BIGBASKET & THE RAPID GROCERY

DELIVERY MARKET
Business Research Methods

Instructor: Prof. Akshaya Vijayalakshmi

Academic Associate: Riddhi Upadhyay

Submitted on January 08, 2022 by Group A-8

Abhinay Rana PGPGC202100002

Anubha Singhal PGPGC202100010
Gupta Chirag Shantiprakash PGPGC202100026
Kunal Jangid PGPGC202100033
Tanay Tirpude PGPGC202100069
Amrita Parsai PGPGC202100082

Section A
Food and groceries constitute a universal demand which is income-group and demographics
agnostic. Even though the frequency of purchase differs across customers, the common
sentiment that connects them is the chore-like behaviour when grocery shopping. Thus,
companies which were built around the model of providing this convenience to customers
attracted a lot of attention and turned out to be successful businesses.

BigBasket was also born out of this need to provide convenience to customers in the form of
online grocery delivery a decade ago. The online grocery delivery industry has evolved since
then with several new start-ups as well as behemoths eyeing for a piece into this space. With
the advent of the pandemic, there was a permanent shift in the consumer behaviour with respect
to online grocery delivery.

To tap into this space further, there emerged a concept of rapid grocery deliveries: Groceries
which could be delivered in 10-20 minutes at your doorstep. During the initial months of the
pandemic, it did seem like a short-term gimmick to serve customers stuck at home. However,
the space has been garnering a lot of traction both by incumbent players as well as VC funds.

Grofers has rebranded itself to BlinkIt to focus on quick commerce. Dunzo with its ‘Dunzo
Daily’, is promising delivery speed of less than 17 min. Swiggy has planned to invest $700
million into its Instamart vertical to aggressively expand and compete with the other players.
Zepto, the newest entrant into the space that promises a less than 10-minute delivery is raising
funds every other month at higher valuations.

The rapid-delivery grocery concept requires balance between two key variables: convenience
and selection. Convenience in online grocery shopping is largely characterized by faster
delivery times. The demand and delivery times have been observed to be following a negative
correlation, with consumers dropping off when the promised delivery times are longer. The
question that has been explored with rapid delivery grocery is how can delivery times be
optimized in order to maximize convenience. The rapid-delivery concept attains its goal by
establishing hyperlocal warehouses to shorten delivery times. But it might come at the cost of
another key variable which is the selection or variety of products available to the consumer.
All of these hyperlocal warehouses can’t maintain high stocks due to capital and perishability
constraints.

The nature of the space is thus challenging and there are skeptics about the long-term
profitability of the business. Nevertheless, it presents a lucrative opportunity with funding and
demand, and poses the following questions which we aim to answer in this research project.
With the space witnessing a surge both in demand and funding, will it be prudent for BigBasket
to enter the space given its country wide reach? Do the consumers really need groceries in less
than 20 minutes? Will the business model be sustainable after the VC Funds have dried up?