Tech startups are typically founded by young entrepreneurs with more passion than experience. This is as true in India as it is in Silicon Valley. Then there’s Bigbasket, whose founders are veterans of the dotcom bust and mostly north of 50. Drawing on their successes and failures, they’ve turned their six-year-old startup into India’s biggest e-grocer and are taking on a host of competitors, including Amazon and brick-and-mortar chains operated by the nation’s biggest conglomerates.
Bangalore-based Bigbasket delivers everyday cooking essentials like ghee (clarified butter), diced coconut and fragrant basmati rice, as well as 18,000 other items from bread to laundry detergent to eight million customers in 25 Indian cities. It’s mostly targeting upwardly mobile young Indians keen to avoid traffic and the drudgery of supermarket runs. Last month, Bigbasket raised $300 million in an Alibaba-led round that valued the grocer at $950 million—just shy of unicorn status.
In a country where groceries account for half of the almost $1 trillion retail market, Bigbasket is using knowledge learned the hard way during the dotcom era (don’t expand too quickly or use discounts to acquire shoppers) and latter-day innovation (putting vending machines inside apartment buildings; building a supply chain of competitively priced organic produce).
“We want customers to get hooked, and make our service harder to replicate,” says Hari Menon, 56, co-founder and chief executive officer. He, along with V.S. Sudhakar (58), Vipul Parekh (53), Abhinay Choudhari (47) and VS Ramesh (62), founded Bigbasket parent Supermarket Grocery Supplies Pvt, in December 2011 in a nondescript building in Bangalore’s humming Indiranagar neighborhood.
Bigbasket’s founders had their first brush with e-commerce back in 1999 when they started Fabmart.com to sell books, toys and groceries online. “Those were the dial-up days, there were no payment gateways, and the internet user base was more hype than reality,” recalls co-founder Sudhakar, standing in a Bigbasket warehouse where women shake soil from mounds of vegetables before packing them into ready-to-ship bundles. “Back then, it’d take 50 seconds for a page to download.”
It didn’t take the men long to realize that the world—let alone India—wasn’t quite ready for online shopping, and they pivoted to physical stores under the name Fabmall. They soon merged with a brick & mortar grocery chain before getting acquired by another conglomerate. By 2006, the founders had sold out and begun angel investing.
In 2011, they were approached to regroup for an online grocery. Plenty of people told them to stay away from perishable produce in a country so obsessed with freshness that shoppers surreptitiously break okra tips and sink their fingernails into cucumbers. The founders pressed on all the same.
But their timing was propitious: smartphones were proliferating, broadband was becoming affordable, and online payments were in place. Even so, when they pitched the concept, venture firms kept bringing up Webvan, the Bay Area e-grocer that famously flamed out in 2001. The founders revised their pitch to make clear that enough had changed to make the venture viable, and eventually persuaded private equity investor Ascent Capital to put up $10 million.
Delivering fresh food is challenging everywhere, but India presents steeper obstacles. The country lacks a cooling infrastructure—walk-in freezers, chill rooms, refrigerated trucks and so on. That precluded Bigbasket from buying produce directly from farms. So for the first year, every morning at 3:30, the founders visited a riotous wholesale fruits and vegetable market to buy produce, then picked up other items from a wholesaler. Eventually, Bigbasket…