BigBasket.

com: Redefining the Business

Model

SUBMITTED BY
SUBHAM CHAKRABORTY
0191PGM002
PGDM SAP
Q-1 Do you think online grocery retailing would work in India? Please state your
reasons.
Q-2 Discuss the strengths and weaknesses of the two main models employed in
online grocery retailing.
Q-3 In your assessment, what is the scope for the hyperlocal model in online
grocery retailing? In the given scenario, describe the effects of the
interdependence on relationships between the company and the channel
partner for any business model to survive.
Q-4 It is important to transform consumer buying behaviour for groceries from
buying from local stores to buying online. Is BigBasket doing anything in this
direction? What can be done further to achieve this objective?
Q-5 How would technology help BigBasket achieve its long-term objective?
What would be the role of technology in redefining BigBasket’s business
model?
 Q-1 Do you think online grocery retailing would work in India? Please state your reasons .

• I think grocery delivery is really popular. On Demand Economy is booming. In the food and
beverage industry, an increasing number of consumers are looking for on-demand food
delivery options, and grocery retailers are being forced to react. Today’s consumers are all
about convenience. Groceries sell irrespective of the state of the economy. Online grocery
verticals have taken the lead in terms of monetizing their convenience seeking consumers,
by converting ~30-40% to the total consumer base to their subscription programs. Key
drivers of rapid subscription adoption are affordable pricing and a variety of benefits ranging
from price savings via cashbacks and price discounts, along with (limited) free/priority
delivery. Armed with this strong value prop, the platforms were able to drive subscription
adoption rapidly in less than 15 months of launch on an average.
• India’s online grocery space has gone through a significant evolution in last few years- from
explosive growth and funding in CY15 to growth challenges and funding winter in CY16 and
then kickstart and accelerated growth 2018 onwards. In this stop-start journey, many new
business models have evolved, and many themes have been proven and disproven.
• Inspite of all these disruptions and changes, one thing that did not change was the massive
potential for online grocery- as indicated by India’s USD 500+ Bn grocery market out of
which a mere 0.2% is online (~USD 1.2 bn overall and ~USD 1 Bn considering only hyperlocal
grocery). Given this massive potential, we expect the online market to continue chugging
along at 50% growth rate for the next few years, which will be served by various models,
including category specialists and narrow and wide supermarkets.
 Q-2 Discuss the strengths and weaknesses of the two main models employed in online
grocery retailing.

• Strengths in the SWOT Analysis of Big Basket :

• Product Range: Big Basket offers a huge range of products which stretches to about 18000
products.
• Exotic Range: It also offers exotic fruits, vegetables and imported groceries which are not
easily available in nearby retail outlets. This gives them an edge in catering to customers who
like buying such stuff.
• Discounts: Big Basket offers huge discounts on various products. They also have the product 
bundling technique to maximise sales and offering maximum discounts to the customers. This
makes them a lucrative option for customers to buy.
• Convenience: Big Basket offers an escape from the hassle of standing in the queues of malls
or going all the way to the retail stores. They give the products right at the door step and
offer multiple payment options. The on-time delivery guarantee makes them a lucrative
option, Customers, especially in big cities where life is very fast and it is difficult to reach
thThe customers, can shop at any time of the day.
• Target Group: They have selected their target customers very carefully and have established a
footing in the metropolitan and some tier-I cities. They operate in Bangalore, Hyderabad,
Mumbai, Pune, Chennai, Delhi, Mysore, Vadodara, Patna, Indore, Vijaywada, etc. They are
currently operational in about 25 cities.
• Low Fixed Cost business model: Most of the items that Big Basket offers are perishablehence
they depend on the retail stores they are coordinating with for the products. This means they
have no inventory cost and makes their business model more profitable.
• Weakness in the SWOT Analysis of Big Basket :

• Delivery Time: Big Basket delivers the groceries the next day. Many retailers have started the
facility of home delivery to nearby societies and customers in just few minutes to hours. So
customers prefer this instead of waiting for 24 hours.

• High Variable Cost: Cost of running many delivery guys, delivery trucks, storage for perishable
items, wastage during transportation makes the business run at a high variable cost. They have
to bleed more money and will take longer to break even.

