BigBasket to invest $100 million to strengthen supply chain, will set up vending machines and distribution centres across cities

BigBasket had recently raised $150 million in funding, led by Mirae Asset-Naver Asia Growth Fund, CDC Group and Alibaba Group.

Press Trust of India April 29, 2019 11:10:07 IST
BigBasket to invest $100 million to strengthen supply chain, will set up vending machines and distribution centres across cities
  • BigBasket plans to utilise the proceeds of this fundraising to further penetrate into existing markets

  • The company expects its capital expenditure towards these initiatives to be about $100 million this year

  • BigBasket - which competes with Grofers, Amazon.in and Flipkart - will continue to build further on its leadership in grocery business

New Delhi: Alibaba-backed company BigBasket is pumping in $100 million (about Rs 698 crore) to strengthen its supply chain by setting up vending machines and smaller distribution centres across various cities it operates in.

The online grocery platform -- which is registered as Supermarket Grocery Supplies -- had recently raised $150 million in funding, led by Mirae Asset-Naver Asia Growth Fund, CDC Group and Alibaba Group.

Founded in 2011, BigBasket operates in 25 Indian cities. It plans to utilise the proceeds of this fundraising - which has placed the Bengaluru-based company in the unicorn club (companies with a valuation of $1 billion and above) - to further penetrate into existing markets with more investments in the first mile, scaling-up of its supply chain and for developing new reseller channels.

"We want to enable two-hour delivery in top 10 cities that we operate in by July this year. For that, we have been investing in strengthening our distribution centres. We have 18 large and 80 smaller distribution centres together with our resellers and this will be ramped to 20 large and 100 smaller ones by June this year," BigBasket co-founder Vipul Parekh told PTI.

This move will help BigBasket reduce delivery time and ensure the quality of dairy and fresh produce, he added.

BigBasket to invest 100 million to strengthen supply chain will set up vending machines and distribution centres across cities

Representational image. Reuters

The company expects its capital expenditure towards these initiatives to be about $100 million this year.

"We are ramping up our milk subscription business - BB Daily - under which we have built the supply chain to deliver milk and other items in the morning. The service was started around September last year and our sellers already carry out 90,000-100,000 orders a day. We are aiming to take this to a million orders a day and a stronger supply chain infrastructure will play a key role in this," he said.

Another area where the company is investing is in setting up unmanned vending machines - BB Instant - in office and apartment complexes.

"We see a huge potential of these machines. Customers can use their app to access the machine and buy products. The only human intervention is in re-stocking. We have already placed such machines at 200 sites in Bengaluru and over the next one year, we want to have 2,000 such sites across the 10 large cities where we operate," Parekh said.

Also, given that these machines are placed within an apartment and office complexes, the risk of vandalism is lower.

Parekh said with these investments, BigBasket - which competes with SoftBank-backed Grofers as well as Amazon.in and Walmart-owned Flipkart - will continue to build further on its leadership in the grocery business.

"We have been re-engineering our supply chain to allow for faster delivery to our resellers and to reduce the time from farm to our customers. This coupled with an expansion in our range of private label products will create a solid foundation for growth in both revenue and profitability," Parekh said.

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