Alibaba-backed company BigBasket is pumping in USD 100 million to strengthen its supply chain. The online grocery platform will invest in vending machines and smaller distribution centers across various Indian cities. This move will help BigBasket reduce delivery time and ensure quality of dairy and fresh produce.
Founded in 2011, BigBasket operates in 25 Indian cities. The new investment will place the company in the unicorn club (companies with valuation of USD 1 billion and above). It will also help the Bengaluru-based company to further penetrate into existing markets with more investments in the first mile, scaling-up of its supply chain and for developing new reseller channels.
“We want to enable two-hour delivery in top 10 cities that we operate in by July this year. For that, we have been investing in strengthening our distribution centers. We have 18 large and 80 smaller distribution centers together with our resellers and this will be ramped to 20 large and 100 smaller ones by June this year,” according to a PTI report quoting BigBasket co-founder Vipul Parekh as published by BusinessLine.
The company expects its capital expenditure towards these initiatives to be about USD 100 million this year. The company recently raised USD 150 million in funding, led by Mirae Asset-Naver Asia Growth Fund, CDC Group and Alibaba Group.
With increased automation, supply chain is going through a huge change. Gartner, identified the top 8 supply chain technology such as AI, blockchain, AR-VR that have broad industry impact.
Christian Titze, research vice president at Gartner said, “Within the next five years, if half of large global companies are using some of these technologies in their supply chain operations, it’s safe to say that the technologies will disrupt people, business objectives and IT systems.”
As Parekh said the company is ramping up its milk subscription business and has built the supply chain to deliver milk and other items in the morning. “The service was started around September last year and our sellers already carry out 90,000-100,000 orders a day. We are aiming to take this to a million orders a day and a stronger supply chain infrastructure will play a key role in this,” he informed.
Another area where the company is investing is in towards setting up unmanned vending machines – BB Instant – in office and apartment complexes. The company sees a huge potential of these machines. Customers can use their app to access the machine and buy products. The only human intervention is in re-stocking. We have already placed such machines at 200 sites in Bengaluru and over the next one year, we want to have 2,000 such sites across the 10 large cities where we operate,” Parekh said.
“We have been re-engineering our supply chain to allow for faster delivery to our resellers and to reduce the time from farm to our customers. This coupled with an expansion in our range of private label products will create a solid foundation for growth in both revenue and profitability,” he told the news site.