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We're the only online grocer offering all possible formats, says BigBasket's Hari Menon

Co-founder and CEO Hari Menon says BB will shorten delivery timelines, but in a way that unit economics work. He says BBNow has taken off well and it will be expanding to more cities.

June 29, 2022 / 02:50 PM IST
BigBasket (File Image)

BigBasket (File Image)

At a time when the quick commerce space is heating up, Tata-owned BigBasket's strategy to stay on top of the online grocery game is a four-pronged approach.

“We're the only company in the grocery space that has all the possible formats which are required from a consumer standpoint,” says BigBasket co-founder and CEO Hari Menon.

What are the formats he is referring to? Apart from the traditional business of BigBasket, there are three more — BBNow, BBDaily, and BBInstant.

Under the traditional full-stack business, customers generally tend to make larger volume purchases which are planned and scheduled. BBNow is the quick commerce offering. In subscription offering BBDaily, customers can choose products such as milk, eggs and bread and get them delivered the next morning. BBInstant is the format under which the company sets up vending machines in residential complexes and corporate canteens.

‘Quick commerce has strong use cases’


“We believe quick commerce has a space and there are strong use cases for it, but people won't use it for buying all their groceries, except for the unplanned segment. It's meant for top-ups and emergencies. What we're doing is bringing all of these onto one app — almost like a super app.

“It will tell a consumer that if you want your regular grocery, a full-stack of 50,000 SKUs, there's BB. If you want emergency top-ups, you do BBNow. You want to subscribe hassle-free, like ordering at 11 in the night and getting it in the early morning slot? Or, you want to just subscribe for the month and forget about it? That's BBDaily. This is our B2C play. This is what we are doubling down on,” says Menon.

Where does BBNow currently stand?

“BBNow has really taken off and is doing extremely well right now. BBDaily and the full-stack BB are growing anyway,” Menon says, adding: “This ecosystem will be, at best, 20-25 percent of the grocery buy typically.” From a value standpoint, BBNow is growing 30-35 percent per month, though because of a low base, he says.

“Currently, from a value standpoint, we will be close to about a Rs 75-80 crore run rate — monthly sales of BBNow. This is the fastest you could have got there, and it is growing rapidly. It's growing. It's growing 30-35 percent every month right now, but it's a low base. I think that's where we are right now. We are in 10 tier-1 cities and we have started going national in terms of advertising,” he says.

The average order value currently for BBNow is a little over Rs 400.

Scaling up BBNow 

“BBNow doesn't need too much money from a BB perspective, because we're setting up smaller dark stores, though in larger numbers. We’ve been running dark stores for the past 5-6 years, and I don't think anybody else can be better at knowing what a dark store entails,” he says.

BigBasket received a capital infusion of Rs 350 crore from its holding company earlier this month. Last month, BigBasket received Rs 1,000 crore.

Going forward, the company is looking to spend more on ad spends to build the brand, which would showcase all four offerings.

Plans for BBInstant

BBInstant currently available in some locations in Bengaluru, Hyderabad, Noida and Mumbai, offers 48-50 products such as biscuits, chips, beverages and some produce. BBInstant refers to vending machines that are installed, which are unmanned and cashless.

This, Menon says, has seen adoption from kids as well. BigBasket plans to expand this to all 10 tier-1 cities in the next year or two. Even in the cities they currently are in, Menon says they are looking to expand. The company is looking at apartment complexes that have over 300 residents. Otherwise, it doesn’t make sense from an economic perspective, he points out.

For corporates, the company is looking to install these machines in canteens. People can sit at their desks and order what they want on the app, and pick up the item from the machine.

Market share

Since BBNow was the last entrant in the quick commerce sphere, Menon says the company took its time in setting it up and was not in a hurry since it had other businesses. Even though other quick commerce companies have been around for over a year, BBNow has not lost any market share.

“Customers behave in a particular way and they continue behaving that particular way. Moving your entire grocery buy to a quick commerce model is just not possible because it carries only 3,500-4,000 SKUs, we [full-stack BB] carry 50,000 SKUs. The need for the 50,000 SKU business is going to continue and is going to grow. That's how people buy groceries. Because of that, we never saw a share loss,” he says.

He said that the company’s retentions were the best in the last year. The purchases of a customer who shops from both BB and BBNow in a month has gone up by 18 percent, says Menon.

When asked if BB is looking to shorten delivery timelines for its full-stack offering, Menon says BB will shorten every possible delivery timeline.

"That's what people want, so we will do whatever it takes. But we will do it in a manner where unit economics works. We will not do it in a manner which will burn money. That's critical. Beyond a point, it'll burn money. That's where we draw the line.”

Haripriya Suresh
first published: Jun 29, 2022 02:50 pm
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