• Minimum order quantity/price compulsion: Big Basket does not offer home-delivery below a
certain set order price limit. This means that customers would be forced to add a product or two
just to avail the service. This makes them lose a customers.
• Be at home: Customers have to be at home when Big Basket is about to deliver. This means the
customers have to plan according to the delivery time. If by some means the order gets delayed
customer gets angry and unhappy by the service. On top of this they have to pay a little add on
price for the home delivery.

• Order Cancellations: They depend on stores that they have tied-up with to provide them the
items. If they do not have the items available they won’t be able to deliver them. This
sometimes tend in cancellation of orders. Out of stock issues tend to make the customers
unhappy and repetitive of such issues makes the customers reluctant to reuse the service.
 Q-3 In your assessment, what is the scope for the hyperlocal model in online grocery retailing? In the given
scenario, describe the effects of the interdependence on relationships between the company and the channel
partner for any business model to survive.

• When it comes to groceries, the battle's not just between offline and
online. Break up the former into the friendly-neigbhourhood kirana stores,
which are still holding their own, and the more recent phenomenon of
modern retail, manifested by sprawling hypermarkets and supermarkets.
The digital banyas are of two types, too: the ecommerce players who stock
up food and beverages and deliver them to your doorstep; and then there
are the rash of well-funded hyperlocal ventures, which pick up groceries
from a clutch of stores in the neighbourhood and rely on hired feet-on-
the-street to bring your order home. Online grocery services, as analysts
will tell you, is perhaps the toughest part of the ecommerce market to
crack. Even in a digitally savvy market like the United States, less than 1
per cent of food and beverage sales took place online, according to
estimates by Business Insider Intelligence early in the year — this in an
F&B market valued at $600 billion a year, and despite the likes of Amazon
investing heavily in delivery infrastructure.
• It's easy to see why grocery etailing and their delivery are
tough businesses. For starters, the supply chain is disjointed
and technology in inventory management still unrefined.
Then, delivery persons don't come easy, and expect roughly
Rs 20,000 per month in wages, over two times what a kirana
would pay the local chhotu. Also, as discounts are available all
over — at last count there were an estimated 65 hyperlocal
startups — customers have no reason to be brand-loyal.

That's why analysts reckon online grocers who source directly

from companies or wholesalers are better placed than the
hyperlocals who source from a range of kirana stores, and
whose key business is just the delivery part.
 Q-4 It is important to transform consumer buying behaviour for groceries from buying
from local stores to buying online. Is BigBasket doing anything in this direction? What can
be done further to achieve this objective?
• Proving that no sector of the retail market is safe from the online shopping
revolution, it is now possible for the humble hometown grocery store to become
digitized and available on your smartphone, tablet, or computer. Just think: no
more long checkout lines, counting the number of items to see if you qualify for
the Express Lane, forgetting your grocery list at home, or carrying heavy bags up
your front steps. Online grocery shopping is dramatically changing the
consumer's relationship with the food market and making a service that may
have once felt luxurious into an everyday convenience. An online grocery store is
a website that allows users to purchase food over the Internet to be delivered to
the person at a later time. Ordering food on the Internet is similar to ordering
any other product--the desired food items can be searched for specifically, or
one can browse through listings of products or sections, similar to sections one
might walk through at an actual grocery store. The products offered by an online
grocery store are identical to a normal grocery store. When one has finished
shopping, checkout is made with a credit card, and the buyer must specify
certain hours that he will be available to receive the food for delivery. Since
Internet groceries must deliver the food to the customers, they typically pay a
fee for delivery based on the amount of food they buy.
 Q-5 How would technology help BigBasket achieve its long-term objective?
What would be the role of technology in redefining BigBasket’s business model?

•  Improving Network infrastructure, creating cloud computing environment and

cost effective
•  Removing in-house storing using AWS Cloud computing which is the on-demand
delivery of compute power, database storage, applications, and other IT resources
•  Using a cloud services platform via the internet with pay-as-you-go pricing.
• IT STRATEGY
• MISSION Big Basket aims to use Amazon web services to automate the network
and slide all the data storage into the Cloud for increasing the efficiency in data
storage and management
• VISION Be the largest food and grocery store for helping customers in every corner
of India
• Objective Big Basket aims Speed of Innovation and Delivery along with Real-time
analytics, big data, machine learning and modeling.
• Value Statement Increase in speed since all the data will be on Cloud,
IDENTIFICATION + CONVERSION + REALIZATION = IT VALUE
• Strategy Growing information, Reducing physical storage, Increasing the processing
power