The big challenge in grocery e-tailing is last-mile delivery, high attrition: Hari Menon, CEO, BigBasket

Online grocery store BigBasket, founded by VS Sudhakar, Hari Menon, Vipul Parekh…

Online grocery store BigBasket, founded by VS Sudhakar, Hari Menon, Vipul Parekh, VS Ramesh and Abhinay Choudhari in December 2011, banks on superior customer service, a wide assortment of products and best prices to expand its customer base, especially among DINK (dual income, no kids) families. CEO Hari Menon, in an interaction with BV Mahalakshmi, talks about plans to generate revenues of Rs 800-1,000 crore by 2015-16, and how the company maintains an on-time delivery rate of almost 100%. Excerpts:

How did the idea of grocery e-tailing strike you at a time when there is both hype and hope on e-commerce?

We started BigBasket in December 2011 in Bangalore, and expanded to Mumbai and Hyderabad within a year. As with other categories, we found a huge untapped opportunity for groceries as well. The trigger was primarily the convenience factor. We wanted to create a one-stop online shopping experience for high quality, fresh products at competitive prices, delivered right at the customer’s doorstep.

The founding team had both offline and online retail experience — it had earlier set up India’s first e-commerce site,, in 1999. It later established the Fabmall-Trinethra chain of more than 200 grocery supermarket stores in South India. Trinethra was sold to Aditya Birla group in 2006 and it currently operates under the brand ‘More’.

We have clocked more than a million orders across the three cities since inception, delivering over 25 million items. We are getting approximately 5,000 orders a day on average and growing at over 20% on the back of a rapidly expanding customer base of more than 1.5 lakh. The average basket size is Rs 1,500.

What are your expansion and investment plans?

Grocery e-tailing is fast catching up among DINK (dual income, no kids) families because of convenience, besides the quality of products. We do the have the first-mover advantage and will soon be expanding to three more cities — Pune, Chennai and Delhi — by February 2015.

We raised Rs 200 crore recently in a fresh round of funding led by Helion Ventures and Zodius Capital at a valuation of Rs 1,000 crore. We had seed funding from serial entrepreneurs Meena Ganesh and K Ganesh. We reported revenues of about Rs 85 crore for 2013-14 and the target for 2014-15 is Rs 250-300 crore. After expanding to six cities, we will target a revenue of Rs 800-1,000 crore in 2015-16. Our Bangalore centre has already turned cash-positive and, in the next eight months, both Mumbai and Hyderabad will also break even.

How do you address challenges in last-mile delivery, logistics and inventory since you deal in perishable products?

We started BigBasket for three primary reasons — convenience, range and pricing for quality products. We manage our own end-to-end logistics. All processes are backed by technology to ensure error-free operations. We benchmark against global operating standards and have achieved on-time delivery rates of over 99.3%.

What are your plans for sourcing and strengthening backward integration?

We have entered the private labels business. At present, about 35% of our revenues come from private labels. In the next 12-15 months, about 40% of our business will come from private labels, under the brand ‘Fresho’, which would include fruit, vegetables, seasoning products, high-end chocolates and coffee.  As part of our backward integration plans, we will be working with farmers directly for sourcing of vegetables and fruit.

Besides, in association with a few farmers in Karnataka, we will be marketing a wide range of organic produce with certification, all sold at normal prices. As of now, we have tied up with 250 companies, have six warehouses with a fill rate of 99.5% and 99.4% on-time delivery. The challenge for grocery e-tailing is last-mile delivery coupled with high attrition.

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