Imagine you are preparing a special meal on a special occasion for which you carefully make a list, buy all the groceries required and start preparing it only to find later that you have forgotten to buy a key item and there is no time left for you to go to grocery shopping last minute!
Thankfully, with the advent of technology, there are a bunch of online grocery retail apps which will bring anything you need in a matter of minutes with assured safety and quality.The online grocery market is thriving enormously in India as more and more customers are adopting online grocery purchases due to the convenience involved, the freshness of products, assured safety & quality, easy & faster delivery options, standard packaging, and easier payment methods and budget-friendly options. According to a recent Redseer report, India’s online grocery retail market is all set to reach $10.5 billion by 2023 and undoubtedly, BigBasket is one of the largest and undisputed online grocery delivery platforms in India.
Five co-founders namely, V.S. Sudhakar, Hari Menon, V.S. Ramesh, Vipul Parekh, and Abhinay Choudhari, who weredot-com bust survivors, co-founded Supermarket Grocery Supplies Pvt. Ltd. in the year 2011 under the trade name, BigBasket with its headquarters in Bangalore, India. Within a short period, BigBasket has marked its impression in the business industry and has become a household name. This online grocery delivery start-up reported business revenues worth$502.47 mn (Rs 3818.20 crore in FY20) and claims to fulfill more than 150,000 orders daily.
After receiving a funding of $150mn in a Series F funding round, the start-up achieved its unicorn status in the year 2019. After being acquired by Tata’s sons who acquired a majority stake of 64.3% in the business, the net valuation of BigBasket has reached around 2bn+ which made this start-up in direct competition with e-commerce players like Amazon, Walmart, Flipkart, and Reliance Industries.Read further to find out about the story of inception, founder& team, funding & investors, business & revenue models, key challenges faced, and plans for the business.
BigBasket- Story of Inception
The story of the inception of BigBasket is not of a young mind but a group of a skilled and highly experienced group of entrepreneurs. It goes back to the time when the co-founders faced a massive failure in its previous dot com bubble, namely creating Fabmart.com, which was an innovative online website that sold books, toys, and groceries in the year 1999, but couldn’t take off due to the inability of the masses to take the buzz of digitization. They decided to merge that business with a brick-and-mortar grocery chain in exchange for a lump-sum amount in 2006.
Despite all the criticism they received for this failure, they come up stronger with a will to create something innovative that could create a long-lasting impression.As they had already had enough experience in the e-commerce segment, they decided to create a unique website that was never even thought of.
They observed that in around 2011, the smartphone market was booming and everything except fresh groceries was available, which was their Eureka moment. Then came the fateful day of the year, when all the co-founders reunited and started reconsidering the idea of coming up with something new & exciting, again. Next, all the co-founders found themselves creating a unique & innovative online grocery platform that would offer fresh & quality grocery products all over India, which came to be known as BigBasket.
Therefore, the co-founders decided to receive orders and fulfill them by purchasing products directly from Metro Cash and Carry stores, till its first warehouse was opened in Bangalore as the Founder & CEO, BigBasket states” These stores were being operated as their own warehouse at that point”.
Cut to the date, the Supermarket Grocery Supplies Pvt. Ltd. (under the trade name BigBasket) has been drawn from the idea of bigger shopping baskets at shopping retail stores that it intends to offer to its customers at the best quality & reasonable as the tagline states “Har Din Sasta” (Cheaper Every day!) delivered at their doorsteps.The BigBasket online grocery delivery platform has more than 40,000 everyday grocery products like ghee, sugar, diced coconut, fragrant basmati rice, etc. apart from other household products such as laundry detergents & cleaners, dairy items, snacks & beverages, etc., and many more for consumers to choose and buy from.
