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  Investmentrise:Online grocery Bigbasket has received funding of Rs.200 Crores in a round led byVenture capital firms, Helion and zodius fund venture with avendus. Existing investors Ascentcapital & lion rock capital also participated in the round which saw the valuation of the two yearoldstartup crossed Rs.600 Crores.Big basket, which has now risen to a total funding of Rs.278 Crores, Which competeswith more than a dozen of online grocery stores including zop now, aaram-shop and farm tokitchen. It is currently present in Bangalore, Hyderabad and Mumbai. Plans to use the funds toenter 10 more cities, including Delhi& Pune, which has 2 lakh customers across 3 cities.Yes, BigBasket were aiming for a GP between 20   23% and net profit between 5- 7%.There are a number of reasons we believe this is achievable. For instance, They have our ownprivate label in staples which allows us higher margins. Fruits and Vegetables contribute 20% ofthe business. Here also the margins are set by us.Besides growing the GP BigBasket also have some margin advantages as an onlinemodel such as no shrinkage, while the brick and mortar stores have shrinkage as high as 2%.  4% which goes straight from the bottom line. Also while our logistics costs are high, our costs onrentals are low. Not having stores further helps us save on cost of utilities   electricity, telephoneetc.Valuation:Initially, venture capitalists weren't very comfortable with the business model. Often,they drew parallels with Webvan, a US-based online grocery store that lost a reported $800million (about Rs.4,880 crore) in venture capital and initial public offering proceeds before beingshut in 2001.In February 2012, BigBasket raised $10 million (Rs.61 crore) from Ascent Capital inseries-A funding. We don't need to raise funds for some time now, says Parekh.Raja Kumar, founder and chief executive of Ascent Capital, says, Grocery is a $160-billion (Rs.976-crore) opportunity, where the online model could potentially be a scalable andcapital efficient to overcome many challenges organized retail faces. The success of Ocado andTesco in the UK, Yihaodian in China and FreshDirect and Amazon Fresh in the US pointed to anemerging untapped opportunity. Parekh says as of now, the company's unique selling point lies in its range of products,both in fresh and frozen categories. We have significant experience in own-branded productsand that helps keep a check on quality. Our delivery track record is strong - 99.99 per cent ordersare delivered on time, else we refund 10 per cent of the order cost to the customer's account. Wealso track the delivery and update the customer of the status, he says. Also, if the companycannot fill an item, it refunds one and halftimes the item value back to the cus  tomer. If a productis returned, the money is refunded.The company which has crossed annual revenue of Rs.250 Crores and is growing 10 %each month, relies heavily on technology solutions to track every process from the time an orderis placed margins in grocery business in India are above 20 % compared with countries like theUS & the UK, where they run in single digit numbers.Now BigBasket valuation is more than Rs.600 Crores.Sales & Revenue:Average no. of transactions per day is around 300 and the average value of each bill isaround Rs.1200. so we can clearly see the revenue they generate each day in one state.Total Revenue for the day is1200 * 300 = Rs.3, 60,000Total revenue for month3, 60,000* 30 days = Rs.1, 08, 00,000 per monthNew customers who were joining each month are around 3000.One of the advantage of this company is that they have is their own private stable cropwhich contributes to 20 % of their business.Profit margin also looks veryattractiveGross Profit remains in between 20% - 23% & Net profit is around 5%-7%, where asusual retailer  s profit margin is 3-5%. Our Bangalore business saw revenues of Rs.20 crore in FY13. In FY14, we should clockrevenues of Rs.300 crore and Rs.500 crore in FY15, says Parekh. The Bangalore business wasexpected to break-even by the end of this year and operations in the other two cities were likelyto be profitable by July 2014, he added


Jul 23, 2017

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Jul 23, 2017
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