Big Bigger Biggest
BigBasket has managed to
become India's largest egrocer in a short span
For the founders of egrocer
Big Basket, this is part II of their dotcom dreams. The first was in the 1990s
when they started Fabmart.com, India's first online store that began by selling
books and music. It was an idea ahead of its time. The founders struggled,
persevered, and along the way pivoted the model and rebranded it Fabmall to
include an offline component in the form of 210 stores. Eventually, they sold
out to AV Birla Group's retail venture More in 2006. The cofounders then went
their separate ways, taking up corporate jobs and chasing other dreams.
In 2011, they regrouped to
start BigBasket. Expectedly, this time they were more seasoned, resilient,
determined, meticulous and a lot more confident. BigBasket comes with a
pedigree that few other egrocers in the country can lay claim to.And that's
perhaps a reason for the startup managing to become the country's largest
egrocer by revenues in a short span.
Cofounded by VS Sudhakar,
Hari Menon, Vipul Parekh, VS Ramesh and Abhinay Choudhari, BigBasket has a bevy
of top-notch inves tors including Bessemer Venture Partners, Helion Ventures,
Zo dius Capital, Ascent Capital, GrowthStory and LionRock Capital. It has
raised `1,080 crore so far and claims a valuation of `2,500 crore. The startup
which logged a turnover of `220 crore in 2014-15 hopes to achieve a top line of
`1,000 crore in 2015-16. From a staff count (direct and indirect) of over
7,000, Menon says it could cross 15,000 by next year end.
By 2017-18, BigBasket hopes
to break even, even as it expands operations from 12 cities currently to 30 by
then. “In three years, we will be among the top three grocery players in the
country with a turnover of $1.5-2 billion,“ says cofounder Hari Menon. It is
audaciously hoping to touch a monthly revenue run rate of `1,000 crore by March
2018.
There are many reasons why
BigBasket is so confident and ambitious. It operates in a space that has huge
potential. India's retail industry is pegged at $500 billion. Grocery is the
biggest chunk pegged at $350 billion. The segment is dominated by neighbourhood
kirana stores, despite the decade-long presence of organised retail, which is
under 10% of the total. Clearly, it is a large opportunity that the startup is
chasing. Grocery shopping while necessary is universally considered a chore
that most households would prefer not to spend time on.
“There is a need and a huge
opportunity in the home delivery space,“ says Menon.Understandably, it is a
crowded space with many online national-regional players like Grofers, ZopNow,
PepperTap and MeraGrocer pulling out the stops. The big etailers like Amazon
and Snapdeal too are entering the fray. Snapdeal offers products from Godrej
Nature's Basket. “Like telecom, India will leapfrog. With online, we will
bypass organised retail,“ says Sanjeev Aggarwal, cofounder, Helion Venture
Partners, who is on board of BigBasket and one of the investors.
A few things differentiate
BigBasket from the rest of the pack. This is the only inventory-led player that
has invested heavily at both the back and front ends. “Grocery is a complex,
process-driven sector that requires a deep understanding and a high execution
focus to remain in business,“ says Menon. Adds Aggarwal: “They own the
inventory. And by cutting out the middle men, they are the only online player
with strong unit economics.“
BigBasket is further
building on its strengths. Making its front end and back end more efficient is
a top priority. For ex ample, three years from now it is hoping to use robotics
and warehousing automation tools that will make its backend more efficient. It
has rolled out a new service called BB Express that assures delivery within 60
minutes of placing an order. In the next two months it hopes to take the
service to eight of the 12 cities they are present in.Even their 12-city
presence will go up to 27 by March.
To have a better grip on
the last mile, BigBasket recently acquired Bengaluru-based delivery startup
Delyver. The company is investing heavily in the supply chain and is setting up
16 collection centres close to farming centres. It is also building eight large
warehouses in the big cities. To further improve its margins, the egrocer is
laying a thrust on private labels, which today account for 32% of sales; Menon
hopes to take it to 40% within a year.
BigBasket has signed up
Shah Rukh Khan as its brand ambassador and has rolled out a high voltage ad
campaigns to strengthen its brand. Investors are betting that BigBasket's hard
work and Khan's magic will help BigBasket coast into the billion dollar league,
not just in valuation but in something more tangible -revenues.
ETM3JAN16
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