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New Delhi: A month after rolling out its two-hour delivery service, hypermarket chain Big Bazaar said nearly half of its delivery business is now coming from tier-II cities where consumers are sending orders to local store managers using WhatsApp or logging onto its delivery app or website.

Cities such as Bhopal, Mangalore, Lucknow, Ranchi, Kanpur, Ghaziabad and Varanasi have seen orders climb over the past week.

Ongoing restrictions in several states—with shops being directed to open only for a few hours and curbs on opening of non-essential stores in some cities—has spurred demand for home deliveries. Meanwhile, footfalls in large modern trade stores have fallen at least 50-60%, said industry executives, as fresh covid-19-led restrictions prompt shoppers to avoid large stores and instead shop online or at local neighbourhood stores.

“Almost 40-45% of our business is coming from tier-II cities. We realized the need and the importance at this point in time for people to not step out and call for home delivery is very high," said Pawan Sarda, group chief marketing officer digital, marketing and e-commerce, Future Group.

Big Bazaar is Future Group’s flagship hypermarket retail chain. It launched the home delivery service even as the beleaguered company awaits the completion of its deal with Reliance Industries Ltd. Last August, Future agreed to sell its retail assets to Reliance Industries for 24,713 crore. The deal is, however, being challenged in court by Amazon.com Inc.

Big Bazaar’s two-hour home delivery service started with Mumbai, Bengaluru and Delhi in April, and has now been extended to 150 cities. The chain’s close to 290 stores are fulfilling deliveries, competing with the likes of Big Basket, Amazon, Milk Basket, Flipkart and Grofers.

Currently, the retailer is fulfilling around 60,000 deliveries per day, aiming to touch 100,000 by the end of May. “We want to take every store to around 400-500 deliveries daily. We have a fairly good attach rate of non-food items as well, with people buying utensils, home goods, kitchen products, etc. In fact, 40-50% of our orders are beyond food and grocery. Our average ticket size right now is around 1,400, and it has been more or less consistent," Sarda said.

Big Bazaar stores cumulatively account for 300 million footfalls in a year. Sarda said the intent is to get some of them to shop with the brand online.

“Not a lot of people are comfortable with digital technologies, but a lot of people have learnt, thanks to our competition. We want to go back to these people and get them back on our online platform as well," he said.

The company said in the past year, the cost of acquiring new customers and making deliveries has reduced, making deliveries more viable.

“Our biggest fear was that beyond the first 100 million customers in India, the online acquisition and delivery costs and issues around cash-on-delivery would make it difficult for people to make money easily. But customer acquisition cost has come down tremendously because people are forced to shop online. The delivery cost, with the number of players entering the market, has come down, too," Sarda said.

In many cities, the chain has tied up with delivery partners Grab and Dunzo, apart from its own store managers fulfilling orders.

Aditya Goel, who provides payment, people and technology services to small and large format grocery stores, said Big Bazaar stores have an advantage since their captive audience will love to order from them. “The tier-II customer, a value seeker, will use them. However, acquiring new customers will be hard as they are spoilt for choice in terms of online shopping," he said.

While e-commerce sales peaked last year in the country’s first lockdown, they tapered off in the September quarter, researcher NielsenIQ said in a recent report. However, the current surge in covid-19 cases means more consumers have returned to buying goods online.


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