INDIA – BigBasket, India’s largest online grocery startup, is set to launch express deliveries, in latest attempt to improve customer experience amid rising competition from rivals such as Amazon, Grofers, Reliance, and Jiomart.
According to a report by ET retail, Big Basket will over the next two to three months introduce a quick-delivery service that will be made within an hour of purchase.
Big Basket previously experimented with express deliveries but pulled back due to a number of logistical problems that it had probably underestimated prior to the launch.
The category is however hotting up with well-capitalized companies like SoftBank Vision Fund-backed Swiggy investing heavily into it.
Threatened of losing market leadership position- BigBasket leads the e-grocery category with a 37% share – the company has been left with no option but to relaunch its own express delivery service.
“We have learned from the past to build this vertical…and will now launch it under the Tata umbrella,” Big Basket cofounder Menon said on the weekly audio chat show ‘The Rundown by ETtech’ on Twitter Spaces.
BigBasket had acquired a small express delivery startup, Delyver, in 2015 but that did not help the e-grocer scale up its hourly deliveries at that time amid the first wave of hyperlocal startups which attracted a bunch of investor capital.
Even as BigBasket makes another push for hourly deliveries, Menon said BB Daily, its subscription-based morning essentials delivery business, is on its path to becoming “the most profitable” business for the company.
“Our average cost of delivery in this business is Rs 5 per order and the average order value is Rs 150-160. So, if you look at the percentage of order value, it’s one of the cheapest home delivery businesses, extremely economical,” said Parekh.
Tata’s bet on BigBasket comes amid heightened interest not only from vertical and horizontal e-commerce players like Amazon and Walmart-owned Flipkart, but from diversified groups like Reliance Industries.
Flipkart recently raised US$3.6 billion for a group of investors including Soft Bank, Walmart, GIC, and the Canadian Public Pension Investment board.
The company plans to use part of the funds to enhance its grocery and last-mile delivery capabilities, further putting pressure on BigBasket to do something to protect its own turf.
“This has always been a competitive place (with Amazon, Walmart-Flipkart). With Reliance Jio coming, they said you will be in trouble. So, we have been in trouble for a long time—for our entire period of existence—and we continue to lead (in terms of market share),” Parekh said.
BigBasket’s investment comes at a time when India’s online grocery market Valued at US$3 billion at the end of 2020 is projected to continue posting double-digit growth to touch US$22 billion by 2025.
This great market potential has attracted huge investments in the sector with startups like Swiggy, Flipkart, and Zomato attracting huge sums of funds from investors who are betting on the country’s e-commerce potential.
Food-delivery app Zomato Ltd has already became the nation’s first unicorn to launch an initial public offering (IPO), raising US$1.3 billion with backing from Morgan Stanley, Tiger Global and Fidelity Investments.
BigBasket plans to go for an initial public offering but not in the immediate future, the founder said. ET had previously reported that the e-grocer would launch an IPO in the next two years.
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