Supermarket Grocery Supplies Private Limited, the B2B division of BigBasket, which is owned by Tata, demonstrated a notable uptick in profitability during the fiscal year 2023–24 (FY24). The company’s losses shrank by 20.7% YoY to INR 1,415.2 Cr from INR 1,785.4 Cr in the prior fiscal year, demonstrating its ability to control costs while growing its revenue base. The B2B company’s revenue exceeded INR 10,000 Cr, with INR 10,061 Cr generated—a 6% rise from INR 9,468 Cr in FY23. This reversal could have consequences for BigBasket as well as India’s rapidly expanding fast commerce industry.
Credits: EquityPandit
Expense Control Drives Profitability Push
One of the key drivers behind BigBasket’s financial improvement in FY24 has been its stringent control over expenditures. Total expenses increased marginally by 2% YoY to INR 11,515 Cr, as compared to INR 11,284 Cr in FY23.
Among the biggest cost centers, purchases of stock-in-trade rose 4% to INR 8,339 Cr, reflecting the company’s investment in inventory to meet growing demand. Employee-related costs, however, saw a notable decline of more than 11% to INR 936.5 Cr, suggesting optimized staffing or perhaps a reduction in workforce. Advertising and promotional expenses were also cut by 14% to INR 330 Cr, showing a more focused and likely efficient marketing strategy.
Transportation and distribution costs, a critical part of the quick commerce model, rose by more than 8% to INR 785.4 Cr, indicating BigBasket’s ongoing investment in improving its delivery network. Additionally, costs of technical services increased by 14.4% to INR 142.21 Cr, reflecting the company’s growing focus on enterprise technology solutions to streamline operations.
Pivot to Quick Commerce: A Game-Changing Strategy
Under Tata Digital’s ownership, BigBasket is transitioning from a traditional e-grocery model to a quick commerce approach. This shift, expected to be completed by September 2024, is part of a broader strategy to cater to the increasing demand for faster deliveries. With the rise of players like Zepto and Blinkit, BigBasket’s focus on BBNow for rapid deliveries and BBDaily for subscription-based daily essentials positions it well to compete.
The merging of the BBdaily subscription service into BigBasket’s main app is another crucial step. It aims to create a seamless user experience, consolidating BigBasket’s offerings under one platform. This integration will also help reduce operational redundancies, driving down costs and improving profitability.
BigBasket’s commitment to quick commerce, coupled with its robust distribution network and Tata’s backing, places it in a strong position to challenge competitors and expand its market share.
Tech Investments to Fuel Future Growth
In addition to quick commerce, BigBasket is experimenting with enterprise technology tools to enhance its operations. The company recently launched BB Matrix, a SaaS-based supply chain platform that helps businesses optimize their delivery processes. This platform can potentially drive BigBasket’s revenues further by expanding its B2B tech services, allowing smaller businesses to manage their supply chains more efficiently.
By focusing on technology, BigBasket is not only improving its own supply chain but also exploring new revenue streams. Enterprise tech tools will help the company become more than just a quick commerce player, positioning it as a key enabler for other businesses aiming to go online.
Impact on the Quick Commerce Market
BigBasket’s financial improvements and strategic pivot to quick commerce are likely to have a significant impact on India’s e-commerce landscape. With Tata’s support, BigBasket can leverage its existing customer base and logistics infrastructure to scale its quick commerce operations. Its focus on tech-driven solutions, like BB Matrix, will allow the company to stay ahead of emerging trends in e-commerce.
Furthermore, BigBasket’s ability to manage expenses and narrow its losses while expanding its revenue is a clear signal of fiscal discipline, something that will appeal to investors. As the company pivots towards profitability, its valuation could rise, making it a formidable player in the market alongside rivals like Blinkit and Zepto.
Conclusion
BigBasket is well-positioned for long-term growth thanks to its strategy focus on speedy commerce and ability to control costs. An encouraging indication that the company’s transition to Tata Digital ownership is bearing fruit is the lowering of losses in FY24. With an emphasis on utilizing technology, merging services, and growing its quick commerce vertical, BigBasket is positioned to prosper in the rapidly changing online grocery sector in India. Due to its continuous efforts to increase productivity and profitability, the company may become a major player in both B2B and B2C e-commerce.
