3 min read.Updated: 20 Mar 2020, 12:53 AM ISTSalman S.H.
BigBasket said that it is facing a supply crunch on many essentials, and that it’s tweaking its procurement process to meet the surge in demand
BigBasket currently tracks more than 8,000 SKUs in real time across cities it operates in.
Ria Bhattacharya, 36, a resident of south Kolkata, decided to order groceries in bulk from online grocer BigBasket in the middle of March, barely a few days after she had stocked up on monthly provisions.
Her shopping spree was fuelled by concerns about the spread of coronavirus in the country. To her surprise, BigBasket informed her that the order delivery would take 2 to 4 days instead of the usual half-day delivery. Similar stories were heard on social media and elsewhere at a time many online shoppers rushed to stock up on essentials in an environment of uncertainty. Many of their orders were automatically delayed or cancelled even after they had been paid for.
BigBasket is finding it tough to fulfil a sudden surge in orders as people resort to panic buying. Consumer staples such as flour, tea and milk are out of stock on the grocer’s app. BigBasket’s closest rival Grofers reported a supply crunch early last week.
BigBasket said that it is facing a supply crunch on many essentials, and that it’s tweaking its procurement process to meet the surge in demand. “Order volumes have almost doubled in the last two weeks alone," said Seshu Kumar Tirumala, national head, buying and merchandising, BigBasket.
He also added that average cart size also increased by about 25-30% compared to two weeks ago, while the number of customers visiting the app also went up by 60-70% during the period.
“We are trying to predict demand for each item that is going out of stock…There are 2-3 SKUs (stock-keeping units) that go out of stock on a daily basis like hand sanitizers, and other kinds of hand wash items, and third is basic staples like rice, dal, etc. Sanitizers and handwash take a longer time to replenish and hence can take more than a day to re-stock. However, on the basic staples segment, we are able to restock within 12 hours," Tirumala said in an interview.
BigBasket’s supply chain is stretched, thanks to its dependence on 2-3 suppliers in the city for consumer staples and BigBasket’s private labels. Complicating matters is its inventory-led model, where supplies are held across a wide range of SKUs in warehouses with quality control checks.
While large e-grocers such as BigBasket and Grofers struggle to keep up with a surge in demand, industry experts point out that their users might start using hyper-local aggregators such as Dunzo and Swiggy Stores to complete their daily grocery shopping.
BigBasket currently tracks more than 8,000 SKUs in real time across cities it operates in. These include daily essentials, groceries, personal care, and other categories, which also make up 80-90% of the average user’s cart. Overall, the e-grocer has around 40,000 SKUs on its platform.
Krishna Murari, 26, a startup founder based out of Bengaluru’s Koramangala, said that he has been shuffling between grocery delivery apps including milk-delivery platforms like SuprDaily to complete his weekly grocery list.
“I couldn’t find my regular supply on BigBasket, so I moved to SuprDaily app...But SuprDaily had also missed their slotted delivery last morning, which forced me to go try instant delivery apps like Dunzo and Swiggy Stores. If I can’t find my item anywhere, then only I step out to buy," he added.
Supermarket aggregator and delivery apps also reported a spike in order numbers and value. At least two grocery and supermarket aggregators that Mint spoke to said that they are able to fulfil most orders since they don’t directly deal with the supply of goods on the delivery platform.
“Supermarkets and small grocery shops have been operating for the longest time, and they are equipped to deal with supply shortages, mostly because they have direct contact with different distributors in the city. We have seen a doubling in traffic over the last two weeks, and we are fulfilling everything except for some shortages in hand sanitizers", Abey Zachariah, chief executive, Goodbox, an hyper-local delivery app, in an interview.
“There is a category of consumers who are panic-stricken and stocking up in bulk…these consumers are instead rushing to the local grocery store," said Sanchit Vir Gogia, founder and chief executive officer, Greyhound Research.
In such a case, the big challenge apps face is to ensure rationing the existing stock to a spread of consumers so that a particular household doesn’t get beyond a maximum quantity.
Madhurima Nandy contributed to this story
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