BigBasket's B2C arm saw losses swell 89% in FY23 even as revenues remained flat

BigBasket’s chief Hari Menon has said 10-minute grocery deliveries are not sustainable.

Tata-owned BigBasket’s business-to-consumer (B2C) unit, Innovative Retail saw its losses jump 89 percent from Rs 813 crore in financial year (FY) 2022 to Rs 1,535 crore in FY23, on the back of mounting expenses, regulatory filings showed.

The losses increased sharply but did not translate to a higher topline, which remained largely unchanged during the period at a time when startups began prioritising profitable growth after ditching the growth-at-any-cost path.

Innovative Retail’s revenue from operations registered a mere 5 percent growth from Rs 7,096 crore in FY22 to Rs 7,434 crore in FY23, regulatory filings accessed via Tofler showed.

The sluggish revenue growth was largely because of higher expenses during the year. The B2C arm saw its total expenses increase by around 13 percent from Rs 7,929 crore in FY22 to Rs 8,998 crore in FY23 on the back of higher employee spends, finance costs and other expenses.

Total expenses included Rs 916 crore that Innovative Retail spent on employee benefit expenses in the year, which was about 24 percent higher than Rs 739 crore that it spent in FY22. Employee-related spends were the second largest cost centre in the previous fiscal year after cost of goods sold which was the biggest expense for the Tata-owned company.

Advertising and logistics were the other key cost components that added to the company’s mounting expenses.

While logistics costs totalled Rs 682 crore during the year, 50 percent higher than Rs 454 crore that it spent in FY22. Similarly, advertising costs added up to Rs 385 crore in FY23, more than double of Rs 184 crore that it spent in FY22.

The company’s advertising costs were also higher because of the space it dabbles in. The quick-commerce industry has seen several players try to scale up. BigBasket competes with SoftBank-backed Swiggy Instamart, Y Combinator-funded Zepto, Reliance-backed Dunzo and Zomato-owned Blinkit.

BigBasket’s chief Hari Menon has however said that 10-minute grocery deliveries are not sustainable.

“The economics just don’t work at 10-15 minute (deliveries), which is frankly the fact. Consumers did not want it either, it was thrust upon them and they said why not.”

Instead, Menon said his business will concentrate on completing deliveries within 15 to 30 minutes, which is more sustainable. The company will also look at expanding offline but is sure that online will remain its primary focus.