BigBasket Becomes India’s 2nd Unicorn In 2019; Triggers New Battle In Online Grocery Space

Starting its journey since 2011, the Bengaluru-based e-grocery startup, BigBasket has raised a $150 million in its latest round of funding, making it the first Indian startup in grocery delivery space, to join the unicorn club in 2019, following the e-commerce logistics startup Delhivery.

The funding has been led by the existing investor Alibaba, who in Feb 2018 funded a massive amount of $300 million in the startup, this time approving a $50 million fundraiser, along with the U.K. government-owned CDC group putting in another $40million and South Korea’s Mirae Asset Global Investments adding $59.9 million.

This round has boosted the company’s valuation to over $1 billion, pushing it to the coveted ‘unicorn’ club.

BigBasket’s Well-Programmed Strategy to Maintain the Summit

BigBasket has acquired this ‘unicorn’ title at the time when the Walmart backed Flipkart, Amazon’s extension into food networks like Amazon Pantry and Prime Now, Softbank-backed Grofers and hyperlocal delivery start-ups such as Swiggy and Google-backed Dunzo, are increasingly becoming a verb in urban Indian cities.

Unfortunately, it is not what investments BigBasket has received up till now that has created a major difference in its status but how it has chosen to work; reengineering its supply chain to allow faster deliveries to its resellers and reduce the time from farm to customer. In 2016, several online grocery companies, including Flipkart’s grocery delivery arm and one of the most prominent startups in the space, PepperTap had been forced to shut shop, due to bleeding money. Unlikely, BigBasket not only survived but also managed to grow during that period.

This is due to BigBasket’s business model. They realised that a tight leash was required on the amount of deliveries made and maintain margins for high frequency purchases. They focused on building better logistics.

The newer grocery start-ups heavily rely on kirana stores and supermarkets for picking up and delivering items to customers. Instead, BigBasket focused on owning warehouses and private labels facilitating supply chain integration for fresh fruits, vegetables and meat businesses so that it could deliver fresh produce and other items. This allows the company to not only buy items at lower rates but also utilize the economies of scale that comes with running warehouses and a large delivery operation.

BigBasket has more than 4000 employees today, operating in 10 metro cities and 15 Tier-II cities in India. Its in-house brands, such as ‘Fresho’ for vegetables and idli and dosa batter, ‘Royal & Popular’ for staples, ‘Tasties’ for snacks, will help drive growth going forward. This aids BigBasket in being self-reliant. It has now forayed into the micro-delivery space, with its acquisition of milk-delivery start-ups of Bangalore and Pune, namely Morning Cart and RainCan, respectively.

How Will a Funding of $150 Million Spur BigBasket’s Growth?

BigBasket plans to use the newly-infused funds to scale up its supply chain capabilities and develop new re-seller channels, by adding more cold storage and distribution centers to serve customers faster. The company also plans to add about 3,000 vending machines that offer daily eatable items, such as vegetables, snacks and cold drinks in residential apartments and offices by next month.

BigBasket’s co-founder Vipul Parekh, on knowledge of Amazon and Flipkart’s vigorous challenge on invading the grocery space and doubling their grocery delivery arms, says that the market is quite sizable for a single company to dominate, complying with its complex nature. Such a massive funding is believed to firepower BigBasket in establishing an upper-hand presence of a market leader against its competitors.

The unicorn status has been the culmination of a long, two-decade journey for Big Basket’s founders. It should be a fascinating battle between the market leader BigBasket and its competitors, now that this grocery space is all ready to be invaded, as it provides opportunities for new entrants. It remains how BigBasket fares against its new competitors but for now it can revel in its new-found billion-dollar valuation that was twenty years in the making.

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