Competition Is Never A Threat, Says Bigbasket CEO

BW Businessworld's Soumya Gupta interacted with Hari Menon, CEO, Bigbasket, to know how his company managed to keep its head above the ground even in troubled times. Menon explains what clicked for the brand and how to win customers.

How has Bigbasket managed to keep its business model simple and survive the age of aggressive expansion?
We had defined our business model very clearly right from the beginning. Our business model is largely based on delivering superior customer experience which we define as on-time delivery, delivering each product ordered and maintaining quality standards.

How has been your journey from Fabmart.com to Fabmall?
As pioneers of e-grocery and we had originally started in 1999 under the brand name FabMart. We had also set up an elaborate supply chain for the same, so the grocery offer was taken offline and we set up Fabmall stores. In 2004, we merged with the Hyderabad-based Trinethra grocery chain and launched 204 offline physical grocery stores in south alone. We were then acquired by Aditya Birla Group in 2006, and the physical store format is better known as 'More' today. In December 2011, we were reborn as Bigbasket.com in Bangalore. Today we are present in over 17 cities, with over 20,000 products, over 3.1 million registered customers and 40,000 orders a day.

How did Bigbasket become a front-runner in the grocery delivery segment?
The real testimony is in our delivery model which is inventory led. We currently operate at 99.5 per cent fill rate and 99 per cent on-time delivery. We offer three differentiated delivery models (all inventory -led), which are actually aligned with our customer buying preferences.

Model 1: In the full-service model, customers typically have a planned buy. Planned buys are normally the large buys that customer does. Average number of items that a planned buy basket has is 26 items/ products.

Model 2: In our one-hour express delivery, customers buy emergency items such as milk, bread and dairy or top up items such as fruits, vegetables and meats. We will deliver such products in one hour. We offer this service in 8 metro cities.

Model 3: Specialty Store: Customers tend to prefer to buy certain products from a local shop or a particular brand.

What are the biggest challenges that you have faced while scaling up?
There are three specific challenges that are unique to the e-format:
1. People: 70 per cent of our employees are blue collar workers. Getting the right people at the right time is obviously an ongoing problem; in addition retaining them is also becoming a tricky problem.

2. Perishable items: Sourcing, storing and handling fresh produce is one end of the problem; the other end is that fresh produce comes with an inherent problem of lower shelf life leading to high wastage. I think we are one of the few in the world who are doing this well, with only 3% overall wastage. We are also very committed to building a sustainable organic F&V and staples ecosystem.

3. Perception: Online grocery is relatively new to the customer - inducing trial especially for perishables is a challenge. We have learnt that offering guarantees such as a no-questions-asked return guarantee on any product reduces the risk perception in customer's minds and makes it easier to induce trial.

What are the major looming threats and competition in the grocery deliverable market?
We believe that competition is never a threat. It only makes the market more open to innovation, which ultimately leads to providing extraordinary services to the customers. Having more players is better as it gives more confidence to the customer.

Please talk about the USP and marketing strategy that makes you a unique brand?
Bigbasket is successfully operating in 30 Indian cities and has a registered customer base of over 3.1 million. This typically allows for good profit margins than on brands owned by other companies. We have a lot of private labels to our name including Fresho, Royal, and Popular.

How is the 'Smart Basket' going to improve the supply chain of fruits and vegetables?
The "Smart Basket" feature allows customers to shop quickly. Today with smart basket our customers finish shopping for their grocery needs in less than 3 minutes. We use data to understand what the customers are buying; analyze their baskets, frequency of purchase etc. This helps us in improving predictability of what they are buying which intern helps in improving sourcing and procurement of various items.

Tell us about the analytics team at Bigbasket that consists of more women than men.
The Analytics team at Bigbasket boasts an 80 per cent women to men ratio. This is in a sharp contrast to the traditional technology teams across the industry that attract very few women especially at the top levels. The team at Bigbasket comprises bright, young women who not only bring high technical skills to the table but also use these to drive key data based business decisions at Bigbasket. Besides storing and leveraging overall data, the team is acting as a research agency for various FMCG brands.