Can BigBasket Find Its Quick Commerce Groove?

Equipped with speed and convenience, quick commerce is expanding its dominance in the world of online shopping. Initially questioned for its long-term viability and relevance beyond metro cities, quick commerce has thrived over the past two years, driven by rising demand for fast, on-demand shopping solutions, particularly among Gen Z and millennial consumers in urban areas.

While major players like Flipkart and Amazon are experimenting with fast delivery options, pure-play quick commerce companies have become increasingly aggressive. Even Swiggy has ventured into this space with its 10-minute food delivery service, Bolt.

Despite scepticism due to the global failure of similar models, this segment has seen high growth in the country, with monthly transacting users (MTU) increasing by over 40% in FY24 from previous financial year, according to a RedSeer report.

This is only symbolic of the fact that user behaviour is changing, and backing this statement is the RedSeer data, which highlights a rise in the frequency of monthly orders from 4.4 in FY21 to nearly 6 in FY24. The momentum will only increase in FY25, with a 75-85% market growth, to reach $6 Bn GMV.

To cash in on this, Tata-owned BigBasket, which disrupted the traditional online grocery market long back, has completely pivoted to the quick commerce model. While the company has been known for its slotted deliveries, it now holds BB Now tightly as the core focus of the platform.

Notably, BigBasket launched quick commerce in early 2022. Back then, it offered both a quick commerce service and a slotted delivery service.

“The quick commerce wing offered delivery in 10 minutes, while slotted delivery took between two to four hours. The range of products differed significantly too — quick commerce offered around 8,000 to 10,000 products, whereas slotted delivery had about 40,000,” cofounder of BigBasket, Vipul Parekh, told Inc42 in an interview.

He added that the company has now decided to merge both services into a single offering. “The default option will be quick commerce, offering delivery in 10 to 15 minutes, but customers will still have the option to choose slotted delivery if they prefer.”

BigBasket’s Quick Commerce Pivot

While BigBasket launched its quick commerce service in early 2022, Parkeh said it grew faster than the slotted delivery service. Initially, quick commerce made up about 50% of sales, and the company anticipated it could account for 60-80% of sales, taking away the charm of slotted deliveries.

According to the cofounder, this would have made the slotted deliveries less impactful to keep it running as a standalone feature. Additionally, offering both options was confusing for customers, who were unsure which service to choose and on what basis.

“By merging both services into a single offering, we have simplified the customer experience, presenting a unified solution. This change was driven by two key factors — the market’s shift towards quick commerce for groceries and the need for a simpler, more streamlined browsing experience for customers,” Parekh said.

As part of its strategic shift, BigBasket is not only continuing with quick commerce but also expanding the range of products delivered in 10 minutes.

Previously, only groceries were delivered in that timeframe but now electronics and other categories have been included. The company has also forayed into general merchandise, fashion and apparel, and jewellery. The company has also started selling iPhone 16 in Bengaluru, Delhi NCR and Mumbai.

However, as per Parekh, the pivot from groceries to new categories and from slotted to superfast deliveries has not been easy. Explaining this, he said, the supply chain for electronics, for instance, is quite different from groceries (with purchases often clustered around discounts, promotions, and festive seasons) whereas grocery purchases are regular and predictable. Understanding these supply chain differences has been a major challenge for the company.

To address this, BigBasket partnered with category-specific experts like Chroma for electronics, Tata Cliq for apparel, and Titan for jewellery. These partnerships allowed BigBasket to leverage the expertise of companies that already excel in these categories, avoiding the steep learning curve.

Besides, another challenge was building the right customer experience and features for these new categories. For example, electronics purchases often involve EMI options, returns, warranties, and bank discounts, which are not as relevant for grocery purchases. To meet these needs, BigBasket had to develop new technology and features, ensuring a seamless experience for customers across all product categories.

How Is BigBasket Approaching Category Expansion?

While BigBasket was aggressively pursuing quick commerce two years ago, there was widespread scepticism about the relevance of the service beyond major metros. But today, it is clear that affluent customers in Tier II cities also prefer the convenience of delivery and exhibit similar buying patterns.

