[ad_1]
Besides Tata Digital, which owns 64% in the Bengaluru-based company, other investors in the firm also participated in the funding round.
The company’s valuation is now up 60% compared to its last primary cash infusion. Mirae Asset, CDC in the UK is among other investors in BigBasket parent Supermarket Groceri Supplies.
Co-founder and CEO Harry Menon said the new capital will be used to strengthen infrastructure and increase marketing to expand the core grocery business.
It will also continue to invest in its rapid commercial product BB Nov, as it entered the space relatively late.
ET was the first to report in its September 27 issue that the e-retailer was looking to raise $200 million and would be valued in the range of $3-3.5 billion, post-money. In a secondary sale of shares in March, it was valued at $2.7 billion.
Discover stories that interest you
Menon pointed out that fast-casual cannot be a stand-alone business for a food company because “making money because of a lower average order value” is “making money”. At BB Nov, the average order value is around Rs 460 similar to the industry average. In the past year, the e-commerce space has seen a funding frenzy that has tapered off amid a slowdown in startup funding across the industry.
BigBasket plans to take its core e-commerce business to around 75 cities, up from the current 55 cities. It also plans to move other subscription-based services like BB Daily to its main app, along with Tata Digital’s pharmacy offering 1mg.
ETtechThese changes and expansion will begin in the new year.
Menon said the stand-alone core food products business is expected to reach operational profitability by the third quarter of the next financial year. It is estimated that it will close the current financial year with gross sales of 1.5 billion dollars with the goal of reaching about 2 billion dollars in gross sales in the following year.
The Bengaluru-based company’s latest funding also comes as there has been a severe slowdown in late-stage funding. In September, a funding round led by Tata Digital lifted the valuation of the group’s pharma portal 1mg to over $1 billion, turning it into a unicorn.
Rapid expansion of delivery
While BigBasket can service about 80% of its existing customers through BB Now, the company plans to allocate about $40-50 million to the business, going forward. “The first thing is that we will invest in BB Nov, which means we will look at another hundred stores (dark stores) to cover all BigBasket customers. By January-February, we would have covered 100% of BigBasket customers,” said Menon.
Significant expansion is underway in Tier 2 markets where the company will aim to deliver in 30-45 minutes. Because adding more stores in areas without enough density “might not make sense,” he added.
Currently, BB Nov is doing gross sales of around Rs 130 crore per month with a target to reach around Rs 320 crore by December 2023. It has a presence in 24 cities that are currently served through dark stores — small warehouses in central locations in the city that will quickly service orders at nearby locations.
BB Nov competes with Swiggy Instamart, Reliance Retail-backed Dunzo and Mumbai-based Zepto. For Menon, he is clear that the core business will continue to be scheduled deliveries at BigBasket across all markets in the country, contributing around 70-80% of total sales.
“I’m quite confident about (the break-up of fast trade) how it will sit with users and 70% will still be the core BigBasket service, while the rest will be from fast trade and subscription services like BB Daily,” he said.
With the expansion in place, Menon said he hopes BB Now will also become an acquisition tool for BigBasket’s core customers, unlike the grocery service that converts existing customers to try the 30-minute delivery service. “We’re going to do a lot of cross-selling,” he said.
ET reported on December 20 that Instamart and Zepto are encouraging users to increase their order size to over Rs 1,000, while Dunzo is pushing longer delivery times like the Dunzo Daily watch.
“The moment you try to increase the average order value, your pickup time goes up, and the amount a bike can carry is also limited. The purpose of people who use flash trading is speed,” Menon noted.
“Gross margin is also very critical and you should earn at least 4% on delivery — around Rs 18 on a Rs 400 order,” he said.
Change in Super App
BigBasket has also rolled out its core services into its main app, internally dubbed its own “super app.” BigBasket and BB Now are listed on Tata Neo as part of the popular super app.
Menon said bringing pharmacy into its main app was always the plan, including before the Tata deal happened.
“Pharma is very close to food products around the world.” If you see a grocery store, they will usually have a pharmacy. We always wanted to introduce pharma even before the deal with Tata. With the deal made with Tata, it was a no-brainer. It will flow straight into 1mg, just like Tata Neu,” he said.
ETtechWhile 1mg is expected to be included in the grocery app next month, its BB Daily subscription service is also expected to launch in the coming weeks. BB Daily is mainly for morning foods like bread, milk, eggs and other foods.
Within the broader online grocery and personal care segments, segments like meat, beauty have been given a “door” on the main app. These “doors” essentially create a gateway for consumers to go directly to these sections while coming to the main grocery app.
“We will introduce some more categories as a draw, but we are yet to decide which one.” We’ve seen the beauty and the meat is good, but it won’t work for just fruits and vegetables. So we are seeing if more can be done and that would be in the ‘more’ section of the app,” he said.
The company is also expanding its offline Fresho stores from 25 stores to 100 stores. It opened its first Fresho store in Bengaluru last November.
These stores are also running experiments as the Bengaluru stores sell fruits and vegetables, while other FMCG products can be ordered on the app and picked up at the store. In Hyderabad, however, both fresh produce and consumer goods can be bought in stores, and in Calcutta even meat can be bought at a Fresho outlet.
[ad_2]
Source link
