What Big Basket Did To Survive, Others Could Not Even Think Of

There are two strange traits of the hyperlocal space: the online grocery market in India is so huge that startups found it difficult to resist the temptation to operate, and second, this market is so complex that most of the companies have either shut down their operations or are finding the going tougher.

Even companies like Flipkart, Snapdeal and Ola decided to go out of the market in order to focus on their core strength. BigBasket, on the other hand, has successfully weathered the storm for four years and worked continuously to gain their foothold in the market. This shows the resilience and strength of the company.

The online grocery companies generally work on two models: many of them depend on inventory-led and many other depend on hyperlocal. Surprisingly, the Bangalore-based startup has adopted both models.

The company, in a official statement, said, “It will be delivering orders with hyperlocal specialty stores, such as bakeries and meat shops, in less than an hour.”

It has tied up with 400 stores to provide logistics to stores within a 6 km radius. Hari Menon, CEO of Big-Basket, said in a statement, “No matter how much you shop online, 5% of your grocery is bought from specialty stores within the locality that you trust and love.”

Big Basket’s survival is in no way a less feat considering the cut-throat competition in the extremely crowded market. The fight is really fierce as the market is crowded by Grofers, Pepertap and Zopnow. Grofer and Papertap have to wind up their operations in a few cities because of the lack of demand and scalability.

Companies have found it tedious to crack the problems related to complex logistics and procurement related issues and last mile connectivity. Only Amazon has been able to withstand these problems because of its deep pocket.

BigBasket is currently operating in 18 cities including metro cities such as Bangalore, Hyderabad, Chennai, Pune and Mumbai. The company is planning to expand it’s operations in 8 other cities by the end of 2016. It has gross merchandise value of $300 Mn.
The marketplace model is working in 8 cities. These small stores are famous for a particular category of product and enjoy a loyal customer base.

BigBasket is competing directly with Localbanya and EkStop, which has been acquired by the godrej group. It has raised a capital around $89 Mn from Helion Venture Partners, Bessemer Venture Partners, Ascent Capital and Sands Capital.

BigBasket, contrary to other players, has believed in doing everything differently. It has opted to inventory-led model when other startups opted for the zero inventory model. They also decided to hire and retain their delivery boys opposite to other players.

Company has opened a large number of warehouses in major cities which cater to the needs of cities falling within 8-10 kilometers of the main cities. For example, the warehouse in Chennai serves the needs of nearby Madurai and Trichi’ Ahmedabad warehouse serves to Surat etc.

This Indian online commerce startup has a large number of two-wheeler network of delivery boys to deliver the ordered goods within 1 hour. BigBasket has unique strategy to retain their delivery team. It goes to smaller cities, hires them, provides training and also provides accommodation at an affordable rate in the city of operation. The employee-centric model has helped company to retain its supply chain advantage.

“It’s very difficult to work in this segment if you don’t have the visibility to inventory. You need to ensure that you’re meeting large orders of customers.” says Hari Menon while justifying the asset –heavy model of BigBasket.

BigBasket’s team goes to wholesale mandi at 4 and checks the report for that day. After that, the company decides the price for farmers in the belts surrounding the collection centre. The company, despite challenges, is able to win the trust of customers.

On Quora, a question-and-answer site, you get the sense of who is actually winning the hyperlocal war. In a reply to a question, “Which is better, BigBasket or Localbanya?” BigBasket, says one user as it offers the user a better quality and more competitive pricing. And, Hari menon is obviously smiling after reading the response.

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