Big Basket

The online grocery space in India has accelerated due to the increasing penetration of internet
in millions of households across the country, rise in smartphone usage, enhanced customer
comfort and trust in e-tailing and a better value for money for customers in online vs offline
stores. Besides, availability of value for money products, better savings vs offline stores and
cashback led by subscription-based programmes further ensure affordable pricing and
scheduled delivery to make this space exciting. Big Basket is one of the largest online
grocery super market in India. It was founded in 2011 by Hari Menon, VS Sudhakar, V S
Ramesh, Vipul Parekh and Abhinay choudari. It has its headquarters in Bengaluru. It operates
in more than 30 cities in India. Big basket offers variety of products ranging from fresh fruits,
vegetables, Food grains, oil, masala, packaged snacks, beverages, household supplies,
healthcare products. It has more than 20000 products and 1000 brands in its catalogue.
Customers order groceries through online website which will be delivered to their doorstep.
Bigbasket has a valuation of 1.8 Billion dollars. It has reached unicorn status. The investors
include Alibaba Group, Abraaj 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.

Basket has grown by leaps, with direct presence in major tier 1and tier2 cities with a network
of 40 warehouses, delivers around 150,000 grocery orders a day and another 135,000 orders
in its fresh milk business under BB Daily. The company has consolidated its operations in a
sprawling building at a posh business park in Bengaluru. It employs around 25,000 people of
which 70 per cent are direct employees.

They currently offer services in Bangalore, Hyderabad, Mumbai, Pune, Chennai, Delhi,
Noida, Mysore, Coimbatore, Vijayawada-Guntur, Kolkata, Ahmedabad-Gandhinagar,
Lucknow-Kanpur, Gurgaon, Vadodara, Visakhapatnam, Surat, Nagpur, Patna, Indore and
Chandigarh.

Objectives

1.Since there is a lot of scope of online grocery in the upcoming future, finding out the
bottlenecks can help us plan out a suitable model to work with so the supply chain runs
smoothly.
2. We wish to look in depth the scope of entering in tier 2/3 cities with respect to the
operations. We plan to focus on Location Planning and Analysis, Inventory Management,
Supply Chain Management, Strategic Capacity Planning for products and services.

3. BB daily which is their new arena and has come up in 2018 currently serves in 10 cities
only. We would look into expanding its operations to various other cities by suggesting a
suitable model with respect to the inventory management.

Rationale-

According to newspaper reports, Mr HariMenon has plans to make Big Basket a profitable
company in the next 2 years. Since after the pandemic, the scope of online grocery shopping
has increased manifold the tier2 and tier3 cities hold a lot of potential. By extensive
secondary research we got data and various other local players in the same segment so we
thought it would be good opportunity to connect our theoretical concepts of operations and
supply chain management. Since some cities will be a completely new area to enter, our
approach would be fresh and it would give us a lot of flexibility to add new ideas of ours.

Methodology- First we will look into the issues then look at the various potential threats in
the new market.

Issues

The cost of delivery outside the major cities is still too high, and while companies are
experimenting with different ideas, including tying up with kirana stores, no firm has worked
out a viable business model.

Capital Intensive
Since perishables were supplied, a same day or next day delivery was required
City-specific model had to be followed
● More investments were required in:
○ Warehouses & Distribution Centres
○ Logistics for Home Delivery Services
○ Managing Technology

Potential Threats
BigBasket and Grofers seem unaffected by JioMart’s entry, that may change soon. The
grocery category with its inherent low margins, supply chain complexities and massive size
will require e-commerce firms to pump in tens of billions of dollars in capital over the
coming years. Reliance, Flipkart and Amazon are all rapidly increasing their focus and
investments. Others like D-Mart and the Tata Group are planning to enter. Despite the size of
the grocery market and the low online penetration in the category, the e-grocery space could
soon become crowded.
Big Basket has plans to expand its operations to Tier 2/3 cities. There are various online
grocery stores present in various tier 2 cities
Example
Flipfresh, Hubballi-
Launched under Shaandhaar E-Commerce Pvt. Ltd. at Hubballi, Karnataka’s second largest
city after Bengaluru, Flipfresh serves fresh vegetables, fruits, groceries, and household items
to the online shopper. Founded by Amruthashva T, Suresh Nekkanti, and Manjunath
Najaladinni, Flipfresh follows inventory model. Based out of the Tier 2 city, Flipfresh buys
fruits and vegetables directly from the farmers in and around Hubballi. This benefits farmers,
as there are no middlemen, and customers as they get access to fresh products.
ShopitDaily, Indore Launched in August 2014, ShopitDaily serves in Indore, and Vadodara
with more than one lakh orders per month. It recently launched in Bengaluru too. ShopitDaily
offers a 90-minute-delivery proposition to customers within 25 kilometres of city limits. The
service also caters to canteens at corporate houses and companies along with retail segment.
Apart from online, the service can be availed over phone and WhatsApp. Co-founded by
Abhishek Bhatt and Saurav Shrivastava, it is targeting Tier II cities like Bhopal, Udaipur,
Dewas, Ujjain, Surat, Rajkot, and Jaipur.

BigBasket, Grofers, or Amazon – have not entered Kerala for online grocery yet.
Although Kada has not scaled outside Thiruvananthapuram, the company offers more
than 10,000 products through the inventory model.