Founded in 2011, grocery delivery startup BigBasket has changed how many Indians get their daily groceries and home essentials. Over the years, the company has made changes in its operations to not only support the marketplace model but also enter into the private label territory and daily deliveries based on subscriptions.
BigBasket’s model that has been built not only in delivery of products but also on the supply chain infrastructure that lets the company procure products directly from producers. And, cofounder and CEO Hari Menon believes this gives the company a great advantage over deep-pocketed Amazon and Flipkart, which are also entering the grocery and food retail sector.
In an interview with ET, Menon said that while the entry of Amazon and Flipkart is great news for the grocery sector, the companies are likely to take at least one year to scale up their supply chain capabilities for groceries and fresh food across the top cities.
Menon believes that the grocery delivery sector will see great growth in the next few years with Amazon and Flipkart bringing in their user bases to the sector. He added that the competition is healthy for the sector as it will replicate the growth of ecommerce in the Indian market.
“As grocery extends beyond the high socioeconomic classes towards the midsection, the market will expand,” Menon expounded.
Flipkart And Amazon Entering Grocery Race
Among the grocery delivery platforms, fresh products are the most complex products to operate with. Usually startups have to solve complexities such as procurement, licensing, storage and last-mile delivery as well as customer returns. All this means considerable expenditure in infrastructure as well as supply chain, which is a crucial link in the business operations.
While Flipkart and Amazon have realised the market opportunity here, it will be tough for these giants to replicate the same model that BigBasket has taken years to create.
Walmart-owned Flipkart is preparing for the launch of FarmerMart, its food retail business which will sell locally-produced and packaged food products.
Amazon too had realised the opportunity and has already committed an investment of $500 Mn to sell third-party and own private-labelled food products. The company already operates Amazon Now and delivers grocery under two hours.
BigBasket’s Competition With Ecommerce Giants
It seems BigBasket has also analysed the rising competition. In this regard, the company has merged its two core businesses, on-demand 90-minute deliveries and planned next-day delivery. Now the company has come up with a four-hour delivery service.
Earlier the shorter delivery time service used to offer limited products whereas the next-day delivery offered a wide range of products to the customers. Now, with the four-hour delivery service, a customer would be able to choose to from the wider section of products, earlier offered in its next-day delivery segment only.