BigBasket Case Study

Understood. I will now provide all the details for every point in the BigBasket case study as per the
structure of the document. This will be a comprehensive summary without omitting any information. It
will take a moment to structure and write; please hold on.

Introduction

BigBasket, founded in 2011, was India’s first online grocery retailer, aiming to transform the
traditional mindset of customers accustomed to physically selecting groceries like tomatoes and
bananas.
By 2013, it had a customer base of over 100,000, growing aggressively at 20% annually through
word-of-mouth marketing.
Achieved a remarkable 65% customer retention rate, focusing on providing top-quality products at
competitive prices.
Operated in Bangalore, Hyderabad, and Mumbai, with a unique model that achieved breakeven in
Bangalore in March 2014.
Despite challenges from traditional retailers, hybrid models, and skeptical venture capitalists,
BigBasket had secured the largest Series A funding in the Indian online retail sector.
The case questions whether BigBasket could sustain its breakeven success in other cities and
whether online grocery retailing could be profitable in the long term.

Company Beginnings

Founded by V.S. Sudhakar, Hari Menon, Vipul Parekh, V.S. Ramesh, and Abhinay Choudhary, all
experienced in retail.
In 1999, the team launched Fabmart.com, India’s first e-commerce website, focused on books,
music, and toys but failed due to low internet penetration.
Rebranded to Fabmall in 2003 as an offline grocery chain, later acquired by Trinethra Super Retail
and integrated into Aditya Birla’s More brand.
Encouraged by improving internet infrastructure (213 million users by 2013) and the absence of
competitors in online grocery retail.
K. Ganesh, an angel investor, emphasized their focus on solving "big pain points" with innovative
ideas, avoiding "me-too" business models like repetitive product sites.

Online Drivers and Target Segments

Online Drivers

Groceries like rice and pulses are mundane, repetitive purchases, making physical shopping tiring
and inconvenient.
Factors like parking struggles, long queues, and heavy lifting drove customers toward online
options.
Working couples, especially tech-savvy men, found the online model appealing due to time-saving
convenience.

Printed using ChatGPT to PDF, powered by PDFCrowd HTML to PDF API. 1/3
Target Segments

Middle-class, double-income postgraduates with global exposure were primary customers (30% of
users).
Focused on planned weekly buyers over impulse shoppers to optimize delivery costs.
Minimum order size of $16.15 for free delivery ensured profitability.

Industry and Competition

Market Potential

The Indian online grocery market was $1 billion in 2013 (2% of the total grocery market), projected
to grow to $17 billion by 2017.
Globally, countries like the U.S. and U.K. showed higher online grocery penetration, but challenges
such as perishability, logistics, and high capital costs hindered growth in India.

Competition

Faced competition from:

Traditional Kirana stores: Trusted neighborhood shops offering credit facilities.
Modern retail stores: Struggled with overhead costs, making BigBasket’s warehouse model
cost-effective.
Hybrid retailers like Big Bazaar: Combined brick-and-mortar stores with online platforms.
Among pure online players, BigBasket led in scale and market share, followed by LocalBanya and
EkStop, which were limited to single-city operations.
Differentiated by having a larger product range, direct sourcing, and same-day delivery, unlike
many competitors.

Challenges in Online Grocery Retail

Margins were thin, requiring large-scale operations and high efficiency.

Complexities included:
Managing perishables and ensuring same-day or next-day delivery.
City-specific logistics and warehouse models for localized operations.
Solutions included focusing on weekly buyers, high-margin products (e.g., pet food), and private-
label brands to boost profitability.

Leveraging Technology

BigBasket developed in-house analytics to streamline operations and minimize inventory costs (1-2
days vs. 2-3 weeks for traditional retailers).
Used GPS-enabled route optimization (via AssetTrackr) for efficient deliveries, achieving 99.3% on-
time delivery.
Partnered with Ezetap for mobile point-of-sale solutions, offering cashless payment options upon
delivery.

Advancing Supply Chain Towards Profitability

Printed using ChatGPT to PDF, powered by PDFCrowd HTML to PDF API. 2/3
 Started with a just-in-time model, procuring products from organized retail stores until demand
justified setting up warehouses.
By 2013, warehouses were operational in Bangalore and Mumbai, with plans for Hyderabad.
Direct procurement from suppliers increased margins by 20-23%.
Adopted a "farm-to-home" model for perishables, reducing shrinkage and ensuring quality.

Operations Management

Warehouses handled over 10,000 SKUs, catering to 2,000 daily orders on weekends and 1,500-
1,600 on weekdays.
Delivery followed a hub-and-spoke model, with automated route planning to ensure customer
satisfaction.
Strict quality control for warehouse operations, such as limiting phone use for pickers to avoid
distractions.

Sales and Marketing

Focused on below-the-line (BTL) activities like posters, banners, and radio ads, supplemented by
word-of-mouth marketing (45% customer acquisition).
Low acquisition costs allowed frequent discounts and promotions to attract and retain customers.

Customer Centricity

Operated 24/7 with four flexible delivery slots, catering to customer convenience.
Offered diverse product categories, including cut vegetables, stationery, and gourmet items.
Ensured customer satisfaction with repeat-purchase options, quality checks, and efficient customer
service.

Pricing Strategy

Competitive pricing, especially for private-label brands and perishables, attracted price-sensitive
customers.
Offered discounts, Sodexo coupons, and multi-payment options to enhance accessibility.

Future of BigBasket

Aimed to expand to Delhi and Chennai by 2014 and achieve $56 million revenue in FY 2014-15.
Secured $33 million in Series B funding for expansion.
The company’s ability to outpace competitors and achieve sustainable profitability remained
uncertain amidst challenges from hybrid models.

This comprehensive summary contains all the details from the case study as per your request. Let me
know if there’s any section you’d like to explore further or refine.

Printed using ChatGPT to PDF, powered by PDFCrowd HTML to PDF API. 3/3