Online grocery has proved a tough market to crack even for the likes of Amazon, but quick commerce has emerged as a key engine of growth because of its convenience and habitforming nature. But competition is fierce, forcing companies to burn through cash to hold on to their customers.
"Customers love quick grocery and they've adopted in droves. But this comes with costs and as a market, we're still in the early throes of quick commerce growth," co-founder Vipul Parekh said in an exclusive interview with Mint. "The costs and some of the customer behaviours will become more apparent over the next few years."
Maintaining a tight lid on costs is crucial for profitability in the hyper-competitive space, where most quick commerce companies such as Swiggy (Instamart) and Zomato (Blinkit) grapple with high cash-burn rates. Growth, in effect, comes on the back of significant losses.
Parekh said BB Now, BigBasket's quick-commerce division, has an edge over its rivals. To ensure orders are delivered in under 30 minutes, the company leverages the same dark stores, or warehouses, and infrastructure it uses for its other two divisions.
As a result, the quick-commerce business's "profitability on a unit basis is going to be higher than [for] other brands," said Parekh.
BigBasket was founded in 2011. Ten years later, Tata Digital Ltd, a unit of Tata Sons, acquired a majority stake in it. But BigBasket continues to operate as an independent entity.
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