Start-ups not just for young
Bigbasket’s promoters find experience works just as well along with funds from Alibaba
Bigbasket’s promoters find that experience works |
chill rooms, refrigerated trucks and so on. That precluded Bigbasket from buying produce directly from farms.
So for the first year, every morning at 3:30, the founders visited a wholesale fruits and vegetable market to buy produce, then picked up other items from a wholesaler. Eventually, Bigbasket put together its own refrigerated warehouses and a fleet of trucks. These moves let the company source the food more cheaply and eventually in 2016 led them to launch Express, a 90-minute delivery service for milk, eggs, bread and emergency supplies.
By investing in “the dysfunctional food and grocery supply chain,” says Arvind Singhal, chairman of retail consultancy Technopak Advisors, “Bigbasket’s managed to get a head start.”
Still, there was a lot of competition, including LocalBanya, Sequoiabacked PepperTap and SoftBankfunded Grofers. (Of them, only Grofers is still standing.) To stay ahead, Bigbasket needed to invest in technology: web-connected, temperaturecontrolled trucks, GPS-traceable vans, inventory-optimising algorithms.
“The days of experimenting were over,” says Parekh. “We needed to step on the pedal.”
This all cost money and by then venture firms were more willing to invest. Starting in the fall of 2014, Bigbasket began mopping up capital — $35 million from Helion Venture Partners and Zodius Capital Advisors, $15 million from Bessemer Venture Partners, $150 million in a round led by Dubai-based Abraaj Group. By mid-2016, Bigbasket was in eight large Indian cities.
Then it was time to target smaller cities. To grab the attention of residents in burgs like Kanpur, Surat and Vijayawada, they recruited Bollywood star Shah Rukh Khan as a spokesman. In one TV commercial, Khan lets shocked delivery boys in through the back door. When asked if he’s the one who orders the groceries, Khan lowers his voice conspiratorially and says, “That’s my role in the house.”
When they ask for his autograph, he says, “You’ll be coming home every week from here on. We’ll take a selfie next time.”
Along the way, Bigbasket has constantly had to adapt to local conditions. Originally the company wanted one person to drive the trucks and carry the orders into homes. But the delivery boys didn’t want to be seen as drivers because they’re considered lower status in class-conscious India. So they had to hire one person for each job — which turned out to be crucial because parking is scarce so the driver needs to circle the neighbourhood.
They also need backup workers on standby because delivery people and packers have a tendency to take time off to celebrate local cultural events. “If there’s a festival, 30 delivery guys take off to their village and return after four days,” Sudhakar says.
Attracting and keeping customers is a challenge for all e-commerce companies, and doubly so in India. Shopping habits vary widely from city to city and are deeply ingrained. The company spent years figuring out how to achieve the ideal ripeness of bananas for its picky customers and devised exacting quality specifications for produce, including eight varieties of eggplant, and trained the sourcing team to meet them.
Customised software automatically guides drivers to their destinations, which the company says has helped it achieve a near-perfect on-time rate. Late deliveries earn customers a 10 per cent discount. Missing items are refunded, plus 50 per cent of whatever the item cost.
Seven hundred people handle customer complaints and answer 95 per cent of calls within the third ring, Bigbasket says. Complaints range from missing items to delivery boys’ hygiene. After getting one too many of these complaints, the founders mandated that their personnel wear clean shirts and open-toe sandals to suit the humid weather.
“A Bigbasket person visits a household an average 50 times a year so being presentable was supreme,” Menon says.
Last year, the founders took stock of what they had achieved. Bigbasket was now in cities with a combined population of 150 million people, had good brand recall and was making money on each order.
But, “we’d barely scratched the surface of the cities we were already in,” Menon says. “It was time to bring in a strategic partner.”
After initial conversations with Amazon, Walmart and others, the founders zeroed in on Alibaba, which runs a large online grocery business in China and has built its own delivery operations.
They’re now preparing for the next phase of growth by ploughing money into warehousing and delivery systems in the 25 cities to bring down delivery times to three hours. In two years, the plan is to double the range of products to 60,000 SKUs, and more than double the farmer base to 5,000, expand private label items and use Alibaba’s muscle to source and import a range of merchandise to six times that of largeformat supermarkets.
“A customer should be able to buy whatever he wants,” Menon says.
The company spent years figuring out how to achieve the ideal ripeness of bananas for its picky customers and devised exacting quality specifications for produce, including eight varieties of eggplant, and trained the sourcing team to meet them.