OPPORTUNITY EVALUATION - Big Basket

AN ASSIGNMENT SUBMITTED AS A PART OF THE REQUIREMENTS

FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

SUBMITED BY

Aditya Karki D 4

Jitendra Singh D 15

Dakshaya Ratan Singh D 16

Batch- 2015-17

Under the Guidance of

Dr. Amit Agrawal

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES (SIMS)

JANUARY 2017
Turnitin Report
OPPORTUNITY EVALUATION Big Basket

Bigbasket.com is Indias biggest online based food and grocery store. The virtual store offers a
huge variety of products with a wide range of option of brands to choose from. The company does
not have any brick and mortar stores i.e. has got no offline presence. Big Basket, presently offers
its services in over 25 cities in India.

The backstory of big basket is a rather interesting one. Big Basket was launched by 5 gentlemen
Mr Hari Menon, Mr V S Sudhakar, Mr Abhinay Choudhari, Mr Vipul Parekh, and Mr V S Ramesh
in 2011, but to get to the real interesting part, well have to rewind to 1999.

In 1999, the above 5 men started one of the first businesses in India which was online. The business
was called Fabmart. Fabmart was an online groceries business. Despite not being very popular,
fabmart actually did pretty well and later expanded to a retail chain which was called Fabmall
which was present mainly in South India. The Aditya Birla Group had eyes on this business and
later acquired it. This store is now very popularly known as MORE.

The same 5 men got together in 2011 and decided to get into another venture and hence launched
Big Basket. Mr Hari Menon is currently the CEO of the company
Q . What are those trends observed by the entrepreneur before venturing in the opportunity?

Hari Menon is the founder of Bigbasket.com which is an online grocery store catering to the Indian
masses that provides the customer relaxation from the boredom experienced while waiting in
queues at supermarkets. Initially Hari along with the founding team of big basket had cofounded
Fabmart, one of the pioneers in the ecommerce sector. It was at that time that he felt that there was
a need among the lndian population which was increasingly coming online to order their groceries
online. He along with the other founders sensed an opportunity to leverage the better internet
connectivity to fulfil the customers basic need of getting vegetables and daily staples at the
convenience of their home with an easy to navigate online portal.

The trend of younger families with multiple earning members has reduced the time
available with households for grocery and vegetable shopping. In this background, if an
entrepreneur is able to provide an inventory based grocery model that provides good quality
products (grocery, personal care products etc.) in less time to a customers home at a time of their
choice, it definitely makes sense. It were these trends that made Hari see value in this business and
he ventured into this opportunity.

Also, according to a report published by Nielson based on a survey conducted in 60 countries,

around 25% of the respondents were ordering groceries online and 55 percent intended to do so in
future. Another study stated that the food and grocery retail in India was in excess of $294 billion
of the total $490 billion retail market in India. While the overall growth of retail was fueled by the
300 million middle class population, the e-tailing part was growing owing to the massive adoption
of ecommerce among the millennial and generation Z.

These results of surveys also motivated Hari to fine tune his business plan for Big Basket by first
offering it in the bigger cities of Mumbai, Hyderabad, Bangalore etc. to begin with.
Q. What are those problems identified by the entrepreneur before venturing in the opportunity?

While online shopping for clothes and gadgets has become quite popular due to the success of
Amazon and Flipkart around the world, when it comes to grocery shopping people are still used to
pick up vegetables and fruits after inspection. However these days due to difficult routines and
busy schedules, office life, traffic and long commute do not leave much time for people to go for
vegetable and grocery shopping. After hectic weekdays, people like to relax at their homes rather
than worrying about getting groceries from kirana stores. It is in this backdrop that big basket
wants to operate by leveraging on its strengths to emerge the market leader in delivering good
quality groceries at the customers doorsteps.

It has been a success so far in changing peoples habit of looking at

fruits/vegetables/groceries physically before buying. It has been successful in this by creating a
simple, easy to use, interactive web interface with all payment options acceptable.

The distribution network was made efficient by introducing warehouses to store quality
products sourced from locations pan India. Big basket has also launched a few of its own brands
in the pulses/staples segment. In addition to carrying an inventory based model, the company has
also diversified into hyper local options by offering products from other vendors on their platform.

Q. What are those gaps identified by the entrepreneur before venturing in the opportunity.

The most important gap identified by Hari was the lethargy that people working in corporate these
days feel and changing the vegetable shopping habit of the urban consumer. This coupled with the
increasing internet penetration along with the ecommerce boom created by the likes of Flipkart
and Amazon forced him to think of starting an online grocery store on the lines of Webvan based
in New York.

While pitching to investors initially Hari faced a few problems securing investment since
his business plan was rejected saying it wont work since it was similar to Webvan. However, Hari
was sure of his idea and convinced the investors to invest in his startup. He was able to convince
the investors by making the point that the demographics of India were different compared to the
US and the problems that an office goer here faces are also different. With long working hours and
corporate lifestyle he was convinced that there was a need for an online grocery portal that could
provide the customers the convenience of booking their daily needs and grocery items at the click
of a button and get it delivered at their desired time slot at their desired place.

The Potential Competitors

Big Basket is operates somewhere in the middle of the F&B and FMCG industry. Groceries is
something without which people cannot survive. So, the bargaining power that customers possess
is fairly low. Even though customers have much options of moving to other offline stores, Big
Basket in the past years has managed to expand its customer base across 25 cities.

Big basket is facing tremendous rivalry from ventures like Grofers, which has a similar business
model but is more of an aggregator of grocery stores across cities. Grofers is giving stiff
competition to big basket and there has arisen a need to constantly stay up to date with technology
to hold on to their market share. Big Basket also needs to keep up to date with its marketing by
using data analytics.
Apart from online stores, the major competitor of big basket is the local vendors of groceries and
the mind-set that people have that local stores are more safer and provide fresher items as compared
to online stores. People do not find the need to use websites/apps to order their basic day to day
need.

Amazon, very recently has launched a similar initiative like big basket which seems like a big
threat and will disrupt the existing online grocery market.

Creating a sense of brand loyalty is very crucial for this market segment as big players cannot be
stopped from entering this market. Mr Menon, CEO of big basket is unfazed from this threat and
believes in the core competencies of the business which is simplicity. He also believes that the
more the number of players in this segment, the faster will this market open up.

Big Basket is constantly innovating and is targeting a total revenue of 1800 Crores in FY17.