BIG BASKET – A STORY OF SUCCESS

Submitted By: Sabal Jain(144)

Swati Batra(176)

Shilpa Sharma(157)

Varsha Sapra(183)

Tisha Makkar(179)

Introduction

Life is changing very fast. People used to be more traditional but now they have become more professionals. They are ready to spent money in order to live a convenient life. Internet has made very drastic change in one’s life. People working in MNCs have no time to go and shop for their basic needs. Taking this as an opportunity 6 entrepreneurs started e – commerce business which is also known as bigbasket.com. It is portal through which you as customer can buy all the basic goods which are required in day to day activities.

Prior to this e-commerce business these entrepreneurs had earlier launched fabmart.com which is also an e-commerce site which sells music cds, toys, jewelry etc. So, they had a practical experience as to how e-commerce business works. Then this fabmart.com merged with many other business but still these people are the shareholders of the same.

Then they finally launched bigbasket.com in the month September 2011 with the help of some angel investors and they also raised huge funds of $10 million from Ascent Capital which is the first institutional investment firm for them. These funding was done with very long term vision of opening this business in other states of India.

About

BigBasket.com (Innovative Retail Concepts Private Limited) is India’s largest online food and grocery store. It is the first comprehensive online grocery store in Bangalore, Mumbai & Hyderabad. They provide a catalogue of 10,000 products of over 1000brands. One can find anything and everything they are looking for.

Big Basket.com was founded by K Ganesh and Meena Ganesh (founders of TutorVista), along with the Fabmart & Fabmall founders V S Sudhakar, Hari Menon, Vipul Parekh and V S Ramesh. Their catalogue covers different categories such as Staples & Provisions, Fresh Fruits & Vegetables, Toiletries, Branded Food & Non-Food products, Bread & Bakery Products, Dairy Products, Frozen Foods such as Ice Creams & many more.

BigBasket.com have made life simpler and grocery shopping a breeze! Now one can buy organic food & grocery online at one’s leisure and from the comfort of his home. One not need to stand in the long queues at ration shops, provision stores & supermarkets. Online grocery shopping in Mumbai, Hyderabad & Bangalore has been made easy.

Business Model

Big Basket has a much customized business model. They are banking upon their logistics to deliver goods timely to their customer across the state. Their motive is to deliver the goods on time in order to satisfy their customers. In order to the same, they have a fleet of 50 vans which are being commissioned to deliver the goods to the customer as per their convenience. They work on Hub and Smoke model where all the goods are bought and kept in a warehouse in Banglore. Then from warehouse the goods are supplied to the hubs which cater to the state.

The order are placed on the website or through a telephone number mentioned on their website. The order for the next day is taken between 07.00 hrs to 22.00 hrs the previous day. All the orders are compiled during the night and goods are purchased early in the morning from the Mandi like the vegetables and fruits etc.

The objective is to buy and sell the goods the same day, so that goods don’t get kharab (English mein kya hoga ) which will add to their cost. They want to sell their products in fresh state condition too.

Once the goods are purchased now they are sent to different hubs according to the orders of the region. They have different slots of deliver i.e. during 7 am-9 am, 11 am-1:30 pm, 3 pm-5 pm and 7 pm-10 pm. Customers request to send the goods when they are available in their home according to the slots.

Sales & Revenue

Now, talking in terms their financials. They are growing very vast in many regions and state. Average number of transactions which takes place in a day is around 300 and the average value of each bill is around Rs.1200/-. So, we can clearly see the revenue they generate each day in one state. Total revenue for the day is 1200 X 300= Rs.3, 60,000 X 30 days = 1, 08, 00,000 per month. New customers which are joining each month each month is around 3000 and next billing for each customer is being done in 15 – 20 days.

One of the advantage of this company is that they have is their own private stable crop which contributes to 20% of their total business. Profits margins also look very attractive. Gross Profit remains in between 20 % - 23 % and net profit is around 5% - 7%.

Future Projections

They have a very bright future ahead because they have identified the needs which will rise and they have made plans to adopt those in order to survive in this competitive world. As we know young generation is more health conscious so they are planning to add organic food in their portfolio, pesticides free fruits and vegetables. Though they may be bit expensive but will have a huge demand. Not just that they planning to keep freeze foods in their cart so that people can order the same and eat the same without spending much time in cooking it.

They are also planning to add international brands in their kitty. Also, planning to expand their business in different cities like Mumbai etc. By doing the same, they will increase their brand value, revenues and profits would automatically increase.

Challenges

One thing that has not changed in all these years is the inefficiencies in the supply chain.But that is a universal challenge. There are other challenges which are specific to their online format.

First challenge is the Quality Control pick errors. The picker picks and packs the wrong product. However, this has now been addressed. They have invested in special scanners which record the order and if the picker scans the wrong product the scanner shows the error.

The second and most pressing is to get fill rates right, which currently stand at 90-95 percent for BigBasket.com. “Consumers are expecting to get a 100 percent fill rate and that puts pressure on them. People buy online for convenience and even if one item is short, they don’t mind purchasing everything offline.

The Third problem is of suggesting alternatives for stock-outs and at present, Big Basket.com’s platform doesn’t have the intelligence to do so. For the time being, it’s tackling the issue by mentally preparing customers before delivery. Not surprisingly, the company has invested heavily in technology, especially for back-end logistics. A routing software helps them divide the number of orders serviced by each van, which are fitted with GPRS systems to monitor movement in real-time.“Delivery boys carry tablets where customers punch in PIN numbers to confirm receipt of order. There’s no minimum order value and they charge Rs. 20 as delivery charges for orders up to Rs. 1,000. Anything above this is delivered free. Customers have the option of four time slots for delivery. “They hope to touch 1,000 orders a day by November 2012.

SWOT ANALYSIS OF BIG BASKET.COM

STRENGHTS:

(1) Huge investment capacity,(2) Convenience for Customers,(3) High Quality Products,(4) Low inventory cost,(5) Low delivery charges,(6) Good relationship with Suppliers,(7) Customization,(8) Closer working relationship with customers,(9) A vast variety of stuff available,(10) Can be start with very low investment.

WEAKNESSES:

(1) No economies of scale,(2) Limited Financial Resources,(3) Lack of staff,(4) Weak brand name,(5) Sometimes the transportation cost increases the product cost.(6) Number of potential customers who can buy through Internet is not still

enough.

OPPORTUNITIES:

(1) Expanding Oversea,(2) Product extension,(3) Strategic Alliances,(4) Licensing,(5) Venture capitalists,(6) Everyday number of Internet users is increasing in a rapid way.

THREATS:

(1) Competitors go online,(2) Changing Government policies.