BigBasket to invest $100 M to strengthen supply chain

Alibaba-backed company BigBasket is pumping in $100 million (about Rs 698 crore) to strengthen its supply chain by setting up vending machines and smaller distribution centres across various cities it operates in.

The online grocery platform, which is registered as Supermarket Grocery Supplies, had recently raised $150 million in funding, led by Mirae Asset-Naver Asia Growth Fund, CDC Group and Alibaba Group.

Founded in 2011, BigBasket operates in 25 Indian cities. It plans to utilise the proceeds of this fundraising, which has placed the Bengaluru-based company in the unicorn club, to further penetrate into existing markets with more investments in the first mile, scaling-up of its supply chain and for developing new re-seller channels.

"We want to enable two-hour delivery in top 10 cities that we operate in by July this year. For that, we have been investing in strengthening our distribution centres. We have 18 large and 80 smaller distribution centres together with our re-sellers and this will be ramped up to 20 large and 100 smaller ones by June this year," Vipul Parekh, Co-founder, BigBasket, told PTI.

This move will help BigBasket reduce delivery time and ensure quality of dairy and fresh produce, he added.

The company expects its capital expenditure towards these initiatives to be about $100 million this year.

"We are ramping up our milk subscription business - BB Daily - under which we have built the supply chain to deliver milk and other items in the morning. The service was started around September last year and our sellers already carry out 90,000-100,000 orders a day. We are aiming to take this to a million orders a day and a stronger supply chain infrastructure will play a key role in this," he said.

Another area where the company is investing is in towards setting up unmanned vending machines - BB Instant - in office and apartment complexes.

"We see a huge potential of these machines. Customers can use their app to access the machine and buy products. The only human intervention is in re-stocking. We have already placed such machines at 200 sites in Bengaluru and over the next one year, we want to have 2,000 such sites across the 10 large cities where we operate," Parekh said.

Also, given that these machines are placed within apartment and office complexes, the risk of vandalism is lower.

Parekh said with these investments, BigBasket - which competes with SoftBank-backed Grofers as well as Amazon.in and Walmart-owned Flipkart - will continue to build further on its leadership in the grocery business.

"We have been re-engineering our supply chain to allow for faster delivery to our re-sellers and to reduce the time from farm to our customers. This coupled with an expansion in our range of private label products will create a solid foundation for growth in both revenue and profitability," Parekh said.

Also read: Amazon pumps Rs 238 crore into Indian food retail arm