Bigbasket to tie up with foodservice startups to give PL offerings a push

After entering the B2B segment to sell its private-label portfolio, Bengaluru-based online grocer Bigbasket is now looking to tie-up with online foodservice startups to further push its brands.
The move will not only help the company reach institutional clients faster (restaurants) via foodservice startups, but will also provide an additional revenue stream to startups that have been struggling to carve a niche for themselves since the beginning of 2015.
Read: BigBasket expects contribution from PLs to touch 50% by year end
“Food Tech Startups can provide ‘Buying’ as a service to their clients by tying up with Bigbasket. This will help them to consolidate buying, help restaurants to improve both quality and margins and also earn an additional revenue,” National Head – Buying and Merchandising, Bigbasket, Seshu Kumar told Indiaretailing Bureau.
Kumar declined to disclose the names of the startups the company is looking to tie-up with. “It’s too early to disclose any names as if for now,” he said.
Since its inception, the company has significant private-label offerings. It owns brands such as Fresho for vegetables, meat and idli and dosa batter and Royal and Popular for staples. It also launched Tasties, a private label for coffee and snacks, last year.
Private labels are brands owned by retailers, and typically, the profit margins on these are higher than on brands that are owned by other companies. In the case of groceries, the margins could be as high as 30-40 per cent, at least double the margins on other brands.
Read: Bigbasket aims to double ‘Organic’ F&V, Staples sale on its platform by March 2017
Bigbasket is already raking in about 35 per cent of its total sales from its own brand. And it is in process of setting up a complete Farm to Fork supply chain to further improve margins and thereby profitability.
“We are in the process of setting up a ‘Farm to Fork’ supply chain wherein we procure 50 per cent to 80 per cent of our requirements in F&V directly from the farmers through ‘Farmer Connect’ centres. We are setting up sourcing linkages with rice and dal mills in different parts of the country. We believe that this supply integration enables us to provide a wide range of high quality produce at competitive prices to Hotels, Restaurants and caterers. This has been corroborated by hotels, restaurants and Caterers who are already buying from us without any major push from our side,” explains Kumar.
Currently about 1000 Kirana stores and 15-20 restaurant chains, like Le Meriden in Bangalore, Wow Momos, Oyo café in Bangalore among others are buying from the company.
Bigbasket has grown from Rs 30 crore since its inception in 2011 to Rs 700 crore in the previous fiscal and is eyeing to achieve a complete break-even by FY18.
“We have doubled our sales every year and this year we expect it to be over 2.5 times. We are on track of achieving our goal and are confident about it,” Kumar concluded.