SWOT Analysis of Big Basket

February 9, 2018 By Hitesh Bhasin Tagged With: SWOT articles

Big Basket is the largest online food and grocery store of the country. They
offer products from a wide range of categories that includes Vegetables and
Fruits, beverage, dairy products, Rice and Dal, Spices, Meat, Packaged foods and
Personal Care products.

Strengths in the SWOT Analysis of Big Basket :

1. Product Range: Big Basket offers a huge range of products which stretches
to about 18000 products.
2. Exotic Range: It also offers exotic fruits, vegetables and imported groceries
which are not easily available in nearby retail outlets. This gives them an
edge in catering to customers who like buying such stuff.
3. Discounts: Big Basket offers huge discounts on various products. They also
have the product bundling technique to maximise sales and offering
maximum discounts to the customers. This makes them a lucrative option
for customers to buy.
4. Convenience: Big Basket offers an escape from the hassle of standing in
the queues of malls or going all the way to the retail stores. They give the
products right at the door step and offer multiple payment options. The on-
time delivery guarantee makes them a lucrative option, Customers,
especially in big cities where life is very fast and it is difficult to reach thThe
customers, can shop at any time of the day.
5. Target Group: They have selected their target customers very carefully and
have established a footing in the metropolitan and some tier-I cities. They
operate in Bangalore, Hyderabad, Mumbai, Pune, Chennai, Delhi, Mysore,
Vadodara, Patna, Indore, Vijaywada, etc. They are currently operational in
about 25 cities.
6. Low Fixed Cost business model: Most of the items that Big Basket offers
are perishablehence they depend on the retail stores they are coordinating
with for the products. This means they have no inventory cost and makes
their business model more profitable.

Weakness in the SWOT Analysis of Big Basket :

1. Delivery Time: Big Basket delivers the groceries the next day. Many
retailers have started the facility of home delivery to nearby societies and
customers in just few minutes to hours. So customers prefer this instead of
waiting for 24 hours.
2. High Variable Cost: Cost of running many delivery guys, delivery trucks,
storage for perishable items, wastage during transportation makes the
 business run at a high variable cost. They have to bleed more money and
will take longer to break even.
3. Minimum order quantity/price compulsion: Big Basket does not offer
home-delivery below a certain set order price limit. This means that
customers would be forced to add a product or two just to avail the service.
This makes them lose a customers.
4. Be at home: Customers have to be at home when Big Basket is about to
deliver. This means the customers have to plan according to the delivery
time. If by some means the order gets delayed customer gets angry and
unhappy by the service. On top of this they have to pay a little add on price
for the home delivery.
5. Order Cancellations: They depend on stores that they have tied-up with to
provide them the items. If they do not have the items available they won’t
be able to deliver them. This sometimes tend in cancellation of orders. Out
of stock issues tend to make the customers unhappy and repetitive of such
issues makes the customers reluctant to reuse the service.

Opportunities in the SWOT Analysis of Big Basket :

1. Market: Indian retail market is valued at more than approx. $550 million
and grocery alone covers 60% of this share. Hence it’s a huge market with
many players to accommodate and customers to cater.
2. Grocery Growth: India is the 6th largest grocery market in the world. E-
commerce grocery market is growing with a year on year growth rate of
19%.
3. Expansion: Many cities are still not covered by these startups and Big
Basket can target them and gain the first movers advantage. They can
expand to tier-2 cities and increase their market.
4. Cross selling and Value Packaging – Cross selling is a major advantage
for Big basket as it can sell multiple products by product bundling.

Threats in the SWOT Analysis of Big Basket :

1. Competition: It has small presence in terms of cities covered hence, it is

getting a huge competition from other startups like Grofers, PepperTap,
Nature’s Basket, Zop Now, Aaram Shop, Mera Grocer, etc.
2. Bigger Players: Bigger players in terms of financial backing and presence
are also entering this lucrative industry. Players
like Amazon, Flipkart and Google have also entered this industry. This may
prove fatal for smaller players like Big Basket to compete with them.
3. Smaller Players: Many other localized shops have picked up on this trend
and have started home delivery service to nearby customers thereby killing
groups of target customers across regions and cities.
 4. Customer Retention: It is very difficult to retain customers. They would
tend to move with the service provider that offers the most discounts.

Market Place vs Inventory-Led

Business Model canvas of Big Basket

Value Proposition:
 Cost reduction
 Easy management
 Easily scalability
 Improved speed and performance
 Almost no downtime
 Faster customer service
 On demand supplies with convenience
 In-bound:

 Just-in time philosophy

  Being at the customer’s doorstep at the promised time.

