 |
| Image Credit: Big Basket |
Want to become a writer at Eat
My News? Here is an opportunity to join the Board of Young Leaders Program by
Eat My News. Click here to know more: bit.ly/boardofyoungleaders
Journey to the
Top
The founders of BigBasket experimented with the concept of an
online marketplace way back in 1999
when they launched Fabmart. But due to the lack of online infrastructure and
the subsequent dot-com bubble burst in 2000, things did not work out. They were
acquired by IndiaPlaza in 2006, and it was the e-commerce experience of
IndiaPlaza’s founders in all these years, which led to BigBasket’s roaring
success in the Indian market.
Decoding
the Business Model
While it initially started as a hyperlocal delivery service,
BigBasket has come a long way. Apart from shifting to a more scalable business
model, it has also ventured into newer spaces to derive maximum value out of
its customers. Wondering how? Well, it’s time to discuss business.
1. Switch to Inventory Model
BigBasket
started its operations using the marketplace model- it partnered with kirana
stores across cities and used to deliver from those stores to households, based
on customer orders.
But
as the customer base increased and economies of scale happened, they moved to
an inventory-led model for most of its products. In this model, the company
directly purchases products from suppliers like HUL, P&G, farmers, and
mills in bulk and stores them in their warehouses. This has increased their
profit margins and reduced their dependence on retailers. Additionally, it allows them competitive
pricing of their products, which local grocers cannot afford due to small
inventory holdings.
2. Private Label Products
They also
came up with their private-label products like Fresho, Happy Chef Gourmet, and
Royal Organic- over which they enjoy substantial profit margins. It helps them
to compensate for the wafer-thin margins of other products.
3. BBDaily
The company has started
subscription-based daily deliveries of milk and groceries in 10 major cities.
BBDaily is poised to have a huge potential and would increase the reliance of
customers on BigBasket while reducing their acquisition cost. Wider product
variety also means that the average spend per customer will increase.
4. Exceptional Customer Service
The customer is the most important part
of any business. BigBasket ensures it goes the extra mile to please its
customers by offering lucrative discounts, on-time deliveries, and bundling
techniques. And in a world where people
are pressed for time, BigBasket has the option of 90-minute delivery apart from
standard delivery options. Even the standard delivery time has been reduced to
4 hours instead of next-day delivery for superior customer experience (pre COVID-19
crisis).
While problems like low profitability and intense competition
are present, BigBasket continues to flourish, witnessing a 3x annual growth in
FY19 thanks to its strong supply chain network and exceptional customer service.
And given India’s massive $650 billion retail market, sky is the limit for this
company!
Written By - Garima Singh
Social