BigBasket-Founders & the Team
In the year 2011, BigBasket was founded by five of its Co-founders namely – V.S. Sudhakar, Hari Menon, V.S. Ramesh, Vipul Parekh, and Abhinay Choudhari. Before this, they co-founded an online delivery platform, namely Fabmart that offered items such as books, toys, and groceries, which was sold to a grocery chain in the year 2006.
i. V.S. Sudhakar
The Co-founder of BigBasket, V.S. Sudhakar is an IT professional who held the position of CEO of Planetasia in the past.
ii. Hari Menon
Co-founder & CEO of BigBasket, Hari Menon completed his graduation from BITS Pilani, he went on to work for various businesses and holds vast experience in diverse fields. Before joining BigBasket, he served in many important positions including CEO of Indiaskills, the Vocational Education joint venture of Manipal Group with City & Guilds, UK, and as Country Head at Planetasia, an internet-service business in India apart from some other key positions with IT businesses like Wipro Infotech.
iii. V.S. Ramesh
V.S. Ramesh is the Co-founder &Head of Logistics & Supply Chain at BigBasket, completed his graduation in electronics engineeringfrom Karnataka University. He holds an experience of over 21 years in the Indian Navy handling Operations and Logistics, before co-founding BigBasket.
iv. Vipul Parekh
Vipul Parekh is another co-founder & the finance & marketing head at BigBasket. After completing his studies at IIM Bangalore, he worked in crucial positions for top companies like Wipro Limited, Trinethra Super Retail Ltd., etc., and as the Investment Director in Peepul Capital Advisors Pvt Ltd., a leading Private Equity Fund. Before co-founding BigBasket, he also co-founded Fabmall with other co-founders.
v. Abhinay Choudhari
Abhinay Choudhari, Co-founder & previously the head of Newinitiatives for BigBasket. He is also an alumnus of IIM Ahmedabad and started his career with large IT Companies like iGATE & Infosys. Abhinay also founded one of the first online fashion retail store businesses in India, that goes by named Stylecountry.com, however, since the business didn’t turn out to be profitable, it had to be shut down soon.
However, after BigBasket was acquired by Tata Sons in May 2021, Abhinay Choudhari and Munendra Singh chose to exit the business to launch a new start-up venture of their own, which is claimed to be another venture to solve a common household problem in India, he made his silent exit in August 2021. In a parting speech, he said “I left BigBasket with an intention to build another business venture from scratch that will solve another bigger household problem as a result of “the start-up itch” that has also grown in past nine years.
BigBasket- Business & Revenue Model
The largest online grocery unicorn start-up, BigBasket primarily works on a B2B & B2C business model, and for flexibility in its services, has adopted an ‘inventory as well as ‘hyper-local model’ for its business. In its B2B business segment, it serves its customers ranging from private labels to thousands of Kirana stores, corporates, and HoReCa (hotels, restaurants, cafes) businesses. Besides, it also provides groceries to customers through its online platform.
Under its inventory model, the company purchases products from chief suppliers like P&G, HUL, mills, farmers, etc., and stores the products in its warehouses after which the products are packaged and supplied to customers. For perishable goods, BigBasket has entered tie-ups with local farmers and suppliers and procured limited goods as per the number of orders.
Likewise, for its hyper-local model, BigBasket has partnered with more than 2000 grocery stores in India with a promise to deliver goods within one hour from their neighborhood.
BigBasket private labels including brands Fresho and BB Royal help the business to achieve roughly 35% of its total revenues out of their lower prices, larger variety, and higher business margins. BigBasket also offers idli/dosa batter on their online platform, which is still rare and doesn’t have many competitors in the business.
BigBasket – Products & Services offered
Initially, BigBasket purchased goods from metro stores and later on started purchasing goods and storing the same in warehouses before the goods reach the customer. From one business warehouse, the business slowly expanded with at least one warehouse in every city and with the total count reaching 20+.”BigBasket currently boasts of being a 5000+ strong team company.
In 2021, BigBasket launched its offline grocery store, Fresho which offers fresh vegetables & fruits with its first branch in October 2021, which is shortly expected to be one of the key revenue initiator business segments.Sudhakar further described that such stores will be operational between 8 am to 9 pm till night as an extremely strategic business initiative.
