BigBasket to invest US$100m in strengthening supply chain in expansion strategy

INDIA – BigBasket, India’s leading grocery retailer, is set to invest US$100 million (Rs 698 crore) in strengthening its supply chain by setting up vending machines and smaller distribution centres across various cities it operates in.   

This follows the US$150 million financial boost that the Alibaba-backed company recently raised, which was led by Mirae Asset-Naver Asia Growth Fund, CDC Group and Alibaba Group.

The online grocery platform which operates in 25 cities across India, plans to increase its efficiencies through the investment.

The proceeds of the fundraising will also enable BigBasket to further penetrate into existing markets with more investments in the first mile, scaling-up of its supply chain and for developing new reseller channels, reports ET Retail.

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“We want to enable two-hour delivery in top 10 cities that we operate in by July this year. For that, we have been investing in strengthening our distribution centres.

“We have 18 large and 80 smaller distribution centres together with our resellers and this will be ramped to 20 large and 100 smaller ones by June this year,” BigBasket co-founder Vipul Parekh said.

The company expects its capital expenditure towards these initiatives to be about US$100 million this year.

According to Parekh, the move will help the firm expand its business, reduce delivery time and ensure quality of dairy and fresh produce.

“We are ramping up our milk subscription business – BB Daily – under which we have built the supply chain to deliver milk and other items in the morning.

The service was started around September last year and our sellers already carry out 90,000-100,000 orders a day.

We are aiming to take this to a million orders a day and a stronger supply chain infrastructure will play a key role in this,” he said.

The company will also be investing in setting up new vending machines in major office and apartment complexes as it seeks to grow its market share ahead of its major competitors which include Flipkart, Amazon.in and Grofers.

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“We see a huge potential of these machines. Customers can use their app to access the machine and buy products. The only human intervention is in re-stocking.

We have already placed such machines at 200 sites in Bengaluru and over the next one year, we want to have 2,000 such sites across the 10 large cities where we operate,” Parekh explained.

Parekh was confident that re-engineering of the supply chain in conjuction with an expansion of the company’s range of private label products will create “a solid foundation for growth in both revenue and profitability.”

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