Big Basket Is Betting On Slotted Deliveries, But Not Banking On Them For Growth

Earlier this year in February, BigBasket, India’s OG online grocery delivery service now backed by the Tata Group, relaunched its slotted delivery format under the banner of ‘BB Super Saver’. They sped up the delivery time from the same day or the next day to two hours, as competition with quick commerce grows.

When quick commerce companies, with their 10-15 minute online deliveries, first launched in India after the pandemic, they offered groceries at considerable discounts, waived off delivery fees for initial orders and threw in a bunch of freebies to get customers hooked. A couple of years later, companies like Blinkit, Zepto, and Swiggy Instamart changed their policies as the economics of this model started to prove unsustainable. They now have a renewed focus on profitability, pushing them to not only pull back on the discounts but also introduce additional fees to get their convenience-seeking consumers to pay up finally.

Big Basket, which has been offering slotted delivery services in India since 2011, saw an opportunity here with its Super Saver option. Customers can buy from an inventory of over 25,000 SKUs, get savings ranging from 6-10% as compared to quick commerce and pick a delivery time starting as early as two hours from the time of placing the order. This, the company believes, is the winning mix of assortment and delivery time. “We just felt that if we actually bring it closer to the 10-15 minutes format, you get much better prices and a much larger assortment compared to quick commerce,” Vipul Parekh, co-founder of Big Basket told The Core.

But will this not-so-quick commerce option help Big Basket grow its business? They’re not banking on it. While Big Basket also offers quick delivery options, it has stiff competition. In this scenario, it wants to tap into India’s value-conscious customers, who wouldn’t mind waiting a little longer for their deliveries in exchange for a discount.

Who Is The Super Saver Customer?

A hint about the target consumer of this format lies in the name. It’s the savings-focused, value-driven consumer. Parekh said that the grocery retail market is still a stronghold of offline sellers. While hypermarkets and modern retail may have felt the pinch of online grocery platforms, they remain the go-to for value-conscious consumers and a big chunk of the monthly grocery baskets of consumers across the income spectrum are bought in these modern retail destinations.

According to Parekh, there is an untapped online market for consumers who are willing to buy from a retailer that offers them a basic assortment at a great price. “If you consider the average monthly grocery purchase of a household to be around Rs 6,000 - Rs 7,000, they are spending about Rs 1,500 - Rs 2,000 on quick commerce, so where is the balance going? They either do this at supermarkets or they are still stocking up from other places. And that's the market that we are trying to address.”

Assortment is an important piece of this puzzle for Big Basket. “Between price, product and experience, Big Basket has played on the product, it has a much wider selection of products than any quick commerce or even hypermarkets,” retail expert Vivek Mathur told The Core. Especially as an alternative to quick commerce, which typically houses 8,000 - 9,000 SKUs; the availability of as many as 25,000 SKUs is a major advantage.

Big Basket is hoping that while the first wave of e-grocery has captured about 40-50 million affluent consumers in metro cities, the next wave is going to be more value-driven as has been observed across different e-retail categories.

“Take food delivery for example, they were running at 50-100% CAGR. Today, they are running at 10-12% CAGR. Even larger e-commerce has flattened out and their growth is really coming from tier 2 markets. Meesho is the fastest growing in the e-commerce segment and it is completely value-driven,” Parekh said.

Quick Commerce Will Remain The Mainstay

Aside from Super Saver, Big Basket has four other formats – BB Daily, a subscription-based service to order milk and fresh groceries; BB Instant, which are unmanned vending machines in offices and building complexes and BB Now, its quick commerce arm delivering in 15-20 minutes.

Parekh said they aren’t expecting customers to move categories, as those who rely on quick commerce will continue to pay higher prices for it.

“We are not trying to move people from quick commerce to slotted or slotted to quick commerce. That is not the goal here. I think most customers have moved to a ten-minute wait for regular fruits and vegetables. It doesn't matter the price difference. They are willing to pay that,” he said.

BB Now, the quick commerce arm of Big Basket was launched in 2021, much later than many of its competitors and only turned to it when the consumers started demanding much quicker deliveries. 

Retail market leader Sanjeev Shrivastav believes that the price difference is a factor for consumers. “When quick commerce adds a bunch of different charges, you end up paying more than you were used to. Somewhere when it crosses a consumer’s threshold of what the cost of convenience they think should be, they will also start thinking about it,” he said.

A key difference will still be the order value and the nature of products bought on these platforms. Perishables and last-minute needs will remain with the quick commerce players regardless of BB Super Saver’s offers. So will lower cart values as the threshold for free delivery is slightly higher for slotted deliveries.

To qualify for free delivery, BB Now needs a minimum order value ranging from Rs 400-500 depending on location. Whereas, on BB Super Saver only orders above Rs 600 will be delivered for free. This signals that Big Basket is pushing people to use Super Saver for larger orders, and is looking to keep the smaller orders with BB Now to reduce the risk of cannibalising its own quick commerce arm. However, BB Now is a much smaller player than market leaders Zomato-backed Blinkit, Zepto and Swiggy Instamart in the quick commerce space.

Parekh said that while the revenue contribution between slotted delivery and quick commerce currently is at 60% and 40% respectively, he is expecting a reversal by the end of the year. While BB Super Saver taps into a new market, Big Basket is looking at BB Now to drive growth. Parekh believes multiple orders per day from an area coupled with higher average order values could make things profitable. But that hasn’t happened yet.

At a unit economics level, the slotted delivery is closer to profitability than quick commerce because it allows clubbing multiple orders in one trip, considerably reducing the cost of every delivery. The average order values are also higher given the nature of orders placed on it.

Competition From Big Guys

Looking at the value-focused proposition of Big Basket Super Saver, they are largely competing with the likes of D-Mart and Reliance, said Shrivastav. While DMart has an online version of its store called Dmart Ready since 2017, they offer home delivery at an additional charge or require the orders to be picked up from a nearby DMart store, making it inconvenient for tier 1 consumers.

Reliance’s recent announcement that Jio Mart is launching a 30-minute delivery is the biggest competition that BB Super Saver is looking at currently, according to Shrivastav. “That's a pretty incredible disruptor because it eats into the quick commerce side also and completely whitewashes the supersaver proposition. But execution is the only piece I’m concerned about with Jiomart given its B2B delivery to retailers wasn’t executed as well as it should have been, especially with stock shortages,” he said.

Since Jiomart is a value-retailer through and through, its proposition is very similar to what Super Saver is offering and in less time. A key difference, however, is that orders on Jio Mart will be picked from their network of physical stores, as opposed to dark stores like Big Basket.

This is exactly why Parekh is not too worried. “Delivering from a store is a very different proposition compared to delivering from a dark store. There is a reason why everybody's moved to a dark store and not picking from a store and delivering. Because it's harder to do that,” he said.

Although supersaver is closer to profitability than quick commerce in its current form, the discounts and promised savings are what will get people onto a platform like BB supersaver, at least initially. Whether it is able to sustain these prices for long enough and how it combats competition from the big retailers will ultimately determine its success.