SUMMARY
BigBasket on road to clock gross sales of around $1.6-$1.7 Bn in FY22, CEO Hari Menon has said
The company’s growth was aided by the Covid-19 pandemic that struck India in the first quarter of FY2021
BigBasket’s revenue grew 36%, from INR 2802.6 Cr in FY19 to INR 3818.2 Cr in FY20
Online grocery startup BigBasket, which will be acquired by Tata Group soon, has clocked gross sales of $1.1 Bn or INR 8,000 Cr in the financial year 2021 that ended in March this year. The company is now expecting to garner gross sales of $125 Mn (INR 910 Cr) in the month of May, on road to clock gross sales of around $1.6-$1.7 Bn in FY22, CEO Hari Menon has said.
“May has been terrific. In the full financial year of 2021, we grew by around 80% compared to an annual growth of 40-45% before the pandemic. Currently, we are seeing higher sales than last year’s peak in July and it would be around 40% higher compared to March 2021 (before the second Covid-19 wave),” Menon told ET in an exclusive interaction.
The growth of BigBasket was aided by the Covid-19 pandemic that struck India in the first quarter of FY2021 and led to lockdown across the country. The situation pushed more consumers to adopt ecommerce in order to source essential items like food, groceries and items of daily needs. The country is once again facing a similar situation due to the deadly second wave of Covid-19. According to a Forrester Research report, groceries shopping was the highlight of ecommerce operation in 2020.
Covid-19 Pushes Grocery Delivery, With New Players Entering The Market
The report, published last year, had highlighted that online grocery may clock $3 Bn in sales due to the pandemic, noting a 76% spike compared to $1.7 Bn sales in 2019. At the same time, ecommerce was expected to grow 6%, or only by $2 Bn, amounting to $35.5 Bn in 2020. The entry of several non-conventional players in the grocery delivery vertical last year had also validated the above-mentioned estimates.
Last year, ecommerce companies Snapdeal, Paytm Mall and ShopClues; food aggregator businesses Zomato and Swiggy, agritech platform Meesho and agritech startup NinjaCart had also entered the vertical. Meanwhile, Reliance’s JioMart, Amazon and Flipkart had expanded their grocery delivery business. Even ride hailing services like Ola, Uber, Rapido and Bounce had acted as a facilitator of grocery delivery by partnering with mainstream retailers like BigBasket, BigBazaar, Grofers and others.
Grofers and BigBasket, the conventional players in the domain, had continued to maintain their lead in the segment. During the lockdown between March to June, Grofers claimed to have registered a 60% increase in its gross merchandise value (GMV), compared to pre-Covid-19 levels. Moreover, the company further noted a 40% increase in basket size during the lockdown. This growth will aid these companies’ revenue growth as well.
Covid Aides Startup Acquisition
In the financial year 2020, which was before Covid-induced lockdown last year, Grofers reported a revenue of INR 176.79 Cr. This represented 84% spike compared to INR 83.6 Cr in FY19. The company’s expenses grew 53%, from INR 531.6 Cr in FY19 to INR 814.2 Cr in FY20. Its losses grew 42%, from INR 448 Cr to INR 637.5 Cr, in the same time frame. In FY20, Grofers spent INR 4.6 for every rupee earned, while this ratio was around INR 6.3 in the previous year.
BigBasket’s revenue grew 36%, from INR 2,802.6 Cr in FY19 to INR 3818.2 Cr in FY20. Its expenses also increased by 31%, from INR 3,365.2 Cr to INR 4,411.3 Cr in the same period. It reported a loss of INR 709.9 Cr in FY20, representing a 26% hike from INR 562.6 Cr reported in FY19.
With greater customer interest, several big players in the market decided to try their hands in acquisitions. For instance, Zomato was looking to acquire Grofers, however, the talks fell through. Now, the food aggregator business is looking to invest $100 Mn in Grofers at a valuation of $1 Bn, taking the company into the unicorn club.
Meanwhile, Tata Group is all set to acquire BigBasket to aid its Super App ambition, which will allow the company to offer several consumer-focused services under one umbrella platform. Tata Group had received Competition Controller of India’s (CII) final nod on this acquisition earlier this month. Though the exact value of the transaction has not been disclosed yet, market estimates peg it at $1.8-2 Bn.
Another player in the segment is MilkBasket, which had been in talks with Reliance, Amazon, Swiggy and several other players for an acquisition deal last year, however the talks fell through. According to sources, the company may be acquired by Reliance, due to the hurried exit of Kalaari Capital from the company.
MilkBasket has reported a revenue of INR 322 Cr in FY20, representing a 3.8X increase from INR 84.6 Cr in FY19. Its expenses grew at the same pace to INR 337.7 Cr from INR 94.1 Cr. Losses, on the other hand, were at INR 15.7 Cr compared to INR 9.5 Cr reported in FY19.
