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BigBasket Ready To Launch Private Labels To Ramp Up Cosmetics And Meat Business

BigBasket Ready To Launch Private Labels To Ramp Up Cosmetics And Meat Business

BigBasket Plans To Challenge Startups Like Nykaa, Purplle, Zappfresh, And Licious, Among Others

A multidimensional portfolio has become the new idea for several startups, more like a cocktail of fixed bets to ramp up the business. This time, it is online grocery startup BigBasket that’s ready to expand its portfolio with private labels of cosmetics and meat.

In an interview with Livemint, BigBasket co-founder and CEO Hari Menon revealed that the startup will enter the cosmetics category with its private label.

“We are adding a new private label under the new category of beauty products. We are going to have a lot of private label play there. We will not just have a private label (for beauty), but also normal labels, imported stuff, etc. Basically, a new set of categories that you will see in beauty,” said Menon.

Private Label Push For Cosmetics And Meat

At present, BigBasket owns private labels like Fresho for vegetables and idli and dosa batter; Royal and Popular for staples; Tasties, for snacks etc.

Even though fish and meat are available on Fresho, BigBasket plans to bring out a new category of meat and set up a deeper supply chain to focus exclusively on the business.

“In meat, we already have a supply chain, but now we want to build a deeper supply chain, in terms of getting deeper into that category. That is because we see a tremendous new business opportunity that is called HORECA (an acronym for hotels, restaurants and caterers). They have a huge requirement for meat and we want to strengthen that business, for which we need to get deeper into the supply chain,” Menon explained.

BigBasket aims to generate 45% of overall sales from its private label business by April 2019. At present, private labels contribute roughly 34% to its revenues.

“(Our private label business) Is largely driven by our branded fruits-and-vegetables piece, which is Fresho. And then, we have our entire range of staples and a very large range of FMCG (fast-moving consumer goods) and gourmet, which we have just launched and will expand as we go along across categories,” said Menon.

Apart from new private labels, BigBasket is continuously focusing on its expansion plans and exploring numerous new initiatives, including an offline push and the launch of a subscription service.

For its offline push, BigBasket has already started working through kiosks that will stock fruits, vegetables, FMCG goods, and other daily grocery items.

For this, the startup has already launched a pilot for its new offline service and has also built a separate app known as BB Instant.

Inc42 had earlier reported that with the aim of further bolstering the service, BigBasket is looking to introduce a subscription programme for everyday essential items like milk, bread, etc.

Menon has now confirmed that BigBasket was looking to launch a new milk subscription service in order to enter the micro-delivery space.

Milk subscription…is the other way of increasing frequency (of orders). We’ve been talking about subscription businesses for a while,” said Menon.

“Using milk as a route is a great thing to do because milk is something that people will subscribe to… For us, milk is not the issue, it’s the route to it. To milk on that subscription app, people can then add things — bread, eggs, dairy products, cheese, etc. Things that they buy regularly or with higher frequency. It is basically subscription, driven by milk,” Menon added.

Growing Meat Delivery Space

In the burgeoning online meat delivery space, BigBasket will compete with a number of players such as Licious, Zappfresh, EasyMeat, Brown Apron, and MeatRoot, among others.

In March 2018, Gurugram-based Zappfresh raised around $3 Mn (INR 20 Cr) in a funding led by Amit Burman, vice-chairman of Dabur India. The fundraise also saw the participation of SIDBI Venture Capital.

In March 2017, Bengaluru-based gourmet meat delivery startup Licious secured $10 Mn in a Series B round led by Mayfield India, 3one4 Capital, Sistema Asia Fund, and Neoplux Technology Fund.

In August 2016, Pune-based raw meat etailer EasyMeat had acquired Nonveggies in an undisclosed all-cash deal.

Online Beauty Industry In India

In the Indian beauty and wellness market, beauty ecommerce websites like Nykaa, NewU, Purplle, etc are leading the space with a focus exclusively on beauty and wellness products.

Inc42 had reported that online beauty marketplace Nykaa raised $24.45 Mn (INR 165 Cr) in a Series D funding round to fuel its plans towards expanding its offline presence from 17 stores currently to about 55 stores by FY19-end.

Recently, reports surfaced that Amazon India is planning to launch its own private label of beauty and personal care products. Prior to this, Myntra announced its plans to open beauty and wellness offline stores.

A RedSeer Consulting report suggested that the domestic online beauty and personal care market is expected to cross $3.5 Bn by 2022; at present it stands at $300 Mn.

According to a Goldman Sachs report, the Indian online grocery market is estimated to reach $40 Mn (INR 270 Cr) by FY19, growing at a CAGR of 62% from 2016 to 2022.

Morgan Stanley expects the online food and grocery segment to become the fastest-growing segment, expanding at a compounded annual growth rate of 141% by 2020 and contributing $15 Bn, or 12.5%, of overall online retail sales.

A report by Kalagato revealed that as of March 2017, BigBasket held about 35% market share in the online grocery segment, closely followed by Grofers at 31.5%, and Amazon at 31.2%.

With a dominant market space, BigBasket has an edge over other startups in its new target segment — cosmetics and meat. But how BigBasket converts its grocery customers to buy its new products will be an interesting watch.