In December 2022, Indian e-grocery behemoth BigBasket (Innovative Retail Concepts Pvt. Ltd) announced a $200 million fundraise despite a global downturn in late-stage investments. The new round led by Tata Digital, the digital-business unit of the Tata Group, boosted its valuation to $3.2 billion.
To industry outsiders, the fund infusion signalled a reaffirmation in the e-grocer by the 155-year-old steel-to-software conglomerate, which acquired the loss-making company at a reported valuation of $2 billion in mid-2021. However, to those at BigBasket, it represented an opportunity to shift their focus back to its core business: doorstep grocery delivery.
By the end of 2021, BigBasket’s management was convinced that a new challenge was emerging on the horizon. Instamart, the one-year-old grocery-delivery arm of foodtech Swiggy—backed by venture-capital giant Softbank—was closing in on an elusive feat: making consumers order groceries in small quantities as and when they needed it, just like food.
Instant deliveries completed in less than 30 minutes were disrupting the decade-old industry, and BigBasket, the undisputed leader the Tatas had bet on, took a few hours or days to deliver. Quick commerce made up 15-20% of India’s e-grocery segment by early 2022, according to analysts and senior executives in the industry.
Instamart and its peers, such as Reliance Retail-backed Dunzo and Mumbai-based Zepto, further pushed the envelope with their 10-minute deliveries.
The Tatas grew concerned, and BigBasket did what it had done time and again—it imitated the competition with its own 20-minute delivery service BB Now. “You cannot let ego dictate things. Instamart had shown that this model was scalable, so we decided to follow,” said a former senior executive who had spent over half a decade at BigBasket. The Ken spoke to eight former executives at BigBasket and a former senior executive at Instamart—all of whom declined to be named as they did not want to comment on their erstwhile employers.
Eventually, BB Now became the first major project BigBasket implemented under the Tatas; and employees could see that a shift had already begun. “We came up with BB Now in roughly three months, and it was the fastest I had worked on a project ever,” said a former executive.
A BigBasket spokesperson, however, said the e-grocer “started preparing for the launch of BB Now almost two years ago”. They added that BigBasket wanted to ensure BB Now would be an “operationally effective and cost-efficient model, in which we have succeeded”.
But it wasn’t an entirely happy decision. According to seven of the former employees, the BigBasket leadership was concerned about the quick commerce’s high cash burn. BigBasket was still not profitable and had been trying to cut losses for years. Just three months into BB Now’s launch, BigBasket’s business-to-consumer arm saw its annual losses jump 4X for the fiscal year ended March 2022.