BigBasket sells big, but losses have higher score

The online grocery industry is booming, but so are the losses, as BigBasket has discovered. The leading online grocer has witnessed a doubling of its sales, but sadly, a tripling of its losses as well. The company has recorded a sale of Rs. 170.24 crore, up from Rs. 69.72. However, its losses have gone up from Rs. 21.6 crores in the previous year to Rs. 60.61 crore.

Attraction of the online grocery industry

While the profits from selling groceries online would be minimal, the possibility of repeat orders is higher; thereby ensuring greater scope for customer loyalty.With the result, the competition is high in the sector. Apart from PepperTap, Grofers, and ZopNow, BigBasket also has to contend with the big names likeAmazon and Flipkart, who are eyeing the grocery industry.

Many have reduced their operations citing inoperability. Grofers had to close its operations in nine cities last month. Similarly, PepperTap has limited its expansion temporarily.

BigBasket has raised substantial capital since its inception in 2011. The company has raised a grand total of Rs. 580 crores from investors.

BigBasket’s plans to turn its fortunes around

BigBasket delivers orders from its warehouses, a model different from other companies, who associate with local kirana stores to deliver goods. The company is considering banking on private labels like Fresho (fruits and vegetables), and Royal and Popular (for bakery and other essentials).

Industry experts agree that this is a smart move. According to Harminder Sahni, founder MD of Wazir Advisors, “In terms of sales, BigBasket should have grown three-four times this year (FY16). From the consumer point of view, whoever will have a wider assortment of products at a better price will have an edge. Others are merely doing delivery, which was anyway happening. But BigBasket can offer a better price as they have private labels.”

It looks like BigBasket is making the right moves. Hopefully it should be able to bring down its losses and eventually turn profitable in the near future.