How Big Basket Became India's Largest Online Grocer

Online grocery shopping is fast gaining popularity among the Indians. According to a Redseer report, India's online grocery retail market is all set to touch $10.5 billion by 2023. A company that holds a huge share in this fast growing market is Big Basket. Started in 2011, by dotcom bust survivors V.S. Sudhakar, Hari Menon, V.S. Ramesh, Vipul Parekh and Abhinay Choudhari, Big Basket today is the India's largest online grocer that receives over 100,000 orders per day.

Big Basket Highlights

Startup Name Big Basket
Headquarter Bangalore
Founders V.S. Sudhakar, Hari Menon, V.S. Ramesh, Vipul Parekh & Abhinay Choudhari
Sector e-commerce
Founded October 2011
Parent Organization Supermarket Grocery Supplies Pvt Ltd
Website bigbasket.com

About Big Basket
Big Basket - Founder / CEO
How was Big Basket Started
Big Basket - User Acquisition
Big Basket - Revenue Model / Business Model
Big Basket - Startup Challenges
Big Basket - Competitors
Big Basket - Funding and Investors
Big Basket - Acquisitions
Big Basket - Growth / Revenue
Big Basket - Future Plans

About Big Basket

Big Basket is into delivering everyday cooking essentials like ghee (clarified butter), diced coconut and fragrant basmati rice and over 18,000 other items from bread to laundry detergent for their customers to shop from and get it delivered at their doorstep. Big Basket's target motive is to enable the ease of doing grocery shopping online to avoid traffic and the drudgery of supermarket runs.

To explore new opportunities, Big Basket has also launched 3 new businesses BB Daily, BB Instant and BB Beauty.

BB Daily is a subscription based service that allows customers to order milk and fresh groceries. Customers has to place the order before 10 PM, and get the goods delivered with 5AM - 7AM the next day.

BB Instant is Big Basket's unmanned vending machines that are mostly available in corporate offices, tech parks, and apartment buildings in Tier I cities.

While BB Beauty, that allows the consumers to choose from a wide range of beauty and personal care products and order online.

Big Basket - Founder / CEO

Big Basket was founded by V.S. Sudhakar, Hari Menon, V.S. Ramesh, Vipul Parekh and Abhinay Choudhari in 2011. Prior to Big Basket, the founders also founded Fabmart.com, an online platform that sold books, toys, and groceries in the year 1999. Fabmart was sold to a grocery chain in 2006.

Big Basket CEO Hari Menon comes with a vast experience in diverse fields. Prior to Big Basket Mr Menon was the CEO of Indiaskills, the Vocational Education joint venture of Manipal Group with City & Guilds, UK. An alumni of BITS Pilani, Hari Menon also worked as the Country Head at Planetasia, one of India’s first Internet services businesses. Hari also held top positions with IT majors like Wipro Infotech.

Big Basket co-founder V S Sudhakar was the CEO of Planetasia. He has vast experience of working in the IT sector.

V.S. Ramesh is the Head of Logistics & Supply Chain at Bigbasket. An Electronics Engineering graduate from Karnataka University, V.S. Ramesh has over 21 years of experience in the Indian Navy handling Operations and Logistics.

Vipul Parekh is the Head of Finance & Marketing at Bigbasket. Vipul is an alumni of IIM Bangalore, and worked with Peepul Capital, a leading Private Equity Fund as an investment Director. He also worked  as business development head in the Wipro Infotech Group.

Abhinay Choudhari is the Head of New Initiatives at Bigbasket. Abhinay is an IIM Ahmedabad alumnus. Besides working with leading IT companies  like iGATE & Infosys, Abhinay also founded Stylecountry.com, one of India's first online fashion retail stores. Stylecountry.com had to be closed down as it did not turn out to be profitable.

How was Big Basket Started

All of this began when the Big Basket founders decided to exploit the experience they got post the massive failure of the dot com bubble. Hence, they decided to create a unique website that was never done before. All the founders of Big Basket had relevant and recent experience of the e-commerce when they had created Fabmart.com. Fabmart.com was an online platform that sold books, toys, and groceries in the year 1999. Back then, only within a few months, they had realized that not just our country but the whole world was not ready to take this buzz of digitization.  In the year 2006, Fabmart was merged with a brick and mortar grocery chain and the founders ended up selling their startup for a lump sum amount.

Then came the golden year of 2011, when the team reunited and started re-evaluating the idea of again coming up with something new and exciting. Despite all the criticism they had received back in 1999, they stood very strong on the fact that the time to do something that’d put them on the map was then. In 2011, the smartphone market was booming and anything and everything was available except groceries, of course. And that, right there was their Eureka moment.

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Big Basket - User Acquisition

An interesting strategy that Big Basket follows to attract customers is that, the company keeps into account the varied needs and different shopping habits of its customers belonging to different cities. The amount of attention the founders paid to little details put them in a competitively better position. The Big Basket team did their planning city wise. They increased the leafy greens numbers in Mumbai, supplied a special kind of rice (called Sona Masoori) in Bangalore and went as far as providing eight different kinds of eggplants to picky customers. All in all, Big Basket ensured their quality was nothing short of perfection.

