Big Bazaar Direct - A new mutation business model from Future group

People in metro and tier-I cities are well adapted to modern shopping in hypermarkets. E-commerce is another modern retail system which is slowing gaining its presence in India. Indian retail market is estimated to be $ 490 billion and grows at CAGR of 5.9%. However the surprising part is only 10% of it is under organized sector and still more than 85% of the transactions are in cash, under-invoicing and not reported in the daily order of sales. Considering the situation Future group, which is known for its persistent approaches in Indian retail industry, is coming up with an innovative business model called Big Bazaar Direct (BBD). It’s considered to be first of its kind and has no precedence in the world. 

Big Bazaar Direct

BBD is a mutation of direct sales and e-commerce business models which unites Big Bazaar with your local stores and delivers the product at customer’s doorsteps, with the help of strong technology. 

BBD business process:

 

• Here Big Bazaar will have a franchisee tie-up with local stores, who will take orders by visiting the customers.
• These