In India, most purchases at a neighbourhood grocery store are made on credit, in which the store owner sends one of his employees to collect payments at the customers’ doorstep or at one of their regular visits to the store. In the last decade, technology has slowly penetrated the consumer offline retail market. The grocery store has moved from collecting payments in cash, to using POS machines. More recently, QR codes have become prolific. Paper bills turned to printed bills. But the one thing that has not changed is the fact that most customers still purchase goods on credit recorded in a notebook.
On average, 30-40% of all merchant sales happen on credit. The percentage varies by sector – higher (45 – 50%) in grocery and lower in services. In addition, 65% of all purchases made by a retailer happen on credit. For 60 Million merchants and retailers representing a $1 trillion market, this is a lot of credit! When 60% of your business runs on credit, managing credit cycles becomes a core need.
It is not surprising therefore, that OkCredit grew at a phenomenal pace since the day they launched. In fact, when Lightspeed made the initial seed investment in the company, the team was fundraising because they couldn’t pay their rising server costs.
Their registered base is 6.5 Million merchants today and has grown 100X since Jan ’19. In recent months, the product has been nearly doubling in scale and has reached a base of nearly 2 Million monthly active merchants all in less than 24 months from launch. OkCredit is used for both B2C and B2B credit transactions by merchants across industries and across Tier 1- 4 cities in India. Some of the most powerful products appear deceptively simple, which is core to the success of OkCredit. OkCredit’s receivables management utility is inherently viral. 3 of every 10 customers that a merchant sends collection reminders to, is another merchant. When this merchant receives a payment reminder from OKCredit, he sees the value in the product for himself and downloads the app. For every paid acquisition, ~2 organic merchants join, leading to viral growth and strong network effects.
Harsha Kumar, Partner at Lightspeed India said, “Lightspeed has been investing in the SME segment in India for years now and we deeply appreciate how complex user acquisition is for this segment. OkCredit represents a rare breed of companies that are discovering digital and viral growth in a market where traditionally, feet-on-street was the only acquisition strategy. We are fortunate to witness this transition along with a team that is deeply connected to its customers and is solving with a first principles approach to product development.