Final report on big basket.

big basket

1. FINAL REPORT ON
BIG BASKET SUPPLY CHAIN





SUBMITTED BY:(Group num: 12)

Tej Vardhan (17BSPHH01C1177)

Sanidhya Goyal (17BSPHH01C0910)

Shresth Agarwal (17BSPHH01C1004)

Lokesh Patel (17BSPHH01C0564)

2. INTRODUCTION ABOUT THE INDUSTRY:

E-commerce is the activity of buying or selling of products on online services or over
the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic
funds transfer, supply chain management, Internet marketing, online transaction
processing, electronic data interchange (EDI), inventory management systems, and
automated data collection systems.
Modern electronic commerce typically uses the World Wide Web for at least one part of the
transaction's life cycle although it may also use other technologies such as e-mail. Typical e-
commerce transactions include the purchase of online books (such as Amazon) and music
purchases (music download in the form of digital distribution such as iTunes Store), and to a less
extent, customized/personalized online liquor store inventory services. There are three areas of e-
commerce: online retailing, electric markets, and online auctions. E-commerce is supported
by electronic business.
E-commerce businesses may also employ some or all of the followings:
 Online shopping for retail sales direct to consumers via Web sites and mobile apps,
and conversational commerce via live chat, catboats, and voice assistants.
 Providing or participating in online marketplaces, which process third-party business-to-
consumer or consumer-to-consumer sales.
 Business-to-business buying and selling.
 Gathering and using demographic data through web contacts and social media.
 Business-to-business (B2B) electronic data interchange.
 Marketing to prospective and established customers by e-mail or fax (for example,
with newsletters).
 Engaging in pretail for launching new products and services.
 Online financial exchanges for currency exchanges or trading purposes.

INTRODUCTION ABOUT THE FIRM:
Big Basket is an Indian online grocery and food products provider, founded in 2011.
Headquartered in Bangalore, the brand is run by Innovative Retail Concepts Private Limited in
30 Indian towns and cities. It sells fresh fruits and vegetables, meat and dairy, groceries, and
personal care and household items via its website and mobile apps. As of 2017 it had a customer
base of 6 million and was the country's largest online grocer.
In 1999, founders of Big Basket, Hari Menon, Abhinay Choudhari, V S Sudhakar, Vipul Parekh
and V S Ramesh started Fabmart, one of the first online businesses in India. But it did not
succeed because of the low internet penetration in India at the time and lack of secure digital
payment gateways which discouraged people from making online payments. After trying other
ventures they regrouped in 2011 to try the online grocery market again and started Big Basket.
Big basket acquired Delyver in June 2015 for an undisclosed amount. Delyver was an online
grocery store and its specialty was using local stores to deliver groceries to people
[9]

3. In 2017 Big Basket partnered with MUMBAI-owned Bengal Chemicals and Pharmaceuticals
Limited (BCPL) to deliver its industrial chemicals, pharmaceuticals, and home products to its
customers in Kolkata. In April 2017, Big Basket partnered with SnapBizz, a retail technology
firm to automate supply chain and inventory management for local grocery stores.

PRODUCTS OF THE FIRM:

POPULAR CATEGORIES:
 Sunflower Oils,
 Wheat Atta,
 Ghee,
 Milk,
 Health Drinks,
 Flakes,
 Organic F&V,
 Namkeen,
 Eggs,
 Floor Cleaners,
 Other Juices,
 Leafy Vegetables,
 Frozen Veg Food,
 Diapers & Wipes,

POPULAR BRANDS:
 Fresho.
 bb Royal.
 Nandini.
 Kelloggs.
 24 Mantra.
 Saffola.
 Lizol.
 Safal.
 Horlicks.
 MTR.
 Fresho Meats.
 Whisper.
 Real.
 Milky Mist.
 Nivea.
 Himalaya.
 Comfort.
 Sunpure.
 Bru.
 Zespri.

