To enable their express service, BigBasket created a city-wide network of dark stores that stocked milk, eggs, bread, vegetables, fruits, and other essentials. This allowed BigBasket to bring last-mile delivery time under 90 minutes.
However, daily needs and fast delivery haven’t translated into daily orders. While the average BigBasket user tends to use the regular service around 3-4 times a month, BBExpress usage was similar. They saw the service as a priority delivery option rather than a daily habit.
Frequency of the usage
This is something BigBasket believes will change with BBdaily. While BigBasket CEO Hari Menon readily admits that the AOV of BigBasket is far larger than the AOV of BBdaily—Rs 1500 ($21) versus Rs 50 ($0.70)—the usage frequency of the latter is what makes it so appealing. In an emailed response, Menon said that BBdaily users are expected to use the app almost every day.
Menon’s expectation is based on the experience of various other businesses in the space. Take subscription-based grocery delivery startup Doodhwala, for example. “Each user spends an average of Rs 2,200 ($31) on our platform. The usage frequency is 25 times a month,” reveals Doodhwala co-founder Ebrahim Akbari.
Founded in Bengaluru in 2014, Doodhwala currently handles 18,000 deliveries a day (largely between 5-7 AM) in Bengaluru alone, at a maximum capacity of around 7,000 deliveries per hour. This is possible, explains Akbari because micro-delivery streamlines deliveries into a single milk-run.
Making it cost-effective
Rahul Chowdhri, the investment professional at Stellaris Venture Partners, says that this single delivery slot is what makes micro-delivery more cost-effective than hyperlocal delivery where there are multiple delivery slots.
According to Akbari, the daily delivery count is expected to go up to 10X in just one year, highlighting the viability of the model. Doodhwala, like its rivals Milkbasket and DailyNinja, offers more than just milk. They also provide daily essentials as well.
This convenience has seen them grow rapidly in a short span of time. And while they may be mere specks compared to the behemoth that is BigBasket, but they’ve had a considerable headstart in the micro-delivery space and BigBasket is playing catch-up.
With BigBasket’s private labels facing competition from big FMCG retailers like ITC and HUL, and emerging meat delivery startups like Licious and Zappfresh competing for a chunk of the meat category, BigBasket is loath to cede the micro-delivery space. After all, industry sources say micro-delivery is a $10-12 billion opportunity in India.
As a late entrant, BigBasket didn’t have the luxury of doing things the way it ideally would like to have. There wasn’t time to meticulously build its own team from the ground up and establish its own supply of fresh milk and daily essentials. Instead, BigBasket chose to acquire startups that had already established working relationships with local milk vendors and had logistics in place.
Heading to the acquisition rate
These were used to kick-start BBdaily. “Buying something comes at a monetary cost while building something new comes at a time cost. Being a company, you have to make those trade-offs all the time,” says Aniruddha Malpani, explaining BigBasket’s decision to go the acquisition route. Malpani is an angel investor in RainCan, which was acquired by BigBasket in October.
However, BigBasket isn’t just relying on its acquisitions. Instead, it intends to put its own unique stamp on BBdaily. “We are building out a completely new team in terms of logistics, supply chain, etc. The new BBdaily product will, however, use the underlying strength of BigBasket, so our sourcing team still remains the same, and the core supply chain remains the same,” says Reebu Varghese, who heads the new BBdaily product. The network of dark stores set up for BBExpress will likely also come into play here.
While BBdaily is currently limited to just milk, BigBasket customers will soon be able to pay a monthly fee for daily delivery of milk, eggs, vegetables, and bread. But the company wants to go even further. “We plan to open up BigBasket’s entire range of private labels for BBdaily,” adds Varghese. He says that the target for BBdaily is 1 million transactions across 10 cities in a year.