Seeing decent demand from tier-2 cities, says co-founder Vipul Parekh
Vipul Parekh, Co-Founder, Chief Finance Officer and Chief Marketing Officer, BigBasket
Over a third of BigBasket’s revenue comes from its private labels, said Vipul Parekh, co-founder, adding that the company plans to launch labels in categories like premium personal care, organic staples and organic dry fruits, among others, going forward.
The Tata-owned company recently closed a $200-million funding round, at a valuation of $3.2 billion. The company also plans to invest the fresh funds towards three business areas, including expansion of its slotted grocery delivery business into newer cities and towns.
“We will be present in almost 450 towns by the end of March this year. A lot of investment is going into making the slotted grocery delivery business wider (in terms of reach) and faster (in terms of delivery). We are now repurposing that business to make it deliver faster. Earlier, we used to deliver maybe, 80 per cent of orders the next day but now the goal is to deliver 80-100 per cent of orders on the same day,” said Parekh, who is also the chief finance officer and chief marketing officer at BigBasket.
Further, the company is investing in its quick commerce vertical, BB Now. The plan is to expand into 20-25 new tier-2 cities over the course of next year and along with increasing its reach in the tier-1 cities BB Now is already present. BB Now currently has a total of 300 dark stores (warehouses).
“We are seeing decent demand from tier-2 cities. Obviously, tier-2 does not have the same intensity of demand that you find in tier-1 cities, but there are some tier-2 cities which actually behave have a lot like tier-1 cities. For example, Surat, Lucknow, Jaipur and Ahmedabad,” said Parekh.
The third investment area for BigBasket this year is multiple pilots, which the company is running to discover whether these formats are ready for market. “One is a large format offline model, which is a store selling both fresh fruits and vegetables and FMCG products operating in various neighbourhoods. Second is a technology-intensive store which we just opened in Hyderabad and we will add more of them in Hyderabad, Bengaluru and Kolkata over the course of the next few months,” he added.
BigBasket also plans to add medicine delivery under its quick commerce offerings by adding Tata 1Mg’s services on the app. However, details like the launch timeline and pilot city are still under discussion.
The company has grown at 50 per cent CAGR in the last five years, said Parekh, adding that he expects to continue growing at this rate over the next three years as well. The business is contribution margin positive, which means that its revenue covers all costs except corporate costs like salaries, technology and certain marketing expenses.
“We expect our corporate burn to keep coming down over a period of time as we continue scaling and the contribution margin goes up. We should be EBITDA positive in probably the next 18-24 months,” he added.