Toexplorenew opportunities,the company has also further launched three innovative business services namely, – BB Daily, BB Instant, and BB Beauty.The new Commerce product will aim to deliver grocery products to the customers in 18-20 minutes within hyperlocal geography
i. BBDaily-RainCan, a daily essential supplies-based start-up which is subscription model, was acquired by BigBasket in 2018, and was rebranded as BBDaily.It is a subscription-based service that offers fresh groceries and dairy supplies to its customers daily. To avail of the services, customers need to place an order before 10 PM and will receive orders between 5 AM-7 AM.
ii. BB Instant-BigBasket offers unmanned smart stores for supplies such as snacks, beverages, fresh fruits, etc. through its smart vending machines which are available in Tier-I cities, corporate offices & tech parks, and Apartments buildings.
iii. BB Beauty-BB beauty platform offers beauty products to choose from a wide range of beauty & personal products to the customers
Big Basket- Customer Acquisition Strategies-
Presently, the Big Basket application has been accessed by more than 6 million users across the nation while the business is operational in around 33+ cities and is in further expansion mode. Some of the reasons behind the popularity & consumer trust include the following-
i. Unique Planning Arrangements-Interestingly, one of the key business strategies followed by BigBasket to attract its customers is through keeping an account of the frequent orders and offering products as per the shopping habits of the customers belonging to different cities. So, they planned and accordingly increased supplies of leafy greens in Mumbai and supplied a special kind of rice (i.e. Sona Masoori) in Bangalore, and even offered six different kinds of eggplants for picky customers, while ensuring their quality, which is nothing short of perfection.
ii. Timely delivery–Household groceries being the ultimate necessity for every household, the timely delivery of orders is an important attribute to attract customers while maintaining their freshness & quality. Thus, BigBasket adopted a focused approach towards ensuring timely delivery through a model of customized software that guides its drivers towards their destinations and thus helps them to achieve timely delivery. And not only this, delayed deliveries help the customers to earn a 10% discount and if any items are missing in the orders, payment refunds are made up to 50% of the item of the costs, regardless of their prices.
iii. UniqueStorage Arrangements-To assure a 100% guarantee of safety& quality, BigBasket has entered tie-ups with leading suppliers such as P&G, HUL, mills, farmers, etc. and after the receipt of supplies, they store goods in their own warehouses and make supplies following the orders. Starting from their one warehouse, now BigBasket has ensured at least one warehouse in each city where business is operational.
BigBasket- Funding & Acquisitions
BigBasket has to date, raised a total sum of around $1.3B over 18 funding rounds with the latest one being received on April 13, 2022, for a total sum of $131 mn from undisclosed investors. The FY21 was an eventful year for the business where it raised a sum of $11.5 mn from CDC Group in Series F funding round and around $60mn from a group of investors like Alibaba & CDC group was raised on April 8, 2020, through debt financing respectively.
In the year 2021 itself, the acquisition of BigBasket by Tata Group got finalized and approved by the Competition Commission of India (CCI) for an estimated sum of $1.2 Billion and a stake of 64.3% stake in the grocery delivery unicorn start-up business, making its valuation over $2 Billion.
Accordingly, the BBNow (instant & hyperlocal delivery platform of BigBasket) will be featured on the upcoming TataNeu app, along with other multiple apps of the brands (also acquired by Tata) such as 1MG, Curefit, and more.
Currently, the application is in its early phase of development on being developed would be in direct competition with apps like Dunzo, Grofers, and Swiggy, after being integrated into the BigBasket platform. In the coming days, BBNow is further expected to stock up on its best-selling essentials, which add to around 2,000 stock-keeping units (SKUs).
Speaking of Acquisitions, BigBasket has made the acquisition of six businesses to date, with the most recent one being Agrima Infotech, a Kerala based deep-tech on Feb 19, 2022 business that will help BigBasket to implement the unique computer vision technology platform, Psyight, that could be used for food recognition to differentiate between raw, cooked and packaged food items at the self-checkout counters of the BigBasket retail stores and will help its parent business ahead.
Before this, BigBasket acquired businesses such as DailyNinza (on Mar 24, 2020), Delyver an online platform that connects offline retailers with customers within a neighborhood (June 2015), a subscription-based service provider platform for breakfast essentials, Raincan, and a company specializing in manufacture and designing of vending machines KWIK24 in Oct 2018. Around the same time, it also acquired a daily essentials delivery online delivery platform based in Bangalore, Morning Cart on October 19, 2018.
BigBasket – Expenses & Revenues
The largest grocery delivery start-up in India recorded gross sales worth $1.1 billion (INR 8000 crore) with a 73% increase in operating revenues to reach Rs 6558 cr in FY21, resulting in an 80% growth from the previous financial year and is expected to keep growing forward after acquisition by Tata Group. Similarly, in FY20 it recorded a 36% growth in its revenues from FY19, reaching a sum of Rs 3818.2 crore as compared to Rs 2,802.6 crore in FY19.
