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BigBasket looks for new avenues to reach customers

Nov 26, 2018 by Avanish Tiwary
BigBasket looks for new avenues to reach customers

It’s 2 pm in Bengaluru. The regional managers of Big Basket, the Bengaluru based online grocer, are busy filling the refrigerator-like vending machines the company has installed in apartments and offices around the city.

The automatic vending machines are operated via Big Basket’s standalone app, BB Instant. The vending machines can store around 50 SKUs including dairy, onions, packet juice etc. “We replenish the products around 4-5 times a day,” a regional manager in Bellandur said.

“The kiosks are conveniently put up in the common area of the apartments. You can open the door using the app and take the products. The cash will be deducted from your payment system once the door is closed. It’s like having a small convenience store that’s open round the clock. On top of that, the kiosk comes with all the temperature zones,” said V S Sudhakar, co-founder, Big basket.

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The fight to remain on top

After attracting USD 300 million from Alibaba earlier this year- the highest funding till now- Big Basket is looking for new ways to reach customers.

“With competition coming from all sides, one of the key focus areas for us over the last year and a half has been to maintain the leadership position and remain a cut above the rest,” said Sudhakar. According to a Kalagato research, Big Basket has a 35.2% market share (as of March 2017) followed by Grofers and Prime Now (Amazon) at 31.5% and 31.2% respectively.

Sudhakar said Big Basket does a monthly business of Rs 300 crore (USD 42 million), up from Rs 200 crore (USD 28 million) in February. “The goal is to bump it up to Rs 500 crore per month (USD 70 million) by June 2019,” he said.

Big Basket bought a controlling stake in smart vending machines firm Kwik24 in July and rebranded it as BB Instant. Big Basket has installed 25 BB Instant kiosks in Bengaluru, with 3,000 more to follow in the next six months.

“We will invest around Rs 25 crore in the BB Instant business. The kiosks will be installed across the country. Customers need not look beyond Big Basket as far as the grocery and household needs are concerned,” he said.

Fresh acquisitions

From the beginning of 2018, Big Basket has been on the lookout for “meaningful acquisitions to add value to the company’s product proposition.” Amid talks of Big Basket acquiring Gurgaon-based rival Grofers, it completed two acquisitions this year to expand its portfolio from delivering packed and branded grocery products to offering milk and vegetables.

In October, Big Basket completed the acquisition of Pune-based RainCan and Bengaluru-based Morning Cart to go into micro-delivery business. Branded as BB Daily, it currently operates in seven cities where it delivers milk and vegetables early morning.

Sudhakar said although the BB Instant allowed the company to have a physical footprint without investing much in the real-estate, the company really wanted to get into a new line of business that would enable it to reach customers in more than one ways.

The micro-delivery market has caught the fancy of many players due to its high repeat order potential. Bengaluru-based Daily Ninja- which deals in milk and grocery- raised an undisclosed amount from Matrix Partners India, Sequoia India and Saama Capital in September and USD 3 million from Saama and Sequoia in June this year.

Even e-commerce titans such as Flipkart and Amazon have their sights set on milk and vegetable delivery. In May, Amazon’s grocery business wing, Prime Now, expanded its portfolio to include vegetables and fruits. In October, Prime Now bought 49% stakes in Aditya Birla Group’s supermarket chain ‘More’ which owns 500 physical stores across India. The US-based retail giant is also in talks to buy stakes in Spencer’s Retail and Kishore Biyani’s Future Retail.

Grofers, after raising USD 61 million from SoftBank and Tiger Global earlier this year, closed its fresh vegetables section recently. Noida-based micro-delivery startup Mr Needs (milk delivery) has shut shop as well. Sudhakar said the low shelf-life of such products pose a big risk.

“Till now we have been selling the tetra pack milk, but fresh milk has a really low shelf life. We decided, if we want to get into this before the competition does, we must acquire companies who are already doing it. It would have taken us a long time if we had started doing it all on our own,” Sudhakar said.

Customers should order milk and vegetables from the BB Dalily app before 10 pm and would get fresh milk and vegetables delivered by 6-7 am next morning.

The average amount of transactions per month for Big Basket, claimed Sudhakar, is between Rs 1800 to Rs 1900, with a frequency of more than once in two days. “BB Daily users can order vegetables and fruits from the app as well which in turn adds to the average order value of the milk basket,” Sudhakar said. With already in the lead in terms of market share, Big Basket looks to get head and shoulders above the competition as swiftly as possible.

“We are going to be on a crazy speed now. We see BB Instant and BB Daily as two innovative and interesting methods to reach out to more customers,” said Sudhakar.

Avanish Tiwary

Avanish Tiwary is a Bangalore-based tech journalist. He focuses on emerging Indian startups and unicorns. He can be reached at avanish.tiwary@thepassage.cc.

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