BigBasket, which currently operates in 40 cities, has around 400 dark stores across India, and it is adding 30-40 stores each month to keep up with demand.

According to Parekh, quick commerce will become increasingly relevant as grocery shopping is rapidly moving towards quick commerce. “Unless someone has highly specialised needs, almost all grocery deliveries will soon be done through superfast platforms,” he said.

In addition, more categories—beyond groceries—are shifting to quick commerce, particularly for fast-moving products. Whether it’s electronics, fashion, or general merchandise, items with high demand and quick turnover will be increasingly delivered within minutes.

“For instance, during the iPhone launch, we sold a significant number of phones within just a couple of days. Customers didn’t want to wait even until the next day; they wanted their new devices immediately. This trend will expand to other fast-moving consumer durables like accessories, mobile phone cases, chargers, and earphones,” Parekh observed.

However, he mentioned that not all categories will shift entirely. Larger, more specialised products, like high-end electronics or large appliances, are unlikely to transition to quick commerce. But smaller, fast-moving items within these categories will, Parekh said.

In fashion, basics like standard footwear, tees, and shorts will likely move to quick commerce, while more specialised or high-end fashion items won’t.

Moving forward, BigBasket plans to expand into categories like toys and general merchandise, along with fashion, while it is also seeing a growing trend in seasonal merchandise.

“When we decide which new categories to prioritise, we consider three factors — product’s size and weight, the velocity of the product and customer demand. If a product has low velocity or isn’t naturally associated with quick commerce, we may avoid it. We also assess the viability of selling higher-value products within this model, as it may not always make sense financially,” Parekh said.

Bottom Line: Can BigBasket Be The Quick Commerce Winner?

Although BigBasket is aiming to be one of the largest quick commerce players, Zomato-owned Blinkit was sitting on a 40-45% market share as of July, according to a recent report by brokerage firm UBS. Also, Instamart holds a 20-25% market share, followed by Zepto and BigBasket with 15-20% and 10-15% market share, respectively.

In addition, the online grocery retailer’s operating revenue saw a mere 6% rise to INR 7,884.5 Cr in FY24 from INR 7,439.7 Cr in FY23. BigBasket generated INR 7,609.6 Cr in revenue from the sale of traded products, which included household and grocery products. On the other hand, it narrowed its loss by 17% to INR 1,267.2 Cr in the year by controlling expenses.

However, it seems team BigBasket has its strategy planned to bring more financial sustainability. According to Parekh, quick commerce is really about how much revenue can be generated per dark store.

“If your dark store generates a minimum revenue, it will automatically become profitable and start generating profits. This is just like any other physical retail business. For instance, let’s say we have 50 stores in Bengaluru. If all 50 stores cross a certain revenue threshold, depending on your expense and margin profile, you will automatically become profitable for Bengaluru. In my view, the same thing is true for quick commerce,” Parekh said.

So, where does the issue lie?

The main issue lies in the fact that a quick commerce platform can end up spending too much on marketing, in which case customer acquisition costs become very high, and that makes it difficult to remain profitable.

BigBasket has a large, established customer base that it can leverage due to its long-standing presence. Additionally, its collaboration with Tata Neu and the broader Tata Group brings a significant base of Tata customers, who are also becoming BigBasket customers, helping to keep acquisition costs low.

Indeed, BigBasket has an edge in the quick commerce segment because, unlike newer players like Blinkit or Dunzo, it has been in the grocery and F&B delivery space for quite some time, Karan Taurani of Elara Capital said.

However, while BigBasket has shifted focus from traditional deliveries to quick commerce, they haven’t yet established a unique selling proposition (USP) that sets them apart from competitors. Currently, their product assortment and customer experience is either average or lagging behind their peers, per Taurani.

With the quick delivery race heating up, it will be intriguing to see how BigBasket gains ground in the quick commerce space, challenging established players like Blinkit, Swiggy Instamart, and Zepto.

[Edited By Shishir Parasher]