Online grocery BigBasket to enter offline to beat back Amazon, Flipkart

Mulls setting up kiosks for stocking daily groceries, plans to start its own subscription service for milk and bread

In a bid to stay ahead of rivals Amazon and Flipkart, India’s largest online grocer BigBasket is looking to open offline kiosks that will stock daily groceries and is also planning to start its own subscription service for items such as milk and bread.

The move comes soon after BigBasket raised $300 million in funding led by China’s Alibaba which is looking compete with Amazon in India through investment in local players rather than on its own.

Hari Menon, co-founder and CEO of BigBasket, in an interview with Times of India, said that the company was looking to open thousands of such offline kiosks as it looks at aggressive growth this year. The small stores will be setup in apartment complexes and offices as it targets customers who want to quickly pick up fruits, vegetables and daily use items.

"The pilot is under way at select apartments and office premises. We have kept it as a separate app and are looking to scale this up as it will solve a genuine user problem for items they need quickly,” Menon told the Times of India.

BigBasket is also working on a separate service called BB Instant which promises delivery of products within two hours. Amazon, which is investing heavily in building its grocery business also offers a service called Now that delivers goods to a customer’s doorstep within two hours.

Last week Amazon announced the opening of 15 new fulfilment centres across four cities that would help its grocery and fresh produce business in India. The company is among the first MNCs to take advantage of the government opening up 100 per cent FDI in food retail sector, and is running a pilot in Pune for this.

While BigBasket has been able to edge out rivals such as Grofers, its success in the market has paved the way for giants Amazon and Flipkart to begin looking at the online grocery space. Both firms are betting big on the category to drive repeat purchases and act as a funnel to bring in customers to shop on their platforms for more high-value goods.

BigBasket, which is now backed by giant Alibaba, is looking to ramp up its revenue from Rs 2 billion to Rs 3 billion in the next few months and says it is on route to hitting Rs 5 billion by March 2019. Menon in an interview with Business Standard had recently said that the company’s operations in Bengaluru had already broken even and other cities would follow by the end of the year.

However, the company’s path to profitability could be pushed back further as it now looks at building an offline presence and come up with services to stay ahead of Amazon and Flipkart. Experts say that the war in the online grocery space could mean bad news for offline stores, especially small unorganised players, as cash-flush online players spoil customers with big discounts.