Online Grocery eBag Closes a €650K Round and Considers an IPO
The online grocery company eBag was founded in 2014 to help consumers in the Bulgarian capital city Sofia save time. In the next two years, the business grew and attracted over 12K customers. Since December 2018, eBag has received some investments and is now closing a round of €650K to grow further. The company aims to penetrate Sofia completely in the next four years and expand to one more city in Bulgaria after that.
“We are planning another round this year and seriously considering to list eBag publicly”, co-founder and CEO Ivan Alexandrov told Trending Topics.
Fuel for expansion
Last summer eBag changed its strategy after a three-year-long partnership with the local chain Fantastico. In its first phase, eBag was responsible for the online platform, the sales and the delivery of the goods, while Fantastico took care of storage and packaging. After the capacity of Fantastico was exhausted, however, Alexandrov decided to continue his own way. “We established two logistic hubs together, but eventually we realized that this capacity is limited. The only way to continue to grow further was to start packaging ourselves”, Alexandrov explained.
Therefore, the two companies had to part ways. Today, eBag has its own warehouse, a fleet of 20 and offers 12K+ items online. The company has invested a lot in the development of its software – a platform that allows customers purchases but also optimizes the whole business process on the backend.
One of the first investors in the business was NTG, the owner of Nova TV, who backed eBag with €320K. Last year, however, Alexandrov bought back his shares from the media company. In end of 2018, the online grocery secured an investment of €210K from the local fund Eleven Ventures. Around the same time, although announced later, the company received another €440K from local microcredit entrepreneurs Nedelcho Spasov and Stanimir Vassilev ( investors in Payhawk.io and Iuvo – ed.note.).
The fresh capital will be used for further development of the platform, which is responsible for 70% of the operations, and expansion of the fleet, warehouse, the team of close to 70. The company will be looking for more capital in the next year – one more investment round is planned, and an IPO is also on the horizon.
A local market to penetrate
The business of eBag has a clear mission – to save the time used for grocery shopping. It all started with Alexandrov’s need to optimize his own schedule. Today the platform is used by around 12K households in Sofia. “We found it easiest to convert young mothers, therefore we strive to always have enough baby supplies in stock”, he explained. Of course, foods, drinks and other household products make a big part of the shopping cart. “We also have corporate clients who purchase fruit and drink for offices”, he explained. The company has delivery slots twice a day and the average purchase through eBag is around €40-€45. Alexandrov hopes to raise it to over €50 in the next few months.
Being in the fast moving consumer goods (FMCG) business means that eBag could only profit from greater volumes and lower operating costs (e.g. delivery). Even the local market in Bulgaria alone offers enough growth opportunities for eBag. “The FMCG market is estimated to be around €2.7B. We’d be happy to reach €100M in revenues in the next four years”, he explained. In 2018, the company generated a turnover of €3M and expects it to double this year.
In the same time, the greater volume would allow Alexandrov to negotiate better prices with subcontractors and eventually turn profitable. In his plans, the next four years will be crucial for the development of the business and if the model turns out to be successful, the entrepreneurs will further expand to one more city in Bulgaria.
+++To be or not to be public: IPO vs. VC money+++