However, since its business expenses are going through a rapid expansion mode, the expenses have also been increasing year on year. During FY19-FY21, the business operations expenses increased fromRs 3,365.2 crore to Rs 4,411.3 crores which indicated a 31% increase in expenses, which escalated to Rs 6983.57 crores during FY21.
The start-up also reported losses in FY19 & FY20, which were around Rs 562.6 crore and Rs. Rs 709.9 crores respectively accounting for 26% overall increase. However, the losses dropped to Rs.413.16 cr in the FY21 resulting in the improvement of the EBITDA margin of the business from -12.87% in FY20 to become -3.15% during FY21, which also indicates that the business might reach a positive EBITDA margin in FY22 and in coming years.
BigBasket- Competitors & Challenges Faced
i. Gaining Consumer attention & trust-A key challenge faced by BigBasket early on is to get the attention of its customers as the resistance level was higher, which was followed by retention of the consumers despite all other factors such as market competition, local vendors, consumer choices & buying habits, etc. for BigBasket.Also, since BigBasket was a kind of start-up dealing with groceries like household supplies & fruits & vegetables, which had never happened before, it took time to gain consumer trust regarding the safety & quality of products & start using their services.
ii. Data Breach Issues– BigBasket was said to face a massive data breach in November 2020 as the business allegedly leaked around 2 crores of user data on the dark web, for which it had to file a complaint in this regard with Cyber Crime Cell in Bengaluru. The cyber cell report suggested that the leaked data included names, email IDs, password hashes, contact numbers, addresses, etc, of the customers on the dark web.
In reaction to this, BigBasket stated, that they learned of the data breach at BigBasket and we are evaluating the extent of the breach & authenticity of the claim in consultation with leading cybersecurity experts and looking for immediate ways to contain it. For which, we also have lodged a formal complaint with the Cyber Crime Cell in Bengaluru and intend to pursue the matter vigorously.
BigBasket also assured that the data that is maintained on the platform is limited to email IDs, phone numbers, order details, and addresses only which could have been accessed by the hackers, and they’re so these are the details that could have potentially been accessed, and there is an adequate robust information security framework that uses best best-in-class resources and technologies for manage user information. Maintaining the security & confidentiality of its customers is its users are the top-most priority it doesn’t store any financial data and is positive about its financial data security. It will continue to proactively engage with best-in-class security experts to strengthen its system further in the future.
Despite its largest market share & tremendous success in the e-commerce retail industry, BigBasket is facing cut-throat competition in the market from start-ups like Pepper Tap, and Grofers(Blinkit). While some other major competitors of BigBasket include the following-
- Freshtohome
- Amazon
- Swiggy Instamart
- Dunzo Daily
- Flip kart
BigBasket-Future Plans
BigBasket allows hassle-free browsing of more than 18000 products under 1000+ brands and is available in all major cities across India with around 150,000 orders fulfilled each day.
With its novel BBNow instant platforms and with the advent of its first physical grocery store Fresho in Bangalore, BigBasket has achieved so much in these years but has so much to do in near future. It is working towards the expansion of its private-label rage through the use of Alibaba’s capabilities to source and import a range of stock which is six times greater than large-format supermarkets.
Founder &CEO, Hari Menon has stated that the business is in process of expanding such 800 offline stores across ten major cities in the country in the coming next five years with a revenue target of Rs 12,000 crore in sales. Besides, BigBasket is also gearing up its business by enhancing its daily business operations by opening more warehouses and reducing the effective time of delivery to three hours, increasing its Stock Keeping Units (SKUs) to up to 60,000 and twofold the farmer base to 5,000 in the Fiscal year2022.
For, BigBasket the future is meant to be bright & prosperous since the Indian masses have largely accepted & adopted BigBasket grocery platforms as the most simple, easy, and convenient method of receiving groceries which allows them to save money & save their time. All these steps being taken will only affirm its position as the largest grocery delivery player unicorn start-up of India that has revolutionized the manner of grocery deliveries in India and has brought ease & convenience to their lives.