Timely delivery is the essence of online shopping hence the team put a focused approach to this. They devised a model of customized software that automatically guides drivers to their destinations and helps the company achieve a near-perfect on-time rate. Late deliveries earn customers a 10 percent discount. Missing items are refunded on a cost that is 50 percent of whatever the item cost is.

Big Basket - Revenue Model / Business Model

Big Basket’s private label business is driven by lower prices and higher margins. Roughly 35% of the revenue comes from private labels. The aim here is to fill the gap in distinct categories like organic food, high-end consumer products, to name a few. Also, the company offers a lower price point for staples and fruits and vegetables. Big Basket also provides idli/dosa batter on their online platform which is very rare and does not have a lot of competition. Moreover, on the B2B side, Big Basket serves its private-label to about a thousand Kirana stores, huge corporates, and HoReCa (hotels, restaurants, cafes).

Regarding Big Basket's Business Model, Big Basket follows both a 'inventory model' and ‘hyper-local model’.

Under the inventory model, Big Basket buys products from leading suppliers like P&G, HUL, mills, farmers, etc., store the products in warehouses, and supplies the same to the customers on order. While in case of perishable goods, Big Basket has tie ups with local farmers and suppliers from whom they procure the goods as per order and supply the same to the customers.

Under the 'hyper-local model' Big basket has tie-up with 2000+ grocery stores across India to deliver products within one hour from the neighborhood

Big Basket - Startup Challenges

One of the main challenges of any startup in India primary includes getting customers to try the service first since the resistance level is much higher. This is followed by retaining these consumers despite all the other factors in the market like competitors, local vendors, and buying habits. Also, since Big Basket was one of a kind startup dealing with groceries which was never the case before, it took a while for the consumers to place trust in a brand like that and start using their services.

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Big Basket - Competitors

Despite growing at an increasingly increasing rate, Big Basket faces cut-throat competition in the market. Major competitors of Big Basket are startups like LocalBanya, Sequoia backed PepperTap and SoftBank funded Grofers. Though these players are acquiring strong market standing with the time, Big Basket tends to stand fit and fine win the market with its large and ever-increasing consumer base.

Big Basket - Funding and Investors

To date, Big Basket has raised  close to $1 billion. In the year 2019, it raised $150 million in its Series F round from South Korea’s Mirae Asset Global Investments, the UK government’s development finance institution CDC Group, and the Alibaba Group, and therefore ended up joining the elite unicorn club at a valuation of $1.2 billion.

This funding round came right in about 18 months after Big Basket raised a massive amount of $300 million from Sands Capital, International Finance Corporation, Abraaj Group, and Alibaba. But the interesting part is that this is the first-ever investment in an e-commerce company by Mirae Asset Global Investments which is an asset management company in South Korea. Here is the details of the funding raised by Big Basket till date -

Date Stage Amount Investors
March 2012 Series A $10 Million Ascent Capital
April 2014 Bridge Round $3 Million Singapore-based private investor
September 2014 Series B $33 Million Helion Venture Partners
August 2015 Series C $50 Million Bessemer Venture Partners
March 2016 Series D $150 Million Abraaj Group
March 2017 Debt Financing $6.9 Million Trifecta Capital Advisors
September 2017 Series E $280 Million Alibaba Group, Paytm Mall
October 1, 2017 Venture Round $ 5 Million Bessemer Venture Partners
October 10, 2017 Debt Financing $838.1K Trifecta Capital Advisors
October 25, 2017 Venture Round $5 Million Helion Ventures Partners.
February 2018 Series E $300 Million Alibaba Group
January 2019 Venture Round - Growth Story
May 2019 Series F $150 Million Mirae Asset-Naver Asia Growth Fund
July 2019 Debt Financing $14.5 Million Trifecta Capital

Big Basket - Acquisitions

Big Basket has made 5 acquisitions till date. In June 2015, Big Basket acquired 'Delyver' , an online platform that connects offline retailers with customers in a neighborhood. In October 2018, Big Basket acquired 'Raincan' a subscription based service provider for morning and breakfast essentials, headquartered in Pune. In October 2018 itself, Big Basket also acquired 'KWIK24' a company that manufactures and designs smart vending machines. In October 19, 2018, Big Basket announced acquisition of Bangalore based startup 'Morning Cart' . Morning Cart is a daily essential ordering platform. Big Basket's latest acquisition is that of hyper-local delivery platform 'DailyNinja' in March 2020.

Big Basket - Growth / Revenue

  • Aggressively present in over 26 cities of India
  • Serving to 125 million customers all around the country
  • Endorsed by the most celebrated celebrity of Bollywood- Shah Rukh Khan
  • Aims to double sales each year to hit $2 billion by 2020
  • Bigbasket has generated Rs 3,200 crore in revenue in FY19.
  • Partnered with the Chinese brand - Alibaba

Big Basket - Future Plans

The company is aiming to generate a revenue of almost INR 6,300 crore in the year 2020. Big Basket has strong plans of not only retaining its post as the largest grocery delivery platform in India. So the plan is to set up warehouses in all the 26 operating cities of India to bring down the delivery time to 3 hours. By 2022, the plan is to grow to 60,000 SKUs and double the farmer base to 5000. Further, the plan also includes expanding Big Basket’s  private label range by using Alibaba’s muscle to source and import a range of merchandise to six times that of large-format supermarkets.

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