No plans to merge with Grofers or get acquired by Amazon: BigBasket CEO
The only challenge we face is in recruiting and retaining of our ‘blue collar’ workforce, says Menon
More than 70 startups in the online grocery and hyper-local delivery segment space have shut shops in the past 24 months. However, Bangalore-based Big Basket started by 54-year-old Hari Menon has survived the storm and continues to dominate the market.
Menon who also co-founded FabMall – India's earliest e-commerce venture shares his insights on key to sustain this high cash burn segment with Moneycontrol. He also talks about company's strategy to compete with the cash rich rival Amazon Now and his success with Shahrukh Khan as company's brand ambassador. Edited excerpts:
Q: What is Big Basket's strategy to compete with Amazon Now? The company is learnt to be burning piles of cash offering customers free deliveries and cashback.
A: BigBasket is the market leader today and is in a high growth stage. We have built a high customer centric culture within the company, that cares for its 5 million consumer base.
Indian grocery segment (both offline and offline) is a very large market of about USD 400 billion. Markets of this size have enough space for more players. In fact, in markets of this size, consumers open up to new formats much faster when there are more players. Our strategy is simple - focus on execution, innovate with the customer in mind and ensure our customers are the focus.
Q: What is the key to crack this high cash burn market in India as several startups have shut shops?
A: There is only one key - focus on unit economics and turn profitable. The mantra is ‘profitable growth.’
Q: What's your comment on media reports suggesting Amazon could likely acquire Big Basket?
A: Completely, untrue.
Q: At a point in time when competitor Grofers is shifting from instant deliveries to scheduled next day deliveries, Big Basket has ventured into instant deliveries. Please help us understand the need to come out of your conventional shell at this point in time?
A: Bigbasket hasn't become an instant delivery company. This is a misconception. The largest chunk of our business is the scheduled/slotted delivery business (85 percent by value and 75 percent by orders). And this mirrors exactly to the way a household buys.
In a typical household, about 65 to 70 percent of their buying is planned purchase, for which, they use our scheduled or slotted delivery service. About 20 to 25 percent is weekly purchase of fruits and veggies, other perishables, top ups, emergency needs, etc. We continue to remain in our conventional shell.
Q: There were media reports of Big Basket exploring a merger with Grofers. We also learnt that BigBasket had a meeting with Albinder Dhindsa, co-founder of Grofers. Your comment?
A: Completely, untrue.
Q: You started off with FabMall and were selling, books, toys and jewellery among other things before starting off Big Basket to sell grocery. As you plan to expand, could you look at other product categories?
A: We are completely focused on grocery and home essentials as a category and we don't have any plans to expand beyond this.
Q: Currently, in how many cities do you operate? What are your expansion plans?
A: About 25 cities (currently). We don't plan to expand any further in the current year. We are focussing on going deep in each of the cities in terms of penetration and that's our focus this year.
Q: Multiple hyperlocal delivery startups shut down their services in 2016 citing lack of demand especially, in smaller cities. What hygiene would you bring in place while trying to crack these markets?
A: Our focus is on offering a good assortment and range in tier-II cities. Convenience is not a very big draw in tier-II cities like it is in tier-I cities.
Q: What are the immediate challenges faced by the company in this space and how do you plan to overcome?
A: The only challenge we face is in recruiting and retaining our ‘blue collar’ workforce. We employ about 13,000 people and about 70 percent of our workforce is "blue collar".
Q: To what extent Shahrukh Khan's endorsement help the company achieve customer stickiness? Any plans for next round of endorsements?
A: SRK as a brand ambassador has helped and worked very well for us. The endorsements has resulted in big surge in new customers coming in. That was our primary objective and that's worked well. Customer stickiness and retaining customers is a function of how BigBasket services its customers and that's going well firstname.lastname@example.org