The desire to rush to the doorsteps of the consumer faster with deliveries seems to compel leading online retailers to acquire more and more market share to strengthen their leadership position. This can be observed from the planning of India’s online grocer, BigBasket, to offer delivery of goods in 60 minutes or less, through collaborations with neighbourhood stores.
BigBasket is cultivating offline partners to secure its dominance as Amazon and other electronic stores pitch themselves closer to shopper’s home. Therefore, it is aiming for significantly higher margins from its branded and co-branded categories, BigBasket will also establish co-branded pickup points as well as sell its own brand of gourmet staples at its partner stores.
For express delivery, the company has tied-up with local stores to promise delivery within an hour of at least 400 items that it has identified as household essentials. These stores will handle the delivery with their own staff, while BigBasket will offer its technology to manage inventory and will pay a service fee to the store for providing facility.
“BigBasket will shortly roll out partnerships with about 1,800 neighbourhood stores in Bengaluru, Hyderabad, Delhi, Mumbai, Chennai and Pune. The key to success is to control inventory, ensure products are delivered in time, and restrict order cancellation to a minimum”, said chief executive Hari Menon.
"We realised that about 20-30% of groceries are unplanned and immediate-need purchases, and cannot wait for the next day or even the next few hours," said Co-founder Abhinay Choudhary. BigBasket, which raised more than 300 crore in the past eight months, is in a hurry to strengthen its leadership position as other electronic stores, too, are putting up shelves online for household supplies and groceries, emerging as a key category in online retailing.
Amazon recently announced it would launch an express delivery platform in partnership with mom-and-pop stores under a scheme called 'Kirana Now'. Rival online grocers Grofers, backed by Tiger Global, and Springboard-funded Local Banya also offer express delivery.
"Delivering in such a short time is a very big opportunity to convert offline shoppers to come online," said Arvind Singhal, chairman of retail consultancy Technopak. "And since BigBasket is the category leader in the space, they will want to consolidate their position."
The company will also stock its own brands Fresho, Royal and Popular in these stores.
"Our private-label brands open up a completely new channel for us and there is significant margin play, which can go up to 35%. We're making investments in infrastructure, facilities, chillers and freezers," added Menon.
The company sells cut and packaged vegetables, fruits, fresh meats, coffee and other staples under its labels. Customers unavailable to receive orders placed online will be able to pick up their supplies at BigBasket's partner neighbourhood stores, which will act as collection points.