700)
  • Multi-category buyers
  • Already used to regular ordering pattern
• Evidence from docs:
• • 80% M1 retention for subscribers
  • Currently 38% are subscribers
  • Higher wallet share (₹1500+)

b) Loyal Customers (R:4, F:4-5):

• Why:
• • Consistent 10-12 orders/month
  • Predictable ordering patterns
  • Good monthly value (₹1,300-1,800)
• Evidence from docs:
• • Strong weekly ordering patterns
  • Value consistency in delivery
  • Fixed weekly menu planning behavior

2. GOOD POTENTIAL FOR SUBSCRIPTION:

a) Potential Loyalists (R:4-5, F:3):

• Why:
• • Growing usage (6-8 orders/month)
  • Good monthly value (₹1,200-1,760)
  • Showing increasing engagement
• Evidence from docs:
• • Regular but not yet fixed schedule
  • Quality conscious but price sensitive
  • Often recommend to neighbors

b) Need Attention (R:3, F:3):

• Why:
• • Moderate frequency (4-6 orders/month)
  • Could be stabilized through subscription
  • Monthly value (₹720-1,200)
• Strategy:
• • Trial subscriptions
  • Category-specific subscriptions
  • Flexible subscription periods

3. NOT YET READY FOR SUBSCRIPTION:

a) About to Sleep & Hibernating:

• Why Not:
• • Inconsistent ordering patterns
  • Low frequency (1-3 orders/month)
  • Unpredictable behavior
• Evidence from docs:
• • Order when inventory runs low
  • Use multiple apps
  • Price sensitive

b) New & Promising:

• Why Not:
• • Still exploring the platform
  • Behavior patterns not established
  • Value proposition not fully realized

Aspects which determine value for Otipy

Money Saved ✓ Valid for Otipy because:

• Price benchmarking shows Otipy is 2-44% cheaper than quick commerce platforms
• Bulk buying and direct farm sourcing enables better pricing
• Wallet bonuses and subscription discounts provide additional savings
• Since the produce wastage in the supply chain is reduced to 3% (from a typical 33%), it is passed on to the customer.

Time Saved ✓ Very significant for Otipy because:

• Eliminates need to visit local markets/mandis
• Early morning delivery (by 8 AM) saves time during busy mornings
• Pre-planned delivery through subscriptions removes daily ordering hassle
• One-stop shop for fresh produce, dairy and groceries

Dopamine Hit × Less relevant for Otipy because:

• Grocery shopping is more utilitarian than achievement-based
• No gamification elements currently in the product
• User satisfaction comes from product quality rather than rewards/achievements

Ranking by importance based on user feedback and behavior:

Time Saved (Most Important)

• User interviews consistently highlight convenience and time savings as key value drivers
• Early morning delivery timing crucial for daily planning
• High retention among subscribers shows value of automated, time-saving experience

Money Saved

• Price sensitivity noted in customer segments
• Wallet adoption driven by savings
• Competition based on value-for-money proposition

Competitor Benchmarking

Perceived value journey

How the perceived value increases in fresh produce delivery for Otipy:

1. Initial Trust Barriers in Fresh Produce:

• Non-standardized nature of products (size, ripeness, freshness varies)
• Quality varies significantly between suppliers
• Subjective evaluation criteria (what's "fresh" to one may not be to another)
• Historical trust issues with online fresh produce delivery
• Traditional preference for personally selecting produce

2. Why First Order is Critical:

• Customers can physically validate Otipy's claims:
• • Freshness promise (12-hour farm to home)
  • Quality standards
  • Packaging quality
  • Delivery timing adherence
• Sets baseline for quality expectations
• Provides tangible evidence against skepticism

3. Value Enhancement with Subsequent Orders:

• Quality Consistency:
• • Repeated validation of freshness
  • Consistent grading standards
  • Reliable ripeness levels
  • Predictable shelf life
• Operational Reliability:
• • Consistent early morning delivery
  • Accurate order fulfillment
  • Professional handling
  • Temperature-controlled supply chain
• Convenience Benefits:
• • Time saved from market visits
  • Early morning availability
  • No haggling required
  • Doorstep delivery
    
    

Any break in this consistency can significantly impact the trust built and reset the perceived value to earlier stages.

The perceived benefits of Otipy may be good enough to start charging for the service from 3rd order onwards. The first two orders are just for building the perceived value (similar to free tinder likes) and hence should not be charged.

Perceived value journey may be different for different users

This is just to show that the perceived benefits would different for different users even when we start charging. However, there is no clear cut value to differentiate between users who are price-sensitive vs convenience focussed vs health-conscious. There will always be an overlap.

