How Does BigBasket Make Money? Business Model Explained

Below, we have shed light on the BigBasket business model. We have discussed the numerous revenue sources through which it makes money along with its marketing strategy.

Grocery shopping is no less than a big tussle, especially if you live in an urban area. Riding through the traffic jam and picking up the right product by searching innumerable shops. The journey doesn’t end here. It continues where you wait in a long queue for making payments and lastly carry heavy bags home. 

This loophole was a golden opportunity for delivery service companies. And BigBasket was the first one to make a move! What did it do, how did it earn money, and how did it become successful?  Due to its super-effective business model! You will get to know all about it in this article. 

BigBasket: A Brief Overview

BigBasket is one of the first Indian online grocery delivery service companies. It claims itself as a one-stop-shop for all of your daily needs ranging from household products to groceries. BigBasket became the largest online grocery market in India with over 5 million customers. It operates in more than 25 cities in our country.

Let’s have a brief overview of the company

The three key pillars of the BigBasket business model are-

• Working Strategy
• Revenue Sources
• Marketing Strategies

Working Strategy: How does BigBasket work?

BigBasket business model is based on B2C i.e. Business to Customer. It buys the products from its partners, stores them in its dark store, and delivers them to the customers. Its working strategy focuses on the following key areas-

1. Partnerships

The strategic partnership is the first notable step of BigBasket’s business model. As you know, BigBasket has a wide range of products. It includes fresh fruits and vegetables, groceries, household items, personal care products, and more. Do you know where these items come from? They come from its partners. 

• Retail partners: BigBasket has partnerships with local farmers, manufacturers, and wholesale retailers to source the products directly. Eventually, this strategy reduces the costs of items.
• Bank partners: For smooth payments, BigBasket has partnerships with various banks, digital wallets, and other companies like Digibank and DBS Bank. These partnerships help to offer discounts and promotions to customers. You can also pay with Paytm, PhonePe, and UPI.
• Delivery partners: BigBasket has its own fleet of delivery agents who deliver products directly to customers’ doorsteps. They also offer express delivery options for urgent orders.
  

2. Efficient Operations & Advanced Technology

You can order products through BigBasket’s website or mobile app. Also, you can choose a delivery slot and pay online through various payment options like credit/debit cards, net banking, and digital wallets. All of it is possible due to its tech-centric approach to operations.

BigBasket has a lean organizational structure and uses technology to streamline its operations, reducing costs and improving efficiency. It heavily relies on the usage of automation in its warehouses to sort customers’ orders and pack them quickly. Also, it uses data analytics to optimize its inventory and use the shortest delivery routes.

3. Dark Stores & Strong Supply Chain Management

BigBasket has a well-developed supply chain management system that helps it to maintain the quality of its products. Also, it ensures timely delivery to customers. It has its own warehouses, dark stores, and logistics network that helps them manage the inventory effectively and efficiently.

They purchase groceries directly from manufacturers and wholesalers. Thereafter, it stores them in its warehouses (dark stores). This method ensures the availability of products in stock and also reduces the cost of delivery.

4. Customer-Centric Approach

BigBasket prioritizes customer satisfaction and convenience by offering a wide range of products at competitive prices, a user-friendly website and mobile app, multiple payment options, and reliable delivery. It also provides features like order tracking and express delivery options to enhance customer experience.

i) bbinstant: Smart Vending Machine

BigBasket consistently introduces new features and services to enhance its customer experience. For instance, they have launched a smart vending machine service for customers. It quickly picks up the orders and automatically fills the products that you selected. It works on a single-touch payment method. Thus, it is very convenient and safe to use.

ii) bb star

It is a flagship membership program from the company. BigBasket has a subscription-based model called BB Star, which offers benefits such as-

• Free delivery
• Early access to sales
• Priority customer support
• 10% cashback on purchases above Rs.2500
• Rs.100 cashback on the minimum purchase of Rs.1500

Revenue Sources: How Does BigBasket Make Money?

BigBasket generates revenue through multiple sources. Some of its major revenue sources are-:

1. Sale of groceries

Being an online grocery delivery service, BigBasket generates a major chunk of revenue by selling groceries. It includes fresh produce, packaged foods, household essentials, and other products. It keeps a profit margin on all of these products. Thus, it makes money through it.

2. Subscription fees

BigBasket offers numerous subscription services. Some of the popular ones are BB Star (smart vending machine) and BBnow. It provides members with benefits such as free delivery, early access to sales, and exclusive discounts. BB Star & BBNow generate a good percentage of revenue for the company along with a loyal user base. Customers pay a monthly or annual fee to access these benefits, providing BigBasket with recurring revenue.

3. Commission from sellers

BigBasket allows third-party sellers to list their products on its platform and charges a commission on every sale made through the platform. This generates additional revenue for the company.

4. Advertising and Marketing

BigBasket generates revenue by selling advertising space on its platform to brands and companies looking to promote their products to BigBasket’s customers. 

5. Delivery Charges

For delivery Service Companies, delivery charges are an important source of revenue. BigBasket charges customers for the delivery of products to their doorstep. The charges are based on the value of the order and the distance of the delivery location. This generates additional revenue for the company.

 

Marketing Strategies

Marketing is important if you want to educate folks and build awareness about your company in the market. Thus, it becomes an integral part of the BigBasket business model. Some of its key marketing strategies are-

1. Targeted online advertising

BigBasket has a strong online presence and utilizes targeted online advertising to reach its target audience. Its target audience is the individuals belonging to the age group 25-34. They contribute over 38.8% of the total audience of BigBasket.  The company uses social media platforms like Facebook, Instagram, YouTube and Twitter to run video ads and poster ads. Do you know more than 55% of social traffic comes from Youtube? These ads target specific customer segments.

2. Ad Campaigns

BigBasket business model uses various ad campaigns to expand its user base. These campaigns increased traffic and also generated high-quality leads. Some of its famous ad campaigns are-

• Har Din Sasta: Focussed on affordable and good quality products
• Save every day, the BigBasket way: Focussed on deals with guaranteed low prices.
• Extra Save Karo, Ghar ke Star Bano: It focussed on providing exclusive benefits and cashback on purchases made on the BigBasket app.

BigBasket also create ad segments that are endorsed by top celebrities to influence the public in masses. For instance, Shah Rukh Khan endorsed BigBasket in the ad campaign of “Extra save karo, Ghar ke star bano.”

3. Customer referral program

BigBasket offers a customer referral program where customers can earn rewards by referring their friends and family to the platform. This incentivizes customers to spread the word about BigBasket and helps the company acquire new customers. With BigBasket referral codes, you can earn up to Rs.2000 with 20 sign-ups using your BB referral code.

4. Content marketing

BigBasket has a blog where it publishes informative articles about cooking, nutrition, and food-related topics. This helps to establish itself as an authority in the food industry. It significantly attracts customers who are interested in learning more about cooking and nutrition. Apart from food and nutrition, you will also find blogs related to health and beauty. Also, it markets its latest rewards, schemes, and deals through the blogs.

Conclusion

BigBasket business model is built on offering convenience, quality products, and reliable delivery of groceries to the customers. Other than groceries, it also delivers fresh produce and personal care items. All of it is possible because it maintains partnerships with wholesale retailers, manufacturers, banks, and delivery partners. 

These tactics reduce the costs of the products and offer them at a competitive price. To build awareness about its brand, BigBasket relies on effective marketing strategies. In 2019, Tata Digital acquired a majority stake in Bigbasket and acquired it! Thus, it is a successful startup ruling the e-commerce grocery market segment.