BigBasket bets on in-house segments, plans to expand private label cart

Company plans Rs 200 cr investment to strengthen in-house offerings

With demand for private labels seeing a surge on its platform, online grocer BigBasket is betting big on the in-house segment with a planned investment of Rs 200 crore in the current financial year. 

The Bengaluru-based company is in the process of adding a string of new offerings to its private labels category as it looks to increase monthly sales from Rs 250 crore now to Rs 400 crore by March 2022.

At present, around 38 per cent of the company’s revenue is generated from private labels. “We treat our private labels like an FMCG brand. These are an integral part of our differentiation strategy which we have carefully built across categories,” says Seshu Kumar Tirumala, national head, buying and merchandising, BigBasket.

The company will build capacity in storage, cleaning and packaging of private label products. It is planning to set up ripening chambers for bananas and mangoes, and a controlled atmospheric chamber for apples in Himachal Pradesh. It will build packaging chambers for fruits and vegetables at all its distribution centres.

BigBasket will also add a cleaning and repacking centre for foodgrain in Indore for the North India market. The company, which sells meat and poultry under its Fresho brand, will set up its own butcheries in all markets.

According to experts, private labels are important for every retailer as they offer additional margins and help the company stand out.

“Companies like BigBasket can’t compete sustainably on low prices with established grocery retailers. Private labels help with competing profitably and also in being distinctive,” said Devangshu Dutta, chief executive officer of Third Eyesight.

The Alibaba-backed company will add cold pressed juices, chips, to its private label offering. It also plans to foray into the frozen food and ready-to-eat category with cold cuts and marinades. 

“During the lockdown we found that there is a huge demand for frozen snacks, hence, we are looking at that segment starting with frozen pizzas,” said Tirumala.

The company has around 2,000 stock-keeping units (SKUs) for its in-house brands, which would rise to 2,500 by the end of FY21. The company plans to add over 30 items to the Tasties brand. “We want a range of snacks for every ethnicity eventually in Tasties,” says Tirumala. 

With health and immunity in the spotlight after the Covid-19 outbreak, the company is also setting up a separate category for health and wellness where immunity building products companies will be sold.

BigBasket has seen its daily orders double to 400,000 with a 45 per cent retention rate for first-time customers after the pandemic outbreak, according to the company.