Lets evaluate each charging category:

A) Time-based Charging:

• Best fit for subscription model (dairy, regular produce)
• Helps with predictable revenue
• Example: Monthly/weekly subscription plans for milk/produce/grocery delivery

B) Output-based Charging:

• Main revenue stream - charging per unit of produce
• Variable pricing based on quantity/weight
• Delivery fee per order
• Example: Price per kg for vegetables, fruits

C) Access-based Charging:

• Less relevant for Otipy's model

D) Shareability-based Charging:

• Not core to Otipy's business model
• Limited application in grocery delivery
  

Recommendation: Otipy should primarily focus on a hybrid model combining:

Primary: Output-based

• Per unit pricing for products
• Minimum order value requirements
• Delivery fees for non-subscription orders

Secondary: Time-based

• Subscription plans for delivery of regular items
• Discounted rates for subscription commitments

Rationale:

1. Aligns with user behavior (documented in customer profiles)
2. Matches market expectations for grocery delivery
3. Supports both casual and power users
4. Enables predictable revenue through subscriptions while maintaining flexibility
5. Leverages existing infrastructure and community model

Otipy can charge for three different perceived value components:

1 - Money saved as compared other alternatives (money)

2 - Time saved as compared to other alternatives (convenience)

3 - Quality/health aspect of fresh produce (quality)

Perceived value analysis by user segment

Casual Users

Profile:

• Average Order Value: ₹500-800
• Order Frequency: 1-2 times/month
• Main Alternative: Quick Commerce
• Time Value: Product Manager/Marketing Executive (₹1000-1500/hour)

Value Components:

Time Value

• Calculation: 15 min × ₹1250/hour = ₹312
• However we need to look at the alternatives also. Perceived value due to time saved is minimal as alternative 'quick commerce' also saves time.

Quality/Health Premium

• Calculation: 10% of order value = ₹50-80
• Casual users do not give so much importance to quality/health
• This needs to be built into the price of the produce.

Delivery Value

• Calculation: ₹20 saved vs quick commerce delivery fee
• Notes: Above minimum order value
• Limitation: Need to plan ahead

Total Perceived Value:

• Per Order: ₹70-100 additional value per order
• Monthly: ₹140-200 (2 orders)
• Quality is key differentiator vs quick commerce

Core Users

Profile:

• Average Order Value: ₹300-400
• Order Frequency: 2-3 times/week
• Main Alternative: Local market/online mix
• Time Value: IT Professional/Homemaker (₹800-1200/hour)

Value Components:

Time Value

• Calculation: 15 min × ₹1000/hour = ₹250
• Local market visit avoided however since quick commerce is an option. We cannot really charge for time value component only.

Quality/Health Premium

• Calculation: 10-15% of order value = ₹30-60
• Core users give more importance to fresh produce, verified quality, traceability and safe certification
• Applies to fresh category only.
  

Convenience Value (due to subscriptions)

• Calculation: 5 mins time saved ordering everyday. 50 mins saved for 10 orders.
• At 1000/hour, saved 833 Rs. on subscription

Total Perceived Value:

• Per Order: ₹30-60 perceived value per order
• Monthly: ₹240-480 (10 orders) + ₹833 due to subscription = ₹1013 - ₹1313 saved monthly

Power Users

Profile:

• Average Order Value: ₹200-300
• Order Frequency: 3-4 times/week
• Main Alternative: Traditional market + premium stores
• Time Value: Senior professionals/Homemakers (₹600-1000/hour)

Value Components:

Time Value

• Calculation: 15 min × ₹800/hour = ₹200
• Notes: Regular market visits avoided however since quick commerce is an option. We cannot really charge for time value component only.

Quality/Health Premium

• Calculation: 15% of order value = ₹30-45
• Notes: Premium quality expectations
• Comparison: Comparing with premium stores

Convenience Value (due to subscriptions)

• Calculation: 5 mins time saved ordering everyday. 80 mins saved for 16 orders.
• At ₹800/hour, saved ₹1066 Rs. as subscription.

Total Perceived Value:

• Per Order: ₹30-45 perceived value per order
• Monthly: ₹480-720 (16 orders) + ₹1066 Rs. saved as subscription = ₹1546-1786 saved monthly

Unified pricing structure for all segments

We need a unified pricing structure that works across segments while encouraging desired behaviors.

