As it was reported earlier that online grocery store BigBasket is ramping up its operations to remove the middleman from its supply chain so that it can trade directly with farmers (Indian Retailer). Adding one more update to its plan, now the company has decided to spend another 90 crore to rope in more farmers on its platform. Company’s this move can be considered as one of its major plans to strengthen its supply chain before the corporate giants like Walmart and Amazon enter in this business.
Speaking on the subject, Hari Menon, Chief Executive, BigBasket said that the investment, which follows a US $150 million (about Rs 1000 crore) fundraise in March, will be directed at building networks of farmers who will primarily supply fruits and vegetables, which account for about 20 per cent of BigBasket's revenue. He added further that as per the profit graph of the company, its business is growing well with a monthly growth rate of 10 per cent.
The company has already invested Rs 80 crore to build supply chain. Tying up directly with farmers will allow for better profit margins and control over quality for BigBasket. Forging tie-ups with (fast-moving consumer goods) companies may be an easier task but repeat and loyal customers are won by keeping the quality and stock of fresh products including fruits and vegetables consistent. A significant portion of this growth will come from becoming a supplier to hotels and caterers and using the company's existing network of 1,800 neighbourhood or 'kirana' stores to sell its own brands of staples and fresh fruits, quoted Menon.
Currently, the company procures fruits and vegetables from framers through its 21 collection centers that are installed around the country. It sells around 60 per cent of fruits and vegetables that are directly collected from the farmers, however, now it has made it clear that it will increase that slab to 80 per cent in the coming months.