4. SERVICES OFFERED BY THE FIRM :

Did you ever imagine that the freshest of fruits and vegetables, top quality pulses and food
grains, dairy products and hundreds of branded items could be handpicked and delivered to your
home, all at the click of a button? India’s first comprehensive online megastore, bigbasket.com,
brings a whopping 20000+ products with more than 1000 brands,to over 4 million happy
customers. From household cleaning products to beauty and makeup, bigbasket has everything
you need for your daily needs. bigbasket.com is convenience personified They have taken away
all the stress associated with shopping for daily essentials, and you can now order all your
household products and even buy groceries online without travelling long distances or standing
in serpentine queues. Add to this the convenience of finding all your requirements at one single
source, along with great savings, and you will realise that bigbasket- India’s largest online
supermarket, has revolutionized the way India shops for groceries. Online grocery shopping has
never been easier. Need things fresh? Whether it’s fruits and vegetables or dairy and meat, they
have this covered as well! Get fresh eggs, meat, fish and more online at your convenience.
Hassle-free Home Delivery options
They deliver to 25 cities across India and maintain excellent delivery times, ensuring that all
your products from groceries to snacks branded foods reach you in time.
 Slotted Delivery: Pick the most convenient delivery slot to have your grocery delivered.
From early morning delivery for early birds, to late-night delivery for people who work
the late shift, bigbasket caters to every schedule.
 Express Delivery: This super useful service can be availed by customers in cities like
Bangalore, Mumbai, Pune, Chennai, Kolkata, Hyderabad and Delhi-NCR in which we
deliver your orders to yourdoorstep in 90 Minutes .
 BB Speciality stores: Missed out on buying that essential item from your favourite
neighborhood store for tonight’s party? They’ll deliver it for you! From bakery, sweets
and meat to flowers and chocolates, they deliver your order in 90 minutes, through a
special arrangement with a nearby speciality store, verified by us.


DETAILED SUPPLY CHAIN STRUCTURE OF THE FIRM:

Big Basket (Online Grocery Shopping and Online Supermarket in India)follows inventory
model currently. They started from just in time model but moved to an inventory model
considering their expansion and large base of consumers. Additionally, they maintain
warehouses to stock products which they purchase from different vendors. Their vendors include
big firms like P&G, HUL etc. along with small mandi vendors and kirana shops. Moreover,
procurement totally depends on type of products and from where they have to be sourced. To
maintain margins, generally it is preferred to procure items from farmers directly. The whole
chain starts at early morning and they have proper team who benchmarks different prices, so that
procurement could be done efficiently considering cost and time.
Running a big chain in such a business is very difficult, so Big Basket has tied up with local
grocery stores to serve consumers as soon as possible, which is called as hyper local strategy.
They are working on express delivery so that they can deliver products in as much as less time
possible like rice, lentils, cooking oil (basic items) etc. in 60 minutes. Acquisition
of DELYVER (strong two wheeler network) was done for the same purpose.

5. Major points of supply chain process of Big Basket:
1. After getting materials from their vendors, it is stored in warehouses (warehouses cater to
cities within KMs range of 250–300) where packing of items is done.
2. Refrigerated vans are placed in different regions from where order is delivered to
customers or now they have storage facilities by name of dark storage where they store
materials before dispatching to customers. Dark storage facilities get a direct feed from
warehouses.
To order on Big Basket, just follow: Browse, select and pay. It deals in staples, vegetables, meat
and fish to gourmet and ready-to-eat food, household goods and personal care items now. Use of
data analytics is helping them to avoid wastage as items are perishable. Big Basket
processes 35000+ orders every day and operates in 23+ cities nation wide.
Currently, they are operating 25 warehouses and 63 storage facilities. With a customer base
of three million, company is targeting revenues of Rs 1800 crores in FY17


INVENTORY BASED MODEL:

6. ADVANTAGES:

1. Product Range: Big Basket offers a huge range of products which stretches to about
18000 products.
2. 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.
3. Discounts: Big Basket offers huge discounts on various products. They also have the
product bundling technique to maximize sales and offering maximum discounts to the
customers. This makes them a lucrative option for customers to buy.
4. 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 the customers, can shop at any time of the day.
5. 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.
6. Low Fixed Cost business model: Most of the items that Big Basket offers are perishable
hence 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.



DISADVANTAGES:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

7. ISSUES WITH EXISTING SUPPLY CHAIN:

1. Competition: It has small presence in terms of cities covered hence, it is getting a huge
competition from other startups like Grofers, PepperTap, Nature’s Basket, Zop Now,
Aaram Shop, Mera Grocer, etc.
2. Bigger Players: Bigger players in terms of financial backing and presence are also
entering this lucrative industry. Players like Amazon, Flipkart and Google have also
entered this industry. This may prove fatal for smaller players like Big Basket to compete
with them.
3. Smaller Players: Many other localized shops have picked up on this trend and have
started home delivery service to nearby customers thereby killing groups of target
customers across regions and cities.
4. Customer Retention: It is very difficult to retain customers. They would tend to move
with the service provider that offers the most discounts.



