Globally, buying groceries online has not boomed, except in the UK. But in India, most consumers are still at the mercy of small mom-and-pop shops with limited or erratic supplies, while corporate grocery retailing has been stunted by expensive real estate and restrictions on foreign direct investment.
Chief executive Hari Menon, who co-founded Big Basket in 2011, believes that the promise of a greater choice of products, and convenience, will drive a faster pick-up of online grocery shopping in India than has been seen in other markets.
"Potentially, this business itself can be close to a $20 billion business in 2020," Mr. Menon says. "Organized retail is only 15 percent of overall retail here. Rental costs are really high, and that is really impacting business. The whole model looks very suspect. Online companies will go after these modern trade customers, who are mostly likely to shift."
Big Basket has raised $61 million from private equity funds Ascent Capital, Helion Ventures, Zodius and U.S.-based Bessemer Venture Partners and is valued at about $275 million. It says it has an estimated 500,000 active customers and that revenues are growing by 12 to 16 percent each month.
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After collecting revenues of $33 million last year — when it was present in just five cities — it is projecting income of $126 million in the financial year to March 2016 and $295 million the following year.
Others also sense opportunity. Competition to entice Indian consumers to shop for groceries online is heating up, albeit with different business models. Many of the fledgling players in the space are effectively localized, on-demand delivery services, which develop relationships to source goods from existing brick-and-mortar corporate retailers such Metro Cash & Carry, the German wholesaler; HyperCity, a chain owned by India's Raheja, and More Stores, part of the Aditya Birla's retail operations.
Localbanya, which started operations in Mumbai three years ago, operates in five cities, as does Zopnow, based in Bangalore. Investors such as Sequoia Capital, Saif Capital, and Tiger Capital are also backing other young on-demand grocery delivery services such as Pepper Tap and Grofers These use mobile phone apps to link consumers to local stores, including independent mom-and-pop shops, and handle deliveries for online orders.