BigBasket invests heavily in supply chains of fresh produce, private labels to take on Amazon

Grocery e-tailer BigBasket is upping its game with heavy investments into its fresh produce and staples supply chain, as it prepares to take on global giant Amazon which recently received the DIPP nod for FDI in food retail.

The company is also making significant investments to build the supply chain of its private labels (food) while gearing up to launch its fifth private label brand, GoodDiet, next month, a top executive told BusinessLine .

“We achieved ₹1,400 crore turnover in FY 2016-17, garnering ₹145 crore in March alone. Our projected annual turnover for FY 2017-18 is ₹2,500 crore,” said Hari Menon, co-founder and CEO, BigBasket. “The contribution of private labels to the annual turnover will increase from 35 per cent at present to 40 per cent by March 2018. Our B2B food-service segment — HoReCa (Hotels, Restaurants and Caterers), launched a year ago — is expected to contribute 15 per cent of the annual turnover in the near future.”

Asked about media reports on the company’s plans to acquire smaller rival Grofers and being in talks for a possible sell out to Amazon, Menon said there are no plans to either acquire or sell out.

Meanwhile, BigBasket and Grofers are also awaiting approval from the Department of Industrial Policy and Promotion, for FDI in food retail. Competition in the grocery segment is set to soar when Flipkart joins the fray and formally goes live with a groceries segment, over the next few months.

Elaborating on the private label launch next month, Menon said: “GoodDiet will increase the nutrient quotient in meals/snacks/drinks without compromising on taste and quality. This includes incorporating super foods such as buckwheat, quinoa, into daily meals; healthier snacking options such as roasted flax seeds, fruits and vegetable crisps; ready-to-cook meals such as multi-grain dosa and idli mixes; and healthy cereals such as millet flakes. It will also offer granola snack bars, cold-pressed oils, organic juices and breakfast drinks.”

Fresho for fresh produce, bakery, cut vegetables, batter, cookies; BB Royal and BB Popular for staples; Tasties for snacks, and Happy Chef for gourmet sauces, dips and ready-to-cook meal kits, are the firm’s other private label brands.

Having pumped in investments to the tune of ₹1,200 crore ($200 million) over the last two years — as per Registrar of Companies’ data from business research platform Tofler — Menon, without revealing how much, said all new investments will be pumped into the supply chains of fresh produce/staples and private labels.

The company’s value proposition is to offer the most convenient way of buying fruits, vegetables, groceries, and toiletries from 20,000 products through a slotted delivery, be it weekly, emergency, top-up buy through express delivery, or from neighbourhood speciality stores. Menon says the order fill rate for home deliveries is 99.5 per cent, on-time delivery is 99 per cent, and 96 per cent of the items are in-stock.

BigBasket’s revenue jumped over 3x to ₹563 crore in FY 2016 from ₹170 crore in FY 2015. Its losses mounted from ₹60.6 crore in FY 2015 to ₹277.5 crore in FY 2016 as per RoC data from Tofler.

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