SUGGESTIONS:

They either store or have a tie up with distributors, the grocery model is not successful unless
accompanied by other fmcg daily use items and a vast client list , the cost of last mile delivery is
very high.
As far as I am aware, companies like big basket, flip-kart etc are not working on model in which
they have vendors or tie-up will people around the places where they place there order according
to the order they receive and then a person representative of the company comes and collect the
product from the concerned vendor to dispatch it further.

Still standing by their original principle of doing things one step at a time, Bigbasket’s future
plans are somewhat less exciting, perhaps, when compared with what some competitors have had
in the recent past.
Two of its major competitors, Tiger Global Management-backed Grofers, which has raised $165
million so far, and PepperTap, paid the price for aggressive expansion. While Grofers expanded
rapidly before closing down about 10 locations between December and January citing poor
demand, PepperTap shut shop in April, about seven months after raising $36 million from
investors.

Bigbasket had originally planned to expand to 50 cities in total but has now scaled that back to
the 25 it currently operates in. “Their expansion has stopped now. They are now not going to
expand anymore for some time to come. Now, their whole thing is to go deep into these cities
and start making each city work well.

And one of the methods the company has identified as key to achieving this goal is analytics.
With analytics, which are constantly being built upon in-house, the company’s aim is to populate
a customer’s basket based on their most recent and frequent purchases, alert them if they have
not added something they usually buy in case they have forgotten it and inform them if an item
they normally buy is about to run out. To that effect, it already has a feature called Smart Basket.

8. Other key focus areas in the days ahead include the fruits and vegetables supply chain and
organic and private labels.
While Bigbasket has no acquisition or fundraising plans, it does expect to start making
announcements about profitability between now and next March. The company has so far raised
at least $220 million from investors such as the Abraaj Group, Bessemer Venture Partners,
Helion Venture Partners, Sands Capital, International Finance Corporation and Zodius Capital
among others, making it the most well-funded online grocery start-up in the country.

And even though the likes of Amazon have already entered the e-grocery space, throwing up
questions around Bigbasket’s future:
“The Indian retail market is about $550 billion and 70% is grocery. It is such a large-sized
market that it is very difficult for one player to play. The more players that come, the better it is
for the market because it opens up faster and customers become a lot more confident. That is
what you are going to see.
According to industry experts, an inventory model helps online stores extract significantly higher
margins as it buys directly from brands and manufacturers. On the contrary, hyperlocal delivery
start-ups such as Grofers accept orders on an app, collect items from nearby stores and delivers
them, often at a discounted price.
Consequently, these firms operate on wafer-thin margins as they charge the local shops a small
percentage of the overall order value, anything between 2% and 10%, and lose money on every
order because of discounts and offers in an attempt to attract customers.

“In the inventory model, quality is better addressed but delivery is typically faster in a hyperlocal
model. The nature of the product, whether it is standardized or non-standardized, dictates which
is a better model. For instance, if it is milk, which is standardized, hyperlocal may be a better
model because delivery is faster. But if somebody wants to buy some expensive cheese, they
would be more quality-conscious. So, the nature of the product, immediacy of the requirement,
the price-quality association plays a determinant. Some products will fly more on hyperlocal and
some other products on the inventory model. For non-standardized and expensive products,
where consumers are looking for quality, inventory model makes sense, while for standardized
products, hyperlocal model works,” said Deloitte’s Sudarshan.
A challenge for Bigbasket, though, has been employee retention. Of its 12,000 employees,
almost 70% are blue-collar workers. The company has formed a trust that supports workers’
families and ensures there are no extra working hours, said Menon. Still, every time the company
expands, its workforce grows too and that continues to be a problem area.

One of the key decisions of making us who we are today is starting fresh from day one. That has
paid off and paid off well for us as we’ve gone along. The second good thing that we’ve done is
making sure this business model, which has all three ways a customer buys, is brought in.

9. CONCLUSIONS:

Bigbasket is looking at achieving the following targets in the next one year:
1. Automation in warehouses.
2. Scale the footprint to 35 cities with 60 dark stores.
3. Raising $150 million. The company has already appointed Citibank(as its investment
bank) for the same.
The next round of funding may take Big basket’s valuation to anywhere close to $1 billion.
Though it is not too concerned about the valuation, he’s clear about continuing with his focus on
the groceries segment(and kitchen care) and does not intend to diversify the business much.
After all, a $300 billion market is by no means insignificant.

