Bengaluru: eGrocer BigBasket has raised USD 200 million in new funding boosting the Tata Digital-owned eGrocer’s valuation to USD 3.2 billion.
Other investors also participated in the funding round with Tata Digital, which has a 64% stake in the Bengaluru-based startup. UK’s CDC and Mirae Asset are other investors in BigBasket parent Supermarket Grocery Supplies.
Cofounder & CEO Hari Menon said that the fresh capital would be used to strengthen the infrastructure and elevate marketing to expand the core grocery business.
Investments will also go into its quick commerce product BB Now.
It was reported by ET earlier in September that BigBasket was looking to raise funding, and its valuation would go up in the range of $3-3.5 billion post-funding.
CEO Menon said, “Quick commerce couldn’t be a standalone business for any grocery firm. It is tricky to make money in due to its lower average order value”. The average order value at BB Now is around INR 460, which is similar to the industry average.
BigBasket plans to take the eGrocery business to around 75 cities from the current 55. It also has plans to bring BB Daily onto its main app, along with 1mg, Tata Digital’s ePharmacy.
The Bengaluru-based startup’s latest funding round comes during a severe slowdown in late-stage funding. In September, a Tata Digital-led funding round raised the group’s epharmacy portal 1mg’s valuation to over USD 1 billion.
“First thing is we’re going to invest in BB Now, which means we will be looking at 100 more dark stores to cover all BB customers. By Jan-Feb, we would have covered 100% of customers,” said Menon.
He further added, “A significant expansion is underway in tier 2 markets where the company will target to deliver in 30-45 mins, as it may not make sense to add more stores in areas without sufficient density.”
BB Now is clocking gross sales of around INR 130 Cr monthly, aiming to take it to around INR 320 Cr by December 2023. It now has a presence in 24 cities serviced through the dark stores — small warehouses in central locations in a town to service orders in nearby areas quickly.
For BB Now, the main competition is Swiggy Instamart, Mumbai-based upstart Zepto and Reliance Retail-backed Dunzo. Menon feels that it is clear that the scheduled deliveries in BigBasket across all markets will remain the core business, contributing roughly 70-80% of total sales.
Eying the expansion, Menon said he is hoping BB Now will become an acquisition tool for core BB users against the grocery service, converting the existing customers to try the 30-minute delivery. “We will do a lot of cross-selling,” he said.
BigBasket has also been bringing on its main app its essential services. BigBasket and BB Now are listed on the Tata Neu app as part of the much-hyped main app, internally referred to as the super-app.
Menon said bringing pharmacy to the main app was the plan always, including before the Tata deal. “Pharma is adjacent to grocery worldwide. If you see a grocery store, it will typically have a pharmacy attached. Even before the Tata deal, we always wanted to bring in pharma. With the Tata deal done, it was a no-brainer. It will flow straight into 1mg, just like Tata Neu,” he said.
While 1mg is expected to join the grocery app next month, its subscription service BB Daily is also likely to come on the app in the coming weeks.
“We are going to bring in some more categories as pullouts though we have yet to decide which. We saw that beauty and meat did well, but it won’t work for just fruits and vegetables. So, we are seeing if we can do more, and it would be in the “more” section in the app,” Menon said.
Also, the company is expanding its offline Fresho Stores from 25 to 100 stores. The first Fresho store opened in Bengaluru last November. These stores are also running experiments as Bengaluru outlets sell fruits and vegetables while other FMCG products can be ordered on the app and picked up from the store. However, in Hyderabad, one can buy fresh produce and FMCG items through the stores, and in Kolkata, customers can even purchase meat from the Fresho outlet.
