India’s largest online grocer Bigbasket, which raised $300 million from Alibaba earlier this year, is gearing up for a fresh round of fundraising in the next few months.
The company is in last-stage talks to raise $150-200 million, according to Hari Menon, Co-Founder, and Chief Executive Officer, Bigbasket.
In a chat with Moneycontrol, Menon said he aims to raise funds from both existing as well as new investors. The funds raised will be used for marketing, building infrastructure and developing technology.
Apart from Alibaba, Bigbasket had earlier raised funds from investors such as International Finance Corp, Sands Capital, and Dubai-based private equity investor Abraaj Capital.
Menon did not disclose Bigbasket's earnings but said it is profitable at an operating level in key cities and that it will become operationally profitable across all cities between March and June, 2019.
The company aims to achieve Rs 3,500 crore in sales this fiscal year, up from the Rs 2,000 crore achieved last year.
Bigbasket is an Indian online grocery and food products provider. Headquartered in Bengaluru, the brand is run by Innovative Retail Concepts.
As of now, the company has 10 million registered customers and services 1 lakh orders per day.
Edited excerpts from the interaction:
Q: We understand you are in talks to raise more funds. How much do you plan to raise and from where?
A: We will raise some money in a couple of months. We will make some announcement soon as we are in talks with a few investors. But I cannot talk about it right now. It is just too early.
Q: How much are you looking to raise and how will you use the funds?
A: We will raise another $150-200 million. We will keep investing heavily in marketing. We have 10 million customers. Currently, sales are Rs 2,500 crore, so by that standard, we are reasonably a large online grocer in the country.
Now, how do we double this every year and how do I quickly become a Rs 7,000 crore company? That’s all about investments in marketing, investments in infrastructure and investment in technology. We want to invest this money over the next 2-3 years.
Q: Have you broken even?
A: Yes. Operationally, we have broken even in our key cities. That's our only focus. Which means that every transaction that we do, we make money. We started making money quite some time back in a large city like Bangalore, so the model is proven. We will operationally break even in all cities between March and June 2019.
Q: There is a lot of competition in this space, so what kind of innovation are you coming up with for customers?
A: We are building a new beauty store which is called personal care into beauty. We are building the milk subscription business which we just launched already it’s called BB Daily where the milk gets delivered to your house early in the morning. We are also building a business which is unmanned kiosks called BB instant and we will put 6,000 machines across the country which will be in apartments and complexes.
All you have to do is choose your product, pick it up and walk away. The machine will sense which product was picked and automatically charge your wallet. These are full-fledged machines which carry 48 products. Hopefully, it will replace the grocery store in the complex. We have already launched this will be put up in all Metros.
Q: You recently tied up with Sunfeast exclusively to sell Yippee noodles. Can you tell us how such tie-ups help in terms of growing revenue?
A: When we do these tie-ups, revenue is not our nucleus objective. Our objective is to see, when it is exclusive to us what are customers doing and how are they behaving. We capture that data as we are digital and feed them back to the company, which helps them figure out what the initial reaction is for the product.
Eventually, it helps us build revenue significantly. So when we compare exclusive and not exclusive, it is 10-15 times higher. But that is good; we will keep doing more of those tie-ups.
Q: In the future, will we see more such tie-ups?
A: More and more FMCG companies want to promote their product on the platforms like ours. We want to work with large companies because for them, feedback data really matters.
Q: Any plans for inorganic growth?
A: No. We want to remain pure-play online player.