Today, Bigbasket operates 25 warehouses and 63 dark stores (storage facilities). The company
claims to have three million repeat customers and is targeting revenue of Rs1,800 crore in fiscal
year 2017, more than double of the around Rs750 crore it clocked last fiscal year. To be sure,
revenue has been growing steadily, from a meagre Rs3 crore in FY13 to Rs8.5 crore in FY14,
before skyrocketing to Rs200 crore in FY15 and Rs750 crore last fiscal year.
During its early years, Bigbasket was banking on the convenience of online shopping more than
anything else. But it realized that convenience was not a card it could play for too long.
Then what clicked for the company? It amassed a wide product assortment, including categories
such as home and personal care, maintained that quality is sacrosanct, especially in fresh
produce, and finally, offered a competitive price.


It also had to ensure customer stickiness. Grocery buying has three distinct patterns: planned,
bulk purchase at the beginning of every month; weekly purchase that typically revolves around
items with a short shelf life such as milk, fruits and vegetables; and specialty store buying.
Specialty stores are local stores that garner a very loyal customer base for a particular product or
brand, which customers typically refuse to buy from elsewhere such as Karachi Bakery’s biscuits
in Hyderabad or Bengaluru’s Iyengar Bakery’s breads. Bigbasket has those kind of niche stores
listed under its specialty stores category.
Initially, Bigbasket serviced the first category. Fast forward to 2016, the company has launched a
90-minute express delivery service to cater to the second category, a segment which is being
eyed by hyperlocal delivery start-ups including SoftBank and Tiger Global Management-backed
Grofers, and started aggregating local specialty stores online to capture the third category of
customers.
To be sure, grocery delivery as a segment has been on a rise globally. According to a report by
CB Insights in May, grocery delivery start-ups globally raised $436 million in funding until May
this year, surpassing food delivery start-ups, which raised $352 million, for the first time since
2012.

10. The team, to ensure stickiness, built a ‘Cocaine’ model. The customers are classified under trial
one, two and three, and silver, gold and platinum. Trial one refers to the first order, the second
order moves to trial two and trial three is the third order. On the fourth order, the customer
moves to silver, and this is when the team knows they have got a customer.
The highest churn is from trials one, two and three, and the retention rate at platinum is at 95
percent. So the team focuses on getting the customer to move higher up the chain by
incentivising them. Their overall customer retention rate is 35 percent.
The idea is to understand what the customer has purchased in the past, and retain him or her on
the available data. “They use different offers for different people. What retains Mr X is different
from what retains Mr Y.
The past year was focused on growth and expansion. This coming year, the focus will be on
deepening their presence in the cities they operate in.

New additions to the ‘basket’:

Bigbasket is operational in seven cities (including six metros) currently and with fresh funding, it
plans to expand to two more metros and 50 tier two cities. The funds will be used towards:

1. Warehouses:The company is in the process of opening large warehouses (approximately
100,000 square feet) in themetrosof Bengaluru, Hyderabad, Mumbai, Pune, Chennai,
Delhi-NCR, Ahmedabad and Kolkata. These eight warehouses will also cater to cities
that fall within a 250-300 kmsto these metros. For example, the Bangalore warehouse is
serving Mysore at the moment, similarly Chennai can be a feeder to Madurai, Trichy;
Ahmedabad to Surat, Baroda; and Hyderabad to Vijaywada, Vizag and Guntur. There
will be a support network of 60 smaller warehouses getting direct supply from the large
warehouses.


2. Expansion:Bigbasket will be launching in Kolkata and Ahmedabad by October. By the
year end(March 2016), Bigbasket aims to be present in 35 cities. Even after these
launches, we expect 60% of our revenues coming from metros.


3. One hour express deliveries: For emergency items, the company is introducing an
option of one hour express delivery using a two-wheeler network of Delyver, the startup
acquired in January 2015. Bigbasket is setting up dark stores or small warehouses with
1000-2000 SKUs, for the same which will get direct feed from the main warehouses.

Delyver co-founders are now a part of the management team of Bigbasket and the rest of
the team will be supporting the one hour express delivery feature.

12. REFERENCES:

https://www.bigbasket.com/shopping-lists/.
https://www.bigbasket.com/specialty-store/?nc=b-speciality-store&b_t=speciality-
store&b_camp=bigbasket-specialty-store&t_from_ban=192275&t_pos=1
https://yourstory.com/2016/12/bigbasket-growth-story-2/
https://www.bigbasket.com.
https://www.livemint.com.