Bigbasket eyes equity in early stage food brands

Online grocer Bigbasket is exploring equity investments in early stage consumer brands that sell on its platform through its accelerator programme.

It had set up ‘BB Accelerate’ where small consumer brands — largely food-based — are selected and then nurtured for a year with handholding from Bigbasket’s executives. They are then moved on to standard categories on the platform, competing with sector biggies like HUL and Marico.

Started over a year ago, BB Accelerate has 20-25 such small brands. Bigbasket co-founder and CEO Hari Menon said these brands get “special” treatment, such as monthly meetings with company executives, consumer data analysis and an express line for receiving products to be delivered.

“We are considering to step up this (BB Accelerate) and take some equity and essentially pump that money back to help them (startups) grow. That’s the next stage of it,” said Menon.

According to him, the scale of investment in these startups is yet to be decided, but it would depend on the capital a brand would need to scale up operations. This would allow Bigbasket to get a share in the emerging brands that are originating largely online. Delight Foods, Kapiva and Vahdam Teas are some of these brands that have participated in BB Accelerate.

Online companies like Flipkart, Amazon, Ola and Paytm have made investments in startups or even acquired them for their existing products or new areas they want to venture into. The Alibaba-backed Bigbasket is also looking to increase its overall share of private label contribution to the total business. At present, over 35% of its total sales are from private labels like Fresho and Royal.

Menon wants to scale this up to about 45% with new growth in the business coming from FMCG products. He clarified the company does not want to undertake a private-brands-only approach.

The company clocked about Rs 3,250 crore of turnover at the end of March 2019 and aims to exit the current financial year with a turnover of just under Rs 7,000 crore. Over the last 12-18 months, it has doubled the stock keeping units (SKUs) on its platform to 4,500-5,000. Menon said its subscription-based micro-delivery business under BBDaily — which delivers milk and daily essentials like eggs, bread, etc — has scaled up rapidly to 1,40,000 orders a day in a span of about six months. It had acquired RainCan and Morning Cart for this business. Interestingly, BBDaily might end up clocking higher volumes in the next few months compared to the core Bigbasket volumes of 1,60,000 orders a day.

In terms of value, BBDaily orders are typically worth Rs 80 each, which the company wants to take upwards of Rs 100 by selling more non-milk products. Average ticket size for Bigbasket is about Rs 1,000. In the micro-delivery space, Bigbasket competes with DailyNinja, Swiggy’s SuprDaily and Milkbasket, among others. “This (micro-delivery) is helping us gain new customers as well,” added Menon.

Source:- https://retail.economictimes.indiatimes.com/news/food-entertainment/grocery/bigbasket-eyes-equity-in-early-stage-food-brands/71680292