Case Study : BigBasket : Marketplace for Online Grocery

September 4, 2017
BigBasket is India’s biggest online store for grocery shopping. It was
founded in 2011 by a group of people named Mr. V S Sudhakar, Mr.
Hari Menon, Mr. Vipul Parekh, Mr. Abhinay Choudhari and Mr. V S
Ramesh. BigBasket currently operates from Banglore, Mumbai, and
Hyderabad and providing their services in 22 different cities in India.
With more than 1800 grocery products and 1000 brands featuring on
BigBasket.

Future of Online Grocery Market In India:

The grocery retail market in India is growing at 10% CAGR(Compound annual growth rate) which is currently
about the size of 400 Billion. Out of which online grocery accounts to only 0.1% of it. The Online grocery market is
expected to grow to 10 billion dollars in next 4 years and is likely to be concentrated in urban areas of the country.

History Behind Bigbasket:

The founders of BigBasket first time got together is 1999 and started one of the first online business in India with
the name of fabmart. As a part of fabmart they started online grocery business as Fabmart.com. This business did
exceedingly well in the market and company went to set up various physical supermarkets in South India. In 2006
FabMart was acquired by Aditya Birla Group and renamed the brand to More Supermarket. However, the same
team got back in 2011 and launched BigBasket.

Business Model:

Today BigBasket is India’s biggest and most used online grocery store in India.
They deliver 35000 orders per day with the average price of the order is 1500.
BigBasket has products of their own and allows other companies to showcase
their product on the portal. With more than 40% of orders coming from their
own brands and remaining on other brands. BigBasket operates at the margin of
35% on the sale of their own product and 25% on the sale of third party products.

Funding:

BigBasket highest fund raising was 150 million dollars in March 2016 led by Abraaj Capital in its Series D of
funding. Some of the other investors are Bessemer Ventures, Helion, Zodius and existing investors who participated
including Ascent Capital, Lion Rock Capital and Ganesh Krishnan and Meena Ganesh.

Recently BigBasket has raised 45 crores from Trifecta Capital which takes the complete tally of funds raised to 290
million dollars in its 8 series of funding from 11 investors.

Customer Service:

One of the biggest factors in BigBasket’s success is exceptional customer focus. The company offers same day
delivery with in the city with more than 99% on time delivery and 99.5% of order fulfillment rate.
BigBasket’s return policy is also very simple and they have a
policy of no questions asked to the customer while returning. All
of these things have built a loyal customer base and excellent
customer feedback.

Competition in E-Grocery Market:

The online grocery market has grown big time in India since it
was born. With new player adding up to the market and many of
the big offline supermarket going online everyone has to keep up
their game to retain the existing customers and to attract new ones. One of the big name in online grocery market
and one of the biggest competitors for Bigbasket is “Grofers”. Grofer right now is operating in 17 cities which is
one less than BigBasket was launched in 2013 which is two years after BigBasket. Grofer has also been investors
favorite and raised around 150 million dollars in last 4 years.

Other Key players in the market are Pepper Tap and Zopnow and there is new big entrant Amazon. Amazon is the
biggest name in e-commerce and has come to e-grocery market. The company started its operation in December
2016 although we don’t have any official data the company was able to attract many customers due to its name in
the E-commerce market.

Marketing and Branding:

Although BigBasket is purely internet based company,

BigBasket chose biggest Bollywood star Shahrukh Khan
as their brand ambassador. With series of Tv commercials
and billboard advertising featuring Shahrukh Khan,
BigBasket has become a popular name among online
grocery buyers.

Strengths in the SWOT Analysis of Big Basket :

1. Product Range: Big Basket offers a huge range of products which stretches to about 18000 products.
2. Exotic Range: It also offers exotic fruits, vegetables and imported groceries which are not easily available
in nearby retail outlets. This gives them an edge in catering to customers who like buying such stuff.
3. Discounts: Big Basket offers huge discounts on various products. They also have the
product bundling technique to maximise sales and offering maximum discounts to the customers. This
makes them a lucrative option for customers to buy.
4. Convenience: Big Basket offers an escape from the hassle of standing in the queues of malls or going all
the way to the retail stores. They give the products right at the door step and offer multiple payment options.
The on-time delivery guarantee makes them a lucrative option, Customers, especially in big cities where life
is very fast and it is difficult to reach thThe customers, can shop at any time of the day.
5. Target Group: They have selected their target customers very carefully and have established a footing in
the metropolitan and some tier-I cities. They operate in Bangalore, Hyderabad, Mumbai, Pune, Chennai,
Delhi, Mysore, Vadodara, Patna, Indore, Vijaywada, etc. They are currently operational in about 25 cities.
6. Low Fixed Cost business model: Most of the items that Big Basket offers are perishablehence they depend
on the retail stores they are coordinating with for the products. This means they have no inventory cost and
makes their business model more profitable.

Weakness in the SWOT Analysis of Big Basket :

 1. Delivery Time: Big Basket delivers the groceries the next day. Many retailers have started the facility of
home delivery to nearby societies and customers in just few minutes to hours. So customers prefer this
instead of waiting for 24 hours.
2. High Variable Cost: Cost of running many delivery guys, delivery trucks, storage for perishable items,
wastage during transportation makes the business run at a high variable cost. They have to bleed more
money and will take longer to break even.
3. Minimum order quantity/price compulsion: Big Basket does not offer home-delivery below a certain set
order price limit. This means that customers would be forced to add a product or two just to avail the
service. This makes them lose a customers.
4. Be at home: Customers have to be at home when Big Basket is about to deliver. This means the customers
have to plan according to the delivery time. If by some means the order gets delayed customer gets angry
and unhappy by the service. On top of this they have to pay a little add on price for the home delivery.
5. Order Cancellations: They depend on stores that they have tied-up with to provide them the items. If they
do not have the items available they won’t be able to deliver them. This sometimes tend in cancellation of
orders. Out of stock issues tend to make the customers unhappy and repetitive of such issues makes the
customers reluctant to reuse the service.
Opportunities in the SWOT Analysis of Big Basket :
1. Market: Indian retail market is valued at more than
approx. $550 million and grocery alone covers 60% of
this share. Hence it’s a huge market with many players
to accommodate and customers to cater.
2. Grocery Growth: India is the 6th largest grocery market
in the world. E-commerce grocery market is growing
with a year on year growth rate of 19%.
3. Expansion: Many cities are still not covered by these startups and Big Basket can target them and gain the
first movers advantage. They can expand to tier-2 cities and increase their market.
4. Cross selling and Value Packaging – Cross selling is a major advantage for Big basket as it can sell
multiple products by product bundling.
Threats in the SWOT Analysis of Big Basket :
1. Competition: It has small presence in terms of cities covered hence, it is getting a huge competition from
other startups like Grofers, PepperTap, Nature’s Basket, Zop Now, Aaram Shop, Mera Grocer, etc.
2. Bigger Players: Bigger players in terms of financial backing and presence are also entering this lucrative
industry. Players like Amazon, Flipkart and Google have also entered this industry. This may prove fatal for
smaller players like Big Basket to compete with them.
3. Smaller Players: Many other localized shops have picked up on this trend and have started home delivery
service to nearby customers thereby killing groups of target customers across regions and cities.
4. Customer Retention: It is very difficult to retain customers. They would tend to move with the service
provider that offers the most discounts.