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How BigBasket Works With Kirana Stores For Hyperlocal Delivery

How BigBasket Works With Kirana Stores For Hyperlocal Delivery

BigBasket has raised $1.02 Bn across 14 funding rounds

The company’s business model is asset-light so it works with kirana stores and other food retailers

How exactly do kirana stores help the grocery delivery company and what role do they play in operations?

In the last eight year of operations, grocery delivery company BigBasket has marked several milestones and has even survived through hyperlocal bubble burst. A constant has been its service and attempts at engaging with local small store networks and kirana stores to ensure fresh and fast delivery for its customers.

Bengaluru-headquartered unicorn was founded by VS Sudhakar, Hari Menon, Vipul Parekh, V S Ramesh and Abhinay Choudhari. The total funding raised by BigBasket has raised $1.02 Bn across 14 funding rounds from investors such as Alibaba, Helion Venture Partners, Bessemer Venture Partners, Abraaj Group, LionRock Capital and others.

As Inc42 had earlier explained, the company’s business model is asset-light. It means that BigBasket does not own retail outlets and uses warehouses and third-party stores for procurement and stocking. It partners with third-party vendors, wholesalers and resellers, and also sells some goods under its private labels.

As an online grocery delivery company, BigBasket claims to have over 10 Mn registered customers and claims to process 1 Lakh orders per day. The company claims to have over 20K products from over 1000 brands and presence in 25 cities across the country. The company plans to touch $1 Bn gross sales run rate by the end of FY19. It has recorded close to $33 Mn (INR 230 Cr) in gross monthly sales, with an annual exit rate of around $435.8 Mn (INR 3K Cr) in March 2018.

Procuring From Kirana And Grocery Stores

One of the crucial aspects of BigBasket’s growth plan is its network of grocery store, which will enable quicker deliveries for some products. It looks to find synergies in corner shops to ensure faster and timely delivery to its customers, especially for speciality items, such as cakes, bakery items, meat, poultry and fish, flowers, body care, Ayurveda products, confectioneries and snacks.

BigBasket cofounder and CEO Menon recently said that the company is expanding its B2B presence with a focus on working with kirana (corner) stores. Over the last few years, the company has been enabling deliveries through its warehouses after procuring products from farmers and stores. In simple terms, BigBasket has been enabling multiple processes behind its grocery delivery business through procurement to supply chain and logistics.

In the hyperlocal space, grocery delivery has grown as a major market for several players. Today, global giants such as Walmart and Amazon have been investing millions in developing their grocery delivery business while existing players such as BigBasket and Grofers etc continue to leverage their market expertise to grow.

Selling To Stores, Businesses

Needless to say that establishing warehouses for fulfilment allows greater flexibility and inventory control for delivery companies, but kirana stores can prove to be a viable alternative, considering that this involves a lower cost typically.

Besides procuring from kirana stores, BigBasket also sells products from its marketplace to over 1,000 kirana stores, hotels and restaurants. With its lower margins, BigBasket is hoping to target higher volumes. Since it also sources a majority of its fruits and vegetables directly from farmers, it is able to compete with other wholesalers on price too.

However, the B2B model has been far from profitable for the company. The wholesale B2B arm of BigBasket, Supermarket Grocery Supplies, increased its overall losses by almost seven times reaching $96.35 Mn (INR 653 Cr) in FY17 from $14 Mn (INR 95 Cr) in the previous financial year, as per filings last year. In an interview earlier this year, Menon said that BigBasket is working with corporates, hotels, restaurants and cafes as well, particularly with its private label products. He also claimed that cash burn has come down by 50-60% between 2018 and 2019.

With BigBasket taking yet another directional change and keeping the focus more on kirana stores procurement, the company has made another major business overhaul and continues to be confident of its business model in the face of increasing challenges.