Online grocery leader, BigBasket is making all necessary moves to speed up their delivery timeline.
Acquisition of Delyver
The e-grocery company recently bought Delyver, a local logistics startup, which is known for their speedy two-wheeler delivery process. This acquisition is aligned with Bigbasket’s aim to smoothen their express delivery service. Delyver is going to help them to distribute groceries under 9o minutes like other e-grocery startups Grofers, Peppertap, Zopnow are doing.
CEO and Founder of BigBasket, Hari Menon said, “Delyver has an expertise in two-wheeler delivery. They will handle the one-hour express delivery in the six cities and two-hour delivery in the 50 new cities. Though it is present only in Bengaluru now, Delyver will scale to the 50 cities as and when BigBasket enters a new market.”
Setting up warehouses
Timely delivery is an essential part of the grocery business. With that in mind, the next step that Bigbasket has taken for better execution of their express delivery service is setting up warehouses across the country.
Bigbasket is going to build 10 warehouses also called ‘dark stores’ in each metro city that they operate in and additionally 1 each will be used to stock & deliver around 50 towns. The purpose behind setting up their own stores instead of partnering with local stores is to have control over inventory and other areas.
Menon said, “On the one hand we’re a full-service online grocer that delivers large volumes… but we are also a one-hour express delivery for topups through the month. The second will be done in our partner kiranas and these dark stores.” These dark stores will be 5000 sq.ft with 1500 product lines and the first of which is going to start in Gurgaon.
Online grocers relying on private labels to increase profit margins
While ironing out the kinks from logistics and delivery process enables e-grocery players to acquire customers. But the problem of wafer-thin margins still floats on top. Looks like private labels is the solution to this problem.
Many e-grocers like Bigbasket, LocalBanya, Zopnow and MeraGrocer have in-house brands for categories such as fruits, vegetables, pulses, spices, flours and other household staples. These private labels earn them higher margins as compared to established brands. It has been observed that private labels will account to nearly half of their sales by the end of this year. Vipul Parekh, Cofounder of BigBasket said, “We aim to increase the share of the private labels to about 40% as they give us better margins and better quality control.
If the strategy to bring out own brands worked for brick-and-mortar hyper-stores like Hypercity and BigBazaar, it can also work for online grocers. Devangshu Dutta, Chief Executive of Third Eyesight, a retail consulting firm shared his opinion, “To focus on private labels is a logical step for online grocery manufacturers, one for higher margins. The only major effort goes in looking for manufacturers and focus on packaging which is incremental. Keeping that in mind private labels in grocery has potential of making a play.”