 No questions asked return policy

 Different qualities of groceries available

 4 time slots as per convenience

 Out-bound

 50 % discount if delivery is not made in time

 City-specific marketing

 BTL activites in malls and apartments

 Focussing on impulse buyers

Benefits
 Variety
 Getting stuck in traffic jams
 Paying for parking
 Standing in long queues
 Carrying heavy bags
 Get everything you need,
 When you need, right at your doorstep
Revenue Model:
Merchandise sale, store sales, delivery charges, sales commission from local
retailers, sponsored content, feature listing
Target Market:
 Mass Market
 Local vendors
 Tech savy population
 Diversified
 individuals
 Students
  Young professionals
Capabilities:
Key Activities
AWS subscription, Data analytics, Product development (web+App) , Warehouse
maintenance,Timely delivery
Key Partners
Amazon Web Services EC2, Cloud computing experts, Local Merchants,
Warehouse partners, Employees Management, Stakeholders, Payment processing
merchant.
Key resources:
Employees, AWS developer, Reliable network, Brand/Culture, Office space
Channels
Social Media, Website, Mobile Apps, Word of Mouth, Multi product
Growth Model:
Cost Structure:
Salaries – AWS developer, website/mobile app developer, UX developer
Hardware/Software expenses, storage + logistic cost, product procurement cost
Sustainability Strategy:
Be a differentiator:
o Personalized, customized experience customers
Hybrid Model

Delivery Strategy

Own fleet of GPS enabled vans

Working on a hub-and-spoke model
All the goods are bought and stocked in a warehouse
50% refund if late
just-in-time model,
warehouse stocking model

Recommendation from
User’s

 Try to achieve one day delivery efficiency

 Introduce loyalty programs
 Improve website and social presence
 Include bundled offer system a customers can make and save for future
 usage
 Make website more user friendly
 Expand geographical reach
 Increase awareness through advertisement.
 Share consumer experience on their website

Problems to deal with

 ! Cyber crimes
 ! Waiting
 ! Quality of products
 ! Competition
 ! Delivery
 ! Minimum order

Profitability

GP between 20 – 23% and net profit between 5- 7%

Reasons:
1.Private labels
2.No shrinkage
3.Costs on rentals are low
4.Save on cost of utilities
5.Farm-to-home concept

How to order
I understand BigBasket adopts a hybrid structure of hyperlocal and
inventory based model,what were the driving factors for choosing this
model?

Predominantly, we work on inventory-based model. Hyperlocal

models have a lot ofchallenges because of which they are not able to
sustain customer satisfaction. Our forte isfreshness. Let’s look at an
example; from the time the vegetable is harvested to the time itreaches your
home it takes 24-48 hours. The vegetables start to lose its freshness from
thetime it is harvested. It has to go from harvester to mandi to wholesaler
to retailer and thenfinally to the customer. We break this preset supply chain
model by sourcing it directly fromthe farmer to the customer within 6 hours
and ensure that the vegetables are still fresh. If wewere to work on a hyperlocal
model, we will have to get our customer experience agents tosource it from a
retailer who already has the vegetables in stock from anywhere between 24-48
hours. This would mean that the vegetables are already at the end of
their shelf life.Availability is another issue. The retailer will keep his
own inventory according to thesuppliers that he is associated with. This
would lead to customer dissatisfaction because wewill not be able to complete
the order. Right now we work at over 95% order fulfillment.

Competitive Advantage of Big Basket

Same day delivery. On time delivery.

Own logistics network. City-wise model for last mile delivery.
Farm-to-Home philosophy for perishables.
Customer Loyalty
Technology
 Automatic sourcing
 GPS tracking of delivery vans
 Order clustering and route planning.
 POS systems

Porter 5 forces

VARIM Framework

V-Value:
 Variety
 Getting stuck in traffic jams
 Paying for parking
 Standing in long queues
 Carrying heavy bags
 Get everything you need,
 When you need, right at your doorstep
A-Adaptability
Big Basket Marketing Mix (4Ps) Strategy

Posted in Services, Total Reads: 2613

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Marketing Mix of Big Basket analyses the brand/company which covers 4Ps
(Product, Price, Place, Promotion) and explains the Big Basket marketing
strategy. The article elaborates the pricing, advertising & distribution strategies
used by the company.

