Another temptation is to leverage the reach and understanding of the buying behaviour of consumers and get into lending business as a non-banking finance company. But the founders are quite clear that there are many fintech players in the market for whom lending is core. “In the business that we run, customers pay us either upfront or on delivery. We carry about 11-12 days of inventory. We have payables for around 14-15 days. So we are actually on a negative working capital side. Where we really need working capital support is in the B2B business where we sell to kirana stores and institutions,” said Menon.
But even in that business, BigBasket
does not give credit and instead is supported by other financial institutions which typically offer discount schemes.
Unlike many of the young start-up entrepreneurs of today, who raise funds every few months at higher valuations, BigBasket
founders pick up funds to last them two to three years. “Even if you give away a little more stake and compromise a little bit on valuation, the fact that you are capitalised is something which gives you so much relief that you can run the business peacefully.”
Menon and his co-founders are also a mature group with BigBasket being their second attempt in the start-up space. They learnt their lesson in their earlier e-commerce venture Fabmall, which they sold successfully to Aditya Birla
Group in 2006 after a pivot.
Five years later, when they decided to start BigBasket, the average age group of the cofounders was 46. Recalling the early days, Menon says, while he himself took up a job at Manipal Group helping them set up the vocational education business, his three other co-founders (Vipul Parekh, VS Sudhakar and VS Ramesh) turned to angel investing. During this phase, they used to be in regular touch with each other while wondering about their next move. But there was not enough opportunity. The internet ecosystem was not still established until 2009-10.
Then, the opportunity came in 2011 when K Ganesh, a serial entrepreneur, angel investor and now co-founder of Protea, approached Sudhakar and Parekh with a proposal. He told them, that they should get back to entrepreneurship, as the business climate was now ripe for building internet-based ventures. “The whole decision was taken in just five minutes. Finally, all of us including Abhinay Choudhari formally met at the Café Coffee Day in HSR Layout, where it kicked off,” recalls Menon.
Besides the founders, Ganesh was the only angel investor. Within two months, the company raised $10 million and started its journey from a four-room office. Eight years later, BigBasket has grown by leaps, with direct presence in 24 cities with a network of 40 warehouses, delivers around 150,000 grocery orders a day and another 135,000 orders in its fresh milk business under BB Daily. The company has consolidated its operations in a sprawling building at a posh business park in Bengaluru. It employs around 25,000 people of which 70 per cent are direct employees.
Menon expects to turn profitable in two years. The company is expecting revenues of Rs 5,000 crore in FY20 and Rs 7000 crore next year. BigBasket says keeping employees and customers happy are critical. “A lot of customers write to us, and we try to make sure that we try and respond to each of those.”
The other priority area for BigBasket is to connect with farmers, given that 17 per cent of what the company sells are fresh fruit and vegetables, which it procures from a network of over 14,000 farmers spread across the country. “One of our objectives is to become the most preferred company for farmers in India. If a farmer decides to sell, they must say that we love working with BigBasket and will first supply to it before anyone else,” he adds.