Investmentrise:

Online grocery Bigbasket has received funding of Rs.200 Crores in a round led by
Venture capital firms, Helion and zodius fund venture with avendus. Existing inv
estors Ascent
capital & lion rock capital also participated in the round which saw the valuati
on of the two yearold
startup crossed Rs.600 Crores.
Big basket, which has now risen to a total funding of Rs.278 Crores, Which compe
tes
with more than a dozen of online grocery stores including zop now, aaram-shop an
d farm to
kitchen. It is currently present in Bangalore, Hyderabad and Mumbai. Plans to us
e the funds to
enter 10 more cities, including Delhi& Pune, which has 2 lakh customers across 3
cities.
Yes, BigBasket were aiming for a GP between 20 23% and net profit between 5- 7%.
There are a number of reasons we believe this is achievable. For instance, They
have our own
private label in staples which allows us higher margins. Fruits and Vegetables c
ontribute 20% of
the business. Here also the margins are set by us.
Besides growing the GP BigBasket also have some margin advantages as an online
model such as no shrinkage, while the brick and mortar stores have shrinkage as
high as 2%.
4% which goes straight from the bottom line. Also while our logistics costs are
high, our costs on
rentals are low. Not having stores further helps us save on cost of utilities el
ectricity, telephone
etc.
Valuation:
Initially, venture capitalists weren't very comfortable with the business model.
Often,
they drew parallels with Webvan, a US-based online grocery store that lost a rep
orted $800
million (about Rs.4,880 crore) in venture capital and initial public offering pr
oceeds before being
shut in 2001.
In February 2012, BigBasket raised $10 million (Rs.61 crore) from Ascent Capital
in
series-A funding. "We don't need to raise funds for some time now," says Parekh.
Raja Kumar, founder and chief executive of Ascent Capital, says, "Grocery is a $
160-
billion (Rs.976-crore) opportunity, where the online model could potentially be
a scalable and
capital efficient to overcome many challenges organized retail faces. The succes
s of Ocado and
Tesco in the UK, Yihaodian in China and FreshDirect and Amazon Fresh in the US p
ointed to an
emerging untapped opportunity."
Parekh says as of now, the company's unique selling point lies in its range of p
roducts,
both in fresh and frozen categories. "We have significant experience in own-bran
ded products
and that helps keep a check on quality. Our delivery track record is strong - 99
.99 per cent orders
are delivered on time, else we refund 10 per cent of the order cost to the custo
mer's account. We
also track the delivery and update the customer of the status," he says. Also, i
f the company
cannot fill an item, it refunds one and halftimes the item value back to the cus
tomer. If a product
is returned, the money is refunded.
The company which has crossed annual revenue of Rs.250 Crores and is growing 10
%
each month, relies heavily on technology solutions to track every process from t
he time an order
is placed margins in grocery business in India are above 20 % compared with coun
tries like the
US & the UK, where they run in single digit numbers.
Now BigBasket valuation is more than Rs.600 Crores.
Sales & Revenue:
Average no. of transactions per day is around 300 and the average value of each
bill is
around Rs.1200. so we can clearly see the revenue they generate each day in one
state.
Total Revenue for the day is
1200 * 300 = Rs.3, 60,000
Total revenue for month
3, 60,000* 30 days = Rs.1, 08, 00,000 per month
New customers who were joining each month are around 3000.
One of the advantage of this company is that they have is their own private stab
le crop
which contributes to 20 % of their business.
Profit margin also looks veryattractive
Gross Profit remains in between 20% - 23% & Net profit is around 5%-7%, where as
usual retailers profit margin is 3-5%.
"Our Bangalore business saw revenues of Rs.20 crore in FY13. In FY14, we should
clock
revenues of Rs.300 crore and Rs.500 crore in FY15," says Parekh. The Bangalore b
usiness was
expected to break-even by the end of this year and operations in the other two c
ities were likely
to be profitable by July 2014, he added