Key Considerations:

1. Users can move between segments
2. Pricing should be transparent and fair
3. Structure should encourage higher engagement
4. Should work for all order frequencies

Proposed Unified Pricing Structure:

• Free Base Level: Anyone should be able to start ordering with a minimum ₹100 order value, get farm-fresh prices, standard delivery by 8 AM, and basic wallet benefits.
• Paid Monthly Subscription Tiers: Two additional plans - "Bloom" at ₹199 and "Harvest" at ₹299 - which offer progressively better benefits like no minimum order value, extra discounts, and increasing wallet cashback (5-10%).
• Wallet-Based System: Users can load money into their Otipy wallet and get bonus credits (e.g., ₹5000 load might get ₹500 extra), which encourages prepayment and platform loyalty.
• Flexible Subscription Options: Users can subscribe to specific products like milk or vegetables, getting X% discounts and more frequent deliveries, which helps build consistent usage. User should be able to switch from one to another anytime.
• Personalized Pricing Strategy: Tailor pricing and incentives based on user type - casual users get basic benefits, while core (ordering 1-2 times/week) and power users (ordering 3-4 times/week) receive more premium perks to encourage higher engagement and spending.

This structure:

• Works for all segments (casual users can choose base, power users likely to opt for subscription)
• Encourages new users to order with low minimum order value compared to quick commerce.
• Encourages wallet adoption without forcing it
• Provides clear upgrade path
• Remains fair regardless of usage frequency
• Simple to communicate and understand

Pricing Page

Currently there is no charge on subscription. However Otipy provides a subscription of Rs. 749/- for 30 vegetables in a month with a limit on 4 vegetables ordered daily. 'Get vegetables for free' is shown to the users on the home page.

Attached below are the images:

Analysis of current pricing page

There are several issues with the existing pricing:

1. Unclear Value Proposition & Cognitive Load Issues

• The term "FREE vegetables" is misleading since users need to pay ₹749 upfront
• The math is complex (30 vegetables, 4 max per day, ₹749 value) creating cognitive load
• Users need to calculate the per-vegetable cost themselves. It is not clear how much would the vegetables weigh. The users don't know whether they are getting a good deal or not.

2. Choice Architecture Problems

• Limited to 4 items per day creates artificial constraints
• The "use it or lose it" model creates stress rather than convenience. I need to use it in a month of else I will loose it.

3. Psychological Friction Points

• Daily selection requirement violates the natural frequency of vegetable shopping (weekly for most users)
• Creates planning fallacy - users overestimate their ability to order daily when generally they are not able to
• High commitment requirement triggers loss aversion

4. Visual Design & Communication Issues

• "FREE" tag overuse diminishes its impact
• Complex multi-step activation process increases drop-off risk
• Terms & Conditions hidden behind a dropdown creates trust issues

5. Product Design Misalignment with User Behavior

• Daily vegetable selection doesn't match natural buying patterns
• No consideration for vacation/travel periods
• Lack of pause/flexibility options creates commitment & consistency pressure
• One-size-fits-all approach ignores household size variations

Redesigned pricing page & offering

Key Rationale for Tier Structure:

1. Sprout (₹0):

• Enables trial without commitment
• Standard benefits establish baseline
• Simple entry point for all users
• Minimum order ensures operational viability

2. Bloom (₹199):

• No minimum order removes friction
• 5% blanket discount drives frequency
• Extra wallet benefit encourages prepayment
• Cost justified by 4-5 orders/month

3. Harvest (₹299):

• No minimum order removes friction
• 5% blanket discount drives frequency
• Extra wallet benefit encourages prepayment
• Cost justified by 10-12 orders/month

Benefits of This Structure:

1. Clear value progression
2. Each tier serves specific needs (casual, core and power)
3. Natural upgrade path
4. Simple to communicate
5. Operationally feasible
6. Revenue potential from upgrades
7. It works for all kinds of users for all flows - whether they are coming from navigation or deep-linking.

Psychological Aspects of Pricing

1. Positive association - Names of plans have positive associations. No negative implications like basic plan. All terms suggest growth and abundance. Green colour associated with freshness. The freshness(green) increases as you start ordering more.
2. No cognitive load - Easy comparison. Features aligned horizontally. Differences immediately visible/ Values side by side for each feature
3. Middle option - Middle tier is highlighted visually. It works for most users and is easy to select.
4. No scratching - Since grocery/produce is a utilitarian item, people are easily able to know the value hence there is no point showing a price and cutting it.
5. System 1 design - Since grocery is a low AOV, high frequency product, we have gone with system 1 design so that users don't have to think a lot. Additionally, choosing any of the subcription will ensure that users keep coming back to the app and order without thinking much about it.