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BigBasket - Success Story of India's Largest Online Grocer

Online grocery shopping is fast gaining popularity among Indians. According to the recent 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 BigBasket.

Founded in 2011, by the dot-com bubble survivors - V.S. Sudhakar, Hari Menon, V.S. Ramesh, Vipul Parekh, and Abhinay Choudhari, Supermarket Grocery Supplies Pvt. Ltd., trading as BigBasket, is a household name soon after it came to existence.

Headquartered in Bengaluru, BigBasket is currently known as India's largest online grocer receives over 150,000 orders per day.

With the recent deal, Tata Group became the owner of BigBasket by acquiring a majority stake of 64% in the company. BigBasket's valuation rocketed to around $1.85 billion, as of May 2021. Tata Sons have acquired a majority stake in BigBasket, putting the Indian conglomerate in a direct race with e-commerce players Amazon, Walmart, Flipkart, and Reliance Industries. The stake was bought by Tata Digital Limited, a unit of Tata Sons. India's antitrust body had in March approved the acquisition of up to a 64.3% stake in BigBasket by Tata Digital.

BigBasket is into delivering everyday cooking essentials like ghee (clarified butter), diced coconut, fragrant basmati rice, and more, amounting to a total of over 40,000 items, along with other household products ranging from bread to laundry detergents for the customers to shop from. The company gets all of them delivered to their doorsteps. The target motive of the company is to enable the ease of grocery shopping online to avoid traffic and the drudgery of supermarket visits.

To explore new opportunities, the company has also launched 3 new businesses - BB Daily, BB Instant, and BB Beauty.

BBDaily is a subscription-based service that allows customers to order milk and fresh groceries. With this platform, the customers have to place the order before 10 PM, and they eventually get the goods delivered between 5 AM - 7 AM the next day.

BB Instant is BigBasket's unmanned vending machine that is mostly available in corporate offices, tech parks, and apartment buildings in Tier I cities.

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

BigBasket has also launched Fresho stores, which is currently serving as the first offline retail store of BigBasket that has already been opened at Basaveshwar Nagar in Bangalore. These BigBasket stores are technology-driven, self-service stores for the customers.

All of this began when the BigBasket 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 garnered relevant experiences in eCommerce when they had created 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 then was their Eureka moment.

BigBasket used to fulfil its orders by purchasing products from Metro Cash and Carry stores, prior to setting up its first warehouse.

BigBasket - Business and Revenue Model

BigBasket’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, and high-end consumer products, to name a few. Also, the company offers a lower price point for staples and fruits and vegetables. They also provide idli/dosa batter on their online platform, which is very rare and does not have a lot of competition.

Moreover, on the B2B side, BigBasket 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 the 'inventory model' and hyper-local model.

Under the inventory model, the company buys products from leading suppliers like P&G, HUL, mills, farmers, etc., stores the products in warehouses, and supplies the same to the customers on order. In the case of the perishable goods, BigBasket further has tie-ups with local farmers and suppliers from whom it procures the goods as per orders and supplies the same to the customers.

Under the 'hyper-local model', BigBasket has tie-up with 2000+ grocery stores across India to deliver products within one hour from the neighbourhood.

With the opening of its physical store, Fresho, BigBasket is also a step ahead in the physical grocery space, which is soon expected to be a revenue generator for the company.

BigBasket - Startup Challenges

One of the main challenges of any startup in India is getting the customers to try the service first since the resistance level is really high. This is followed by retaining these consumers despite all the other factors in the market like competitors, local vendors, and buying habits, which were there for BigBasket too.

Also, since it 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 BigBasket and start using its services.

BigBasket - Funding and Investors

To date, BigBasket has raised a total of $1.3B in funding over 19 rounds. The latest funding for the company was raised on June 2, 2022, when BigBasket raised Rs 350 crore ($45.10 mn) from Supermarket Grocery Supplies, the holding company of the grocery unicorn. As per the reports, BigBasket had previously allocated 3.5 crore shares at a value of INR 100 per share to Supermarket Grocery Supplies on May 24, 2022. Supermarket Grocery Supplies is currently a Tata-owned company. Tata Digital owned a majority stake in Supermarket Grocery Supplies when it acquired majority stakes in BigBasket in May 2021. Tata Digital had already invested twice previously in the company including the $200 mn investment at the time of the acquisition, and with this investment, it becomes its 3rd investment of Tata.

The previous round dated April 13, 2022, infused $131 mn in the company. The grocery eCommerce platform saw this funding round after a long time since its previous round dated April 15, 2020, from Debt Financing.

Recently, the Commission of India approved Tata Digital's acquisition of BigBasket. Tata Group is believed to have acquired a 64.3% stake in the grocery delivery unicorn BigBasket. The deal is estimated to be $1.2 Billion, giving BigBasket a post-money valuation of over $2 Billion.

BigBasket - Acquisitions

Big Basket has made 6 acquisitions to date. Their most recent acquisition was of Agrima Infotech, which the company acquired on February 19, 2022. The Tata owned-online grocery delivery platform has acquired the enterprise business segment of the Kerala-based deep tech company. This deal would allow the company to implement the unique computer vision technology platform, Psyight, at the self-checkout counters of the retail stores of BigBasket. Psyight behaves as a food recognition platform that is powered by the all-new computer vision technology to differentiate raw, cooked, and packaged food items, which will help its parent ahead.

DailyNinja was last acquired startup by BigBasket and the deal was materialized on Mar 24, 2020.

In June 2015, the company acquired 'Delyver', an online platform that connects offline retailers with customers in a neighbourhood. 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. On October 19, 2018, Big Basket announced the acquisition of the Bangalore-based startup 'Morning Cart'. Morning Cart is a daily essential ordering platform.


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