We are very clearly seeing the shift to online, says BigBasket CEO Hari Menon

Consumers are getting accustomed to buying groceries online and order volumes continue to remain higher than pre-Covid levels, said Hari Menon, co-founder & CEO at BigBasket.

“We are very clearly seeing the shift to online. One of the things that we are reasonably clear on right now is in spite of unlock 4 or unlock 5, whatever is that number, we are seeing retention….this makes us feel confident that this behaviour is there to stay,” Menon said at a virtual conference on Thursday.

The bulk of Indian consumers typically subscribe to neighbourhood mom and pop stores for monthly grocery purchases. However, as the pandemic put a curb on movements, customers moved to online shopping. There was an expected 1.5 to 1.6 times increase in households that signed up for online grocery in May compared to January, analysts at consulting firm RedSeer said. The e-grocery GMV saw a sharp spike in May and June as consumer demand peaked.

“The surge continues to be great. It settled down a bit in August, September but much higher than pre-Covid,” Menon said. “We have acquired new customers by value three times, by number of orders three times and by number of members 2.6 times as compared to pre-Covid,” Menon added.

In a study published last month, BigBasket had said the number of new customers has increased by as much as 84% compared to the pre-Covid levels while the retention rate grew by 50% against the earlier 30%-45%. Platforms are also witnessing pent-up demand from cities that had been operating under restrictions, Menon said.

RedSeer estimates the sectoral gross merchandise value (GMV) will cross $3 billion this year, considerably higher than $1.9 billion in GMV that firms reported in 2019. To be sure, online grocery formed just 0.5% of the total market as of FY20 and experts reckon there is enough room to grow.

Satish Meena, senior analyst at Forrester Research, said a significant proportion of the 150 million online buyers have started spending on e-groceries during the pandemic. As far as the players are concerned, BigBasket has a considerable hold on the high-income households while Grofers has been able to tap into mid-income households that typically earn below Rs 15 lakh annually. As demand shores up, BigBasket is negotiating a fresh round of funding with new investors. Reports indicate the deal size to be as much as $400 million. The Tata Group that plans to go big on e-commerce is mulling buying a stake in the company, Financial Times reporter earlier this week.

The Bengaluru-based grocer’s valuation touched $1.2 billion after it raised a fresh $150 million in March 2019 from a clutch of investors including Mirae Asset.