According to Crisil, online grocery in India is expected to grow between 65-70% annually to $1.4 billion by 2020. According to market intelligence provider Kalagato, BigBasket leads the online grocery market with a 35.2% share followed by rival Grofers at 31.5% and AmazonNow at 31.2%.
Bangalore-based BigBasket was founded in 2011 by Abhinay Choudhari, Hari Menon, VS Sudhakar, VS Ramesh, and Vipul Parekh as an online grocery store. Prior to BigBasket, Hari, Vipul, and Sudhakar had started an e-commerce site Fabmart.com in 1999, but it was well ahead of its time. Internet penetration in India was as low as 0.27% in 1999 compared to 18% in 2014. So, they pivoted to retail with Fabmall, scaling to a network of 210 stores before being acquired in 2006 by Aditya Birla Group. In 2011, when e-commerce was taking off with the likes of Flipkart, they got back together with Sudhakar’s brother Ramesh and Abhinay Choudhari, who was running an online grocery business called Shop As You Like.
In 2012, BigBasket expanded to Mumbai and Hyderabad. It crossed the $1 million revenue milestone in mid-2013. In 2014, it expanded to Chennai, Pune, and the National Capital Region, with a warehouse in each city. It also got actor Shahrukh Khan to be its brand ambassador in 2015.
In 2016, BigBasket expanded to Kolkata and Ahmedabad and 17 tier II cities. It also launched a 90-minute express delivery service to cater to perishables. It has also launched its B2B food-service segment called HoReCa (Hotels, Restaurants and Caterers), which is expected to contribute 15% of the annual turnover in the near future.
Today, BigBasket has over eight million customers across 30 cities. It offers slotted deliveries where users can schedule the most convenient delivery slot. It also offers Express Delivery in tier-1 cities where orders are delivered within 90 minutes.
Unlike other e-commerce vendors, BigBasket.com was focusing on groceries including fresh produce and staples. The founders’ experience with Fabmart and Fabmall helped and they focused on building private brands for groceries, where the margins could be as high as 30%-40%. Today, it owns brands Fresho for fresh produce, bakery, meat, cut vegetables, batter, and cookies; Royal and Popular for staples; Tasties for coffee and snacks; and Happy Chef for gourmet sauces, dips and ready-to-cook meal kits. It also sells its private brands through about 1,000 neighborhood stores in eight cities.
Direct sourcing from farmers is a key strategy for BigBasket. It works directly with 1,800 farmers and aims to increase it to 3,000.
In October 2018, BigBasket acquired e-grocery startup RainCan to strengthen its micro-delivery operations. It has rebranded the RainCan app as BBdaily, a subscription-based service for early morning delivery of household essentials such as bread, milk, and fruits and vegetables. Founded in 2015 by IIT Bombay alumni Abhijeet Kumar and Munendra Singh, RainCan had raised close to $1 million from angel investors including Prabodh Agarwal, Aniruddha Malpani, Ajeet Khurana, and Nikunj Shah.
BigBasket has two registered operating entities – its B2B segment or wholesale arm Supermarket Grocery Supplies, and the online grocery portal Innovative Retail. For FY 2018, the wholesale segment revenue grew 35% to INR 1,583 crore ($226 million) while net losses narrowed by 52% to INR 310 crore ($44 million). Innovative Retail segment revenue grew 29% to INR 1,410 crore ($201 million) and net losses reduced by 6% to INR 179 crore ($25 million) in FY 2018.
BigBasket has raised over $885 million from investors including Abraaj Group, Alibaba Group, Ascent Capital, Bessemer Venture Partners, Brand Capital, Helion Venture Partners, ICICI Venture, IFC Venture Capital Group, LionRock Capital, Paytm Mall, Sands Capital Management, Sands Capital Ventures, Trifecta Capital, and Zodius Capital. Its latest round of funding was held in February last year when it received $300 million from Alibaba Group at a valuation of $900 million. In September 2017, it had raised $280 million in a round led by Alibaba Group and Paytm Mall at an estimated valuation of $600 million -$800 million.
The food and grocery market accounts for about 70% of the retail market, which is why e-commerce giants Amazon and Flipkart are eyeing it. Within just two years of launching AmazonNow for e-grocery, Amazon is already close to the leaders BigBasket and Grofers. Despite the competition heating up, it is interesting to note that BigBasket has not lost sight of the big picture and that its losses have reduced by 52%.
What is your experience with online grocers like BigBasket? What features do you think BigBasket should add to make it more attractive?