BigBasket to Invest Rs 500 crore to Expand Private Label Brands

BigBasket to Invest Rs 500 crore to Expand Private Label Brands

For the private label brands, BigBasket has a retention value of anywhere between 40-80 percent. BB Royal Organic accounts for 45 percent of the overall agri-commodity sales

By Charu Lamba, Deputy Editor

Mar 25, 2022 / 6 MIN READ

Indian retailers introduce private labels to offer a lower-priced product to the customer to gain some share of the branded products. However, this strategy actually doesn't work because once the branded products in India have a far higher market share, it becomes impossible to beat them.
 
“At BigBasket we look at the private label as a brand. We make sure that the newly launched brand offers differentiated high-quality products to consumers and it should make business sense from the point of view of profitability,” states Seshu Kumar Tirumala, National Head – Buying and Merchandizing, BigBasket.
 
Private Label Brands
Fresho and BB Royal are the private labels of BigBasket under which it is offering various products to the consumers.
 
Fresho offers everything fresh such as milk, bread cheese, eggs, fruits, and vegetables to name a few.  Recently, with Fresho, BigBasket has entered into offline retail by opening new technology-driven, self-service ‘Fresho’ stores. The launch is part of the company’s vision to open 200 physical outlets pan India by 2023 and 800 by 2026.
 
“At Fresho stores, the customers have an option to check as to when the produce was harvested. The product has the name of the farmer and the date on which it was harvested on the product,” he asserts. The stores are expected to give access to the next 500 million customers who have not yet started buying groceries online and create a new significant growth opportunity for BigBasket.
 
The Fresho stores merge the best of technology such as ‘Self-Billing Counters’ integrated with video AI tools that enable customers to pick items of their choice and weigh them at the counter through automatic computer vision that can identify the items and generate bills accordingly. Thus, there is a completely seamless, convenient shopping experience for the buyers at the store.
 
BB Royal is the second private label and it offers agri commodities that have a larger shelf life like rice, dals, etc.
 
“Even in the case of agricultural commodities, we ensure that our product is better than the competition. Along with this, we also ensure consistency as we have a quality team at every level. We have a rating capability on our platform where consumers can rate the products.” “If the rating falls below 3, then we discontinue the product and we go back to the drawing board and see as to why the customer is given us a lesser rating and we work on it,” he states.
 
For the private label brands, BigBasket has a retention value of anywhere between 40-80 percent. BB Royal Organic accounts for 45 percent of the overall agri-commodity sales.
 
Penetrating Deeper into India
 
BigBasket has expanded its pan-India coverage in the last year and is now delivering in 18 new Tier ll and lll cities of Bhubaneswar, Guwahati, Jamshedpur, Anand, Rajkot, Ambala, Tiruvallur, Chengalpattu, Raipur, Bhilai, Allahabad, Kota, Kakinada, Nashik, Kolhapur, Rajahmundry, Amravati, and Tumkur. 
 
BigBasket records over 7 million customer orders per month and the demand has considerably gone up in the post-COVID scenario. There has been a change in consumer buying behavior during the COVID-19 pandemic. 
 
The shift is more marked in Tier ll and lll cities with people choosing to order online primarily for better safety. Apart from safety and short delivery window, the added benefit with BigBasket includes over 30,000 products which range from fruits and vegetables, pulses, meats, juices, spices and tea to toiletries, kitchen essentials, electronics such as LED bulbs, baby products, and much more.
 
Future Plans
 
At present private labels contribute 38 percent of the total revenue of BigBasket. The brand is currently offering 3,000 SKUs to consumers.
 
“Although we have our vision in place, but we do not plan very long term because the market is a dynamic place. We are targeting to bring private labels to 40 percent of our total sales by next fiscal. We are planning to broadly invest Rs 500 crore to expand the private label brands of BigBasket,” he asserted.

Indian retailers introduce private labels to offer a lower-priced product to the customer to gain some share of the branded products. However, this strategy actually doesn't work because once the branded products in India have a far higher market share, it becomes impossible to beat them. “At BigBasket we look at the private label as a brand. We make sure that the newly launched brand offers differentiated high-quality products to consumers and it should make business sense from the point of view of profitability,” states Seshu Kumar Tirumala, National Head – Buying and Merchandizing, BigBasket. Private Label BrandsFresho and BB Royal are the private labels of BigBasket under which it is offering various products to the consumers. Fresho offers everything fresh such as milk, bread cheese, eggs, fruits, and vegetables to name a few.  Recently, with Fresho, BigBasket has entered into offline retail by opening new technology-driven, self-service ‘Fresho’ stores. The launch is part of the company’s vision to open 200 physical outlets pan India by 2023 and 800 by 2026. “At Fresho stores, the customers have an option to check as to when the produce was harvested. The product has the name of the farmer and the date on which it was harvested on the product,” he asserts. The stores are expected to give access to the next 500 million customers who have not yet started buying groceries online and create a new significant growth opportunity for BigBasket. The Fresho stores merge the best of technology such as ‘Self-Billing Counters’ integrated with video AI tools that enable customers to pick items of their choice and weigh them at the counter through automatic computer vision that can identify the items and generate bills accordingly. Thus, there is a completely seamless, convenient shopping experience for the buyers at the store. BB Royal is the second private label and it offers agri commodities that have a larger shelf life like rice, dals, etc. “Even in the case of agricultural commodities, we ensure that our product is better than the competition. Along with this, we also ensure consistency as we have a quality team at every level. We have a rating capability on our platform where consumers can rate the products.” “If the rating falls below 3, then we discontinue the product and we go back to the drawing board and see as to why the customer is given us a lesser rating and we work on it,” he states. For the private label brands, BigBasket has a retention value of anywhere between 40-80 percent. BB Royal Organic accounts for 45 percent of the overall agri-commodity sales. Penetrating Deeper into India BigBasket has expanded its pan-India coverage in the last year and is now delivering in 18 new Tier ll and lll cities of Bhubaneswar, Guwahati, Jamshedpur, Anand, Rajkot, Ambala, Tiruvallur, Chengalpattu, Raipur, Bhilai, Allahabad, Kota, Kakinada, Nashik, Kolhapur, Rajahmundry, Amravati, and Tumkur.  BigBasket records over 7 million customer orders per month and the demand has considerably gone up in the post-COVID scenario. There has been a change in consumer buying behavior during the COVID-19 pandemic.  The shift is more marked in Tier ll and lll cities with people choosing to order online primarily for better safety. Apart from safety and short delivery window, the added benefit with BigBasket includes over 30,000 products which range from fruits and vegetables, pulses, meats, juices, spices and tea to toiletries, kitchen essentials, electronics such as LED bulbs, baby products, and much more. Future Plans At present private labels contribute 38 percent of the total revenue of BigBasket. The brand is currently offering 3,000 SKUs to consumers. “Although we have our vision in place, but we do not plan very long term because the market is a dynamic place. We are targeting to bring private labels to 40 percent of our total sales by next fiscal. We are planning to broadly invest Rs 500 crore to expand the private label brands of BigBasket,” he asserted.

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