ONLINE GROCERY BUSINESS MODELS: OVERVIEW

The Indian online grocery industry largely works on four types of business models
mentioned below.

1. Inventory-based Model

This model requires the online grocery company to set up its own warehouse so as to
have more control over product quality and timely delivery. But considerable working
capital was required to set up a warehouse and run its own trucks and vans

2. Hyperlocal delivery model

This model requires the online grocery retailer to established local tie-ups with Kiranas
or convenience stores to deliver goods to customers which eliminated need for
warehouses, cold storage facilities and inventory management.

3. Mobile App-based Model

This model requires the companies to develop mobile apps and then tie up with local
vendors or Kirana stores.

4. Hybrid model

Here, a company with a brick-and-mortar structure carried out both online and offline
operations, similar to a franchising model.

BIGBASKET : BUSINESS PHILOSOPHY

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● Bigbasket zeroed in on three key areas, viz, customer focus, range of products and
technology usage. Its delivery process was sturdy and effective. It could deliver
items on the same day if an order was placed before noon.
● Bigbasket practised a customer-friendly, “no questions asked” customer policy. It
accepted returns of defective items without cross-questioning customers and
credited the refund to the customers’ accounts to be used towards future
purchases.
● The company also focused on creating a vast range of products to retain
customers. It made purchase easy which led to better customer loyalty.
● Technology had a major role in ensuring great customers’ experience of using
 Bigbasket. The introduction of Android/iOS mobile apps and the “smart basket”
feature, which forecasted their generic requirements online were some of the
significant technological changes.

BIGBASKET BUSINESS MODEL

Bigbasket has recently raised a funding of $150 million which it will use for marketing
activities, building infrastructure and building technology. The company has also shifted
its focus on the milk subscription business as well as on organic, gluten-free and
healthy products to contribute largely to its revenue.

Inventory-based Model

As Bigbasket’s business grew rapidly, it shifted to an inventory model for most of its
products. The company buys products from suppliers like P&G, HUL, farmers, mills etc
and piles up these stocks in its warehouses. To earn revenue, a small margin is added
to the cost price before handing them over to vendors. Most of its profits and revenue
depend on its private label products such as Happy Chef Gourmet ,Fresho, Royal
Organic and more.

However, for perishable products, to avoid the wastage, they use “just-in-time” model
(purchase-to-order) where they link with local farmers & suppliers, and it assists in
decreasing inventory price.

Hyperlocal delivery Model

Bigbasket has also joined hands with more than 2000 neighbourhood grocery stores
across India to deliver goods within an hour. This move has facilitated a substantial
decrease in wastage and also decreasing inventory price.

STRATEGIC GROUPS AND MOBILITY BARRIERS

Strategic group: A strategic group is a terminology used in strategic management that
groups together companies within an industry which have similar business models or
similar combinations of strategies.

The strategic group of online grocery industry in India can be mapped according to:
· Companies directly sourcing from the farmers
· Companies sourcing from different companies
· Companies sourcing from the local vendors
· Companies owning their own brands and farms.
· Companies on the basis of geographies

Mobility barriers: Mobility barriers are defined as the factors that obstruct the ability of
firms to enter or exit an industry, or to shift from one segment of the industry to another.
Mobility barriers therefore refers to a term which includes barriers to entry and exit and
also barriers to intra industry changes in market position.

The mobility barriers of on online grocery industry in India are::

• Huge investment in logistics and supply chain management
• Long-term commitments with the farmers across the country
• It takes a considerable amount of time in building grocery vertical

The reasons for performance differences between strategic groups:

• Branding of owned products is a major factor through which the companies
compete with each others (Fresho by Bigbasket and Happy Day by Groffers).
• On-demand vs subscription-based models differentiates various strategic groups.
• Bargaining power of the company which includes the negotiation with the farmers
from where they source their products.
• Geographical location in which the company serves.
• Expansion strategy: Merger & acquisition vs Franchise ownership.
 STRATEGIC GROUP MAPPING

Bigbasket focussed on reducing the pressure of grocery shopping for people and make
the weekends comfortable. Thus, Bigbasket has completely transformed the online
shopping experience for the users and has flourished to become one of the most
preferred platforms for shopping of grocery products for food providers.

MARKETING STRATEGIES

Big Basket mainly focused on its Digital Marketing Strategies. These are listed below-

● Search Engine Optimisation: Bigbasket tapped search engine optimization

services to improve its organic search rankings to attract maximum authentic
traffic on its website and establish its brand presence. They concentrated on
famous keywords like online grocery shopping, grocery online, online grocery,
grocery shopping online etc. and made these their target.
● Social Media Marketing: Bigbasket has established its strong social presence
and has leveraged various social media platforms for its inbound lead generation.

○ Facebook : With a massive following over 4,60,000 fans, the company

makes use of the Facebook page to engage with customers by promoting
various campaigns, posts which encourage homemade food, and offers
discounts and rebates.
○ Instagram : While on Instagram Bigbasket engages with the young
audience of 33,000 fans through creative content posts. It also posts
videos of many influencers, and advertises its various range of products
and other offers.

○ YouTube Marketing: Knowing the importance of video advertising,

Bigbasket owns a dedicated YouTube channel “Bigbasket.com” that
provides the consumers with up to date and best videos which act as a
guide on use of beauty and wellness products and for making viewers
conscious of the latest trends in society.