Let us start the Big Basket Marketing Mix:

Product:
Big Basket is a leading Indian ecommerce website focusing on grocery items
being delivered. The main product in its marketing mix is its website and app,
which gives access to users to buy groceries and food online. Big Basket offers a
variety of products ranging from grocery to dairy products, to staples to meat
products. Following are the varieties of product categories it offers:

• Fruits & Vegetables – Fresh fruits, Fresh Vegetables, Cut fruits, Cut
Vegetables, Exotic fruits & vegetables, Sprouts, Organic produce, Flowers

• Food grains, Oil & masala – Dals, pulses, Rice, Salt, Sugar, Organic
Staples, Flour, Dry fruits

• Bakery & Dairy – Bakery snacks, gourmet breads, cakes, desserts, dairy

• Beverages – Tea & Coffee, Fruit Juices, Energy Drinks, Soft drinks

• Branded Foods – Breakfast Cereal, Ketchup, Pasta, Baby food etc.

• Beauty & Hygiene – Oral Care, Beauty, Grooming, Hygiene, Fragrance,
Skincare

• Household – Utensils, Storage, Stationary, Car needs, Electricals etc.

• Gourmet – continental snacks and confectionaries

• Eggs & Meat, Baby Care etc

Price:
Big Basket is a leader in the online grocery delivery services. Big Basket is the
first to venture into this sector and has many competitors currently. Even with all
the competition, it continues to be the market leader and most popular amongst
the customers. It tries to increase its margins by setting a nominal price of Rs.20
as a delivery charge for items ordered below Rs.1000. It also provides a nominal
discount on the order of Rs.3000 or Rs.5000 and above to encourage households
to buy their monthly groceries from Big Basket thus providing economies of
scale. They mark up the prices of the groceries a little higher from the market
prices so as to cover their high variable costs. High variable costs are incurred
due to wastage of perishable items, cost of transportation, cost of labor,
transportation damage, cost of storing inventory etc. Although there’s a markup
in the price it still tries to keep the prices competitive with the other players in the
market.

Place:
Big Basket is spread over many parts of the country which include cities like
Bangalore, Mumbai, Hyderabad, Pune, Chennai, Delhi-NCR, Madurai,
Coimbatore, Mysore, Vijayawada-Guntur, Ahmedabad, and Nashik. Big Basket
will soon be expanding their operations soon to other cities. The customers place
their orders online according to their needs. While doing so, they choose the
delivery timings and the mode of delivery. It provides two types of deliveries:
Standard and Express. Express delivery is done within two hours of placing the
order and Standard is delivered on the next day. Since Big Basket follows an
inventory model, it procures its goods from HUL, P&G and other big
manufacturers, farmers and retail stores and stores it in the warehouse. Upon
receiving the order, the delivery personnel picks it up from the warehouse and
delivers the goods to the said person within the chosen time.

Promotion:
Big Basket has used many marketing and pricing strategies over the years to stay
ahead in the business. The biggest marketing strategy they introduced was to
name Shah Rukh Khan as their brand ambassador and launch TV, media and
digital marketing campaigns which were aimed at gaining popularity and
visibility amongst the masses, as celebrities tend to be very influential in the
Indian set up. Big Basket provides offers periodically to its most frequent
customers, heavy shoppers and also cash back in their digital wallets.

Since this is a service marketing brand, here are the other three Ps to make it the
7Ps marketing mix of Big Basket.
People:
With the scaling up of business, it has to constantly scale up the workforce to
keep up with the operations since it is a very operation oriented business. The
business works on the efficiency of the delivery guys who, if fail to delivery
correctly or on time, and the customer service staff who, if fail in delivering
optimal solutions, would lead to customer complaints and thus degrade the Big
Basket brand amongst customers.
Process:
When Big Basket started it used to follow a Just in time model where the delivery
staff used to procure the items from the local retailers as and when the order is
received. But with time it started to follow Inventory model. Now, the goods are
procured in advance and stored in the warehouse. Whenever an order is received
from the customer, it does the weighing, packaging and sends out the items for
delivery on the customer-specified timing. The model of Big Basket is a hub and
spoke model. It has a main warehouse in the city and many other distribution
centers throughout the city where the goods are shipped for delivery. Currently,
it has been focusing on implementing the hyper-local strategy where it has tie-
ups with the local vendors to deliver goods within an hour or two.
Physical Evidence:
Physical Evidence of Big Basket is seen from the way that we get the delivery of
the goods, the quality service provided by the customer care executives, the
warehouse storage, transportation services etc. Hence this covers the marketing
mix of Big Basket.