After completing its pivot from scheduled delivery to quick commerce with 900 dark stores across 40 cities, Tata Digital-owned BigBasket is now setting its sights on achieving contribution margin positivity by the end of 2026, while aiming for 50-60% revenue growth. Vipul Parekh, co-founder and CMO, BigBasket, speaks with Anees Hussain about the company’s strategic positioning and plans for the year ahead. Excerpts:
Where do you stand on dark store infrastructure?
We have 900 dark stores, around 5,300 square feet each. About 65-70% are in top 10 tier-1 cities, rest are across 40 tier-2 cities. These serve a 2-km radius, with 80-85% orders from within 1-1.5 km, enabling 10-12 minute delivery. We’ve consciously chosen larger format stores to accommodate more and different kinds of SKUs. The average customer search now begins from quick commerce. Earlier discovery began on Google, then shifted to Amazon or Flipkart. Products customers want quickly have expanded dramatically—from groceries to phones, electronics, festival items, gold coins, etc. The real bottleneck is supply, not demand. Our mid-sized stores deliver more SKUs in a single 10-minute order at lower cost versus splitting pick-ups between large warehouses and mini dark stores.
What are your expansion plans?
We’ll add 200-300 dark stores next year, 20-25% growth, maintaining current ratios to serve existing markets better. Tier-3+ isn’t very attractive. A single tier-1 city’s growth potential could equal the entire tier-3+ market. Capex is the same since you need dedicated dark stores with layouts to enable 10-12 minute delivery. Focus is building scale at existing stores through wider assortment, category expansion, and furthering leverage through Tata ecosystem partnerships.
Competitors have waived handling, surge, and delivery charges. Is this sustainable?
No, absolutely not. Look at food delivery. It’s a duopoly with tremendous pricing power and 15-20% year-on-year growth. Despite this, they’re just moderately profitable in a fairly large industry. In quick commerce, delivery can be subsidised for short-term to drive growth but this is cyclical. Eventually, you must charge for delivery. Valuations today support growth, but focus will shift to profitability. I’ve learned the hard way in retail that investors reward growth up to a point. When the wind changes, it becomes very difficult to pivot to profitability if you haven’t built a sustainable unit economic model.
Are you concerned about a quick commerce bubble burst?
From a customer perspective, the product-market fit is here to stay. The Indian customer has irreversibly moved to quick commerce. Unless the government mandates by law that nobody can deliver in less than an hour, which I don’t see happening because this creates significant employment, there’s no going back. However, the bubble burst could be in aggressive pricing or freebies. This is sustainable only as long as you’re doing `10,000 crore fundraisers. As markets mature and growth rates decline, these will automatically disappear.
How are you leveraging Tata ecosystem partnerships?
We’ll deliver all electronics via Croma—India’s largest offline digital consumer goods retailer. This improves unit economics for both and offers unmatched assortment in a category plagued by low margins and high obsolescence. We launched in Bengaluru, expanded to 4-5 cities, but are covering only 40-50% of desired pincodes and will expand dramatically next year. With Tata 1mg, we’re expanding pharma, a high-potential category for quick commerce. Challenge is carrying large assortment, having trained pharmacists, meeting licencing norms, and navigating regulations. We’re exploring similar relationships within and outside Tata.
What is your outlook on private labels?
Private labels contribute about one-third of our overall revenue. We have 80+ brands spanning fresh produce, meat, staples, and non-food. Focus is on higher quality at better cost through scale and understanding customer trends. We’re introducing products in emerging categories like high-protein foods. Private labels build retention and provide higher margins, but contribution won’t exceed appreciably. We expect it to stay around current levels.
How are you balancing growth with profitability?
The industry will take two-three years before growth moderates to 15-25%. Then advantages like unit economics and private label share will play out. Our goal is contribution margin positivity covering all variable costs by September, possibly December depending on competition. As business stabilises, we’ll become profitable while targeting 50-60% growth. The exact timetable isn’t in our hands in a highly competitive market because you must respond to competition, but we’re quite certain it will happen this year.
Is this largely going to come from driving up average order values (AOV)?
Our AOV is currently around `600. This will increase as high-ticket items like electronics grow. AOV impacts unit economics, but gross margin is equally important: a combination of private label, fresh categories, scale, and advertising revenue will come into play.
How are you addressing concerns around delivery worker payouts falling?
Gig wages are market-determined. Until now, there’s only been 4-5 players. But with Amazon, Flipkart, JioMart and others entering, parity in wages will rise. The government has taken a progressive stance bringing in legislation for social security including insurance and provident fund. That will also improve net benefits. Our biggest challenge as we grow continues to be hiring.