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Last Updated : Feb 02, 2018 10:28 PM IST | Source: Moneycontrol.com

Rise of E-Grocers: Bigbasket targets 50% growth in turnover to Rs 2200 cr for FY18

Some early investors have been given partial exits in the company in a new round of funding. About USD 196 million was invested by four investors.

Alibaba-backed Bigbasket is expecting over 50 percent growth in its annual turnover for the financial year ending March 31 to Rs 2,200 crore, according to a top executive.

"We closed our annual turnover at Rs 1,410 crore for 2016-17 financial year. This year it is going to be about Rs 2,200 crore," said Hari Menon, founder and chief executive officer of Bigbasket in an interaction with Moneycontrol.

Bigbasket on Friday announced a fundraise of USD 300 million in its Series E round led by Alibaba.

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It also saw participation from existing investors including Abraaj Group, Sands Capital and International Finance Corporation (IFC).

According to the documents from the Registrar of Companies, about USD 196 million was invested by these four investors combined together. Alibaba alone contributed about USD 140 million to this round.

While Menon declined to give a breakup, he said that USD 300 million included some amount from a previous round and secondary during Series E.

"We had earlier raised a D3 which is also part of the filing and this is actually a combination of primary and secondary. We are not disclosing the breakup," he said adding that some early investors have been given partial exits in the company without disclosing their names.

Founded in December 2011, Bigbasket had raised early cash from investors such as Zodius Capital, Helion Venture Partners.

The seed capital around Rs 1 crore was in fact pooled in by the founders before they started the company.

Bessemer Venture Partners entered into the company with USD 50 million funding round in 2015.

Bigbasket has so far raised USD 556 million so far and has a valuation of about USD 900 million post this round of funding.

"E-grocery market from here on is only going to grow. We are going to see a lot more new players coming in with a pretty good amount of aggression for example companies like Amazon, Flipkart. Besides, there will also be offline players who will actually now start having online presence also," said Menon adding that there was a scope for multiple players in the market.

India’s retail market is worth over USD 900 billion and grocery shopping accounts for about USD 600 billion of that, he said indicating a huge potential.

BigBasket investment

(In pic: BigBasket's funding so far)

The company which has Bollywood actor Shahrukh Khan as its brand ambassador since the last two years will also continue its association with him for the third consecutive year.

Menon also clarified that the company will continue to invest in multiple marketing exercises as growth will be its prime focus.

"For us growth is not dependent on discounting. Growth comes out of marketing spends. We are unit economics positive from a city basis already in two of our very large markets -- Bangalore and Hyderabad. Both the cities turned profitable in March 2017. Three more cities - -Calcutta, Ahmedabad and Chennai are going to get positive next month," he said.

"The unit economics has played out now the question is how much do you want to spend on growth and the spend on growth is more to do with marketing and investments that you will make in technology and capital expenditure. Which is building out your warehouses etc," he added.

Bigbasket is also in talks with Paytm another investee company of Alibaba for business support agreement for a larger synergy.

"We are in the process of finalising a business support agreement with them because we see a lot of synergy in working together and both of us are large investee companies of Alibaba. For example, on the payment side, Paytm will become the default payment gateway on BigBasket. On the mall side, we will power groceries for them .. kind of merchants or enablers but will a much stronger integration," he said.

"We will have other payment gateways on BigBasket but ideally we don't want to have too many .. if you have a partner organisation that actually runs a payment gateway we will probably become the default one," he added.

The company currently claims to have clocked the monthly run-rate of Rs 200 crore in January.

It targets this number to increase to Rs 300 crore in August and Rs 500 crore in March 2019. This is against a monthly sale of around Rs 90 crore claimed by its immediate rival Gurgaon based Grofers.

Alibaba's entry comes at a strategic point when the grocery market is heating up again after a downward spiral in 2015 and early 2016.

Grofers is in talks with existing and new investors to raise around USD 130 million.

The US-based rival Amazon also recently got approval to set up a retail unit in the country to sell private label food. It has committed USD 500 million for the around the next two three years. For grocery the company offers Amazon Now and Amazon Pantry in the India market.

"We see synergy in the technology and processes they use. We will be trying to understand how scale gets managed a that level. We will see how the last mile logistics works there, how electronic vehicles work there and just so many things they do," Menon said talking about the synergy expected from Alibaba.

The company claims to be doing around 50,000-55,000 orders on a daily basis with an average ticket size of Rs 1400.

Retail sectors experts are waiting to see another round of innovation in cost efficient models of online grocery delivery.

"The way goods are delivered will be reinvented. Companies would enable a more efficient means of delivery so that the cost of delivering a low ticket item does not create a skew in the profitability of the transaction," said PN Sudarshan, senior director at Deloitte India.

"Not every unit transaction can be profitable however if you are able to package it in a specific fashion then on a whole it can get profitable. It is like even in a retail store every SKU need not be yielding profit. But you need to keep certain products even if they are unprofitable," Sudarshan added.

priyanka.sahay@nw18.com

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First Published on Feb 2, 2018 10:28 pm
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