Big Basket: Bagging the online grocery market

As part of its efforts to scale up its business and face competition, online grocery behemoth Big Basket has recently merged two business verticles, the on-demand 90-minute delivery, which offered a smaller range of products and the planned next-day delivery, into a single slot that allows customers to get most of their essentials within 4 hours.

The company that commands about 35% of the online grocery market in the country is also focussing on two relatively new verticles BB Daily and BB Instant as its main growth engines, a top official of the company told DH in an interaction.

The online grocery in India is on the cusp of a growth revolution. According to a RedSeer-Big Basket report, it is pegged to grow at 55% to reach 1.2% of the overall market share by 2023. It is poised to be a $10.5 billion market by 2023.

Apart from existing online grocery retailers such as Big Basket and Grofers, E-commerce behemoths Amazon and Flipkart have also unveiled ambitious plans.

The growth will be driven by increased customer trust and comfort in e-tailing, wide varied assortment and express delivery options, the report says.

The Bengaluru based firm was founded by VS Sudhakar, Hari Menon, Vipul Parekh, V S Ramesh and Abhinay Choudhari in 2011. Despite suffering a setback when PE player Tiger Global walked out of funding talks in 2014, it has managed to buck the trend and recently became a unicorn raising more than $1.02 billion from a clutch of investors such as Alibaba, Helion Venture Partners, Bessemer Venture Partners, Abraaj Group, LionRock Capital and others.

The company offers an end to end solution for door delivery of groceries, FMCG products, fruits and vegetables and has recently forayed into the delivery of milk and breakfast staples in the morning.

The Big Basket journey has been chronicled in Saying No to Jugaad, a book that recounts the journey of the startup, penned by Big Basket’s HR head TN Hari and analytics head MS Subramanian.

They point out, “This is not just a book of tips that takes a look at what went right for Big Basket and an attempt to build our brand. We have attempted to tell the story of the company and have focussed on the people behind its success as well.”

Talking about the company and its future plans, Hari says, “In terms of numbers, we have seen a huge uptick in users in all our categories. We fulfill more than a lakh orders every day and have about 10 million customers. We are focusing on BB Daily (door delivery of milk and staples) and BB Instant (kiosks that offer a wide variety of products) as key engines to drive growth.”

The company is also looking to offer options for more delivery slots and quicker delivery for customers.

When Big Basket launched Express Delivery in 2016, allowing customers to get items delivered within two hours, only 150 SKUs (Stock Keeping Units) out of the total 25,000 SKUs held by Big Basket, could be delivered in this time frame. “We now have more than 6,000 SKUs that are available in this category. More than 80% of daily essentials are available on the platform,” points out Hari.

On the other hand, BB Instant, essentially kiosks stocking a wide range of products, is also seeing a huge spurt in demand.

The company has installed nearly 500 kiosks across the country spread across 250 locations, that is topped up, based on demand. While the kiosks installed in apartment complexes focus on staples and so on, the ones installed in offices have snacks, cold drinks and eatables.

Move towards private labels

As Big Basket ups its scale, it is also increasing its focus on private labels. “Private labels make up about 40% of our inventory. We look at customer demand, the market size, the key players involved before setting up a private label. For instance, while most of our vegetables and fruits are from our private labels, we do not have private labels in toothpaste, shampoos and other essentials. Going forward, we think private labels are going to be very important in our journey.” Hari points out.

Big Basket believes in a farm to fork model, especially in the fruits and vegetable space. The company says that it has tied up with more than 8000 farmers from across the country, offering them help in the harvest season and collecting fresh produce from them at more than 35 collection centres across the country.

Ongoing offline

Exponential growth notwithstanding, e-commerce firms in the grocery space in India have often faced multiple issues, with many such as Pepper Tap, Local Banya being forced to shut down. Has Big Basket ever considered setting up offline stores?

ww The duo is circumspect, “We have had many discussions about this, however, we felt that this is not the best time to set up an offline store. We are comfortable in the online space, have a good supply chain and are looking at focussing on our areas of strength.”