BigBasket CEO Hari Menon on the Subscription Model

BigBasket CEO Hari Menon on the Subscription Model

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BigBasket, India’s largest online grocer, plans to test the subscription model shortly. CEO Hari Menon talks about it  among other things. Here, we present a few edited excerpts:

Do you think you have perfected the grocery delivery model?
The model is fairly perfected. We achieved operational break-even in Hyderabad and Bengaluru in March. The 17 smaller cities we launched in last year will take longer. All the 10 tier-I cities that we have operations in are targetted to achieve break-even between December and March next year. We closed the previous fiscal year with Rs 1,400 crore in revenue and we are the sixth-largest grocery retailer in India, combining both physical and online players.

A few online grocery delivery companies are pivoting to the inventory model. How do you think that scores over the marketplace model?
You can control inventory and its quality. Besides, managing your own inventory does two things: it leads to higher margins and, hence, faster profitability. About 80% of all that we sell comes directly from farmers.

Aren’t low margins the bane of the online grocery business?
Low margin is actually a myth. We run at a gross margin of 25%, which is a decent margin, much higher than other fastselling products online such as electronics.

Several new online grocery startups are resorting to the subscription model. Do you think it will work?

Subscription works very well for items such as milk and newspaper. The Indian mindset doesn’t subscribe to anything else because we don’t pre-decide on other things. Rather, we plan our day in the morning. In comparison, people in the West are fairly predictable in their eating routine and have predictable lifestyles. Second, subscription-based orders can’t be subject to too many changes.

 

Click here, for the full interview.

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