Big Basket Business Model - How Big Basket Earns

Hello Friends ! Big Basket, our grocery leader in India so the story starts in 1999 when there was a .com boom and this is one of the 1st e-commerce company who came to buy online after 2 years they added grocery too in starting a lot of people came online but you know in starting people don't buy online only COD can operate at that time and not online payment so people came but did not buy it so they analyze and they came to offline and in south India they got a huge success they opened a fab mart and sell everything in it but still it did not make much profit and in 2006 Birla group overtook it and in 2011 they again return online under sell retail network in 2011 only they got a funding do try to understand this.

If you want to have a grocery business so what are the options 1st is inventory modal, means I will buy product directly from the company at a discount rate next I will be selling to my target audience and rest is my profit 2nd is market place, like amazon and flipkart do here if I will get an order then I will transfer to other and they will deliver it 3rs is hybrid here I am doing the both 1st and 2nd logically they did marketplace, they captured small-small grocery shop and made a pact with them and now the orders they get via there app and website, they do forward to these small grocery shops and deliver the product via a delivery boy so this was the simple process slowly they got the findings and they started to grow and then they shifted to inventory model because in this there is a lot of margin and you can too control your quality they have 18000 listed products, more than 1000 brands and still it's going under loss.

 but slowly and slowly there revenue is increasing last year they did Rs1176 crore revenue and had a loss of Rs191 crore they had a 1500 ticket size and 650 ticket size if one opts for express delivery there target is by the end of 2020 we gonna to take 2000 crore revenue in my opinion fab mart too was a good business model but in 1999's internet used to be a new technology and people don't trust internet and online payment, not good speed, and not visual websites so they took a good step by coming to offline market and made money and reinvested afterword so from 2011 they are in loss, but in coming years they will be coming in profit because it's inventory modal will keep on increasing with the advent of revenue there expenses will tend to decrease they do a simple strategy by ranking it's customer basically. 

If you order today then you are not it's customer so suppose in 3 month you ordered 2-3 times, then you became a silver customer for them silver customer means that this is our potential customer and their platinum customer comes 95% repeatedly so your expenditure get's decreases time to time countanously in 13 funding round, they had taken 884 million dollar and recently they had taken 300 million dollar funding from Alibaba in June 2015 they acquired deliver and that inquisition was good according to me because of this they are able to deliver products on time before that in inventory modal they used to get delay in delivery time.

Now they can deliver vegetables in 2 to 3 hours in vegetable you need to deliver within 1 hours and not in 2 to 3 days so this thing is possible due to delivery acquisition and I will be giving them +1 in grocery they operate in 35% of profit margin and in other item 10-12% margin you may be finding it more but if you see there expenditure-website, app, delivery and many more things to run this makes there expenditure and still they are under loss there is 2 trillion dollar economy in this globally out of which 300 billion dollar online is there if we take globally then it will fluctuate 15-30% in online retail .

If you want to do this type of business then target the cities because in cities there is a lot more awareness, less acquisition cost and you will be getting at a less rate ultimately will tend to sell in your products and will increase your potential customer in village your accusation cost will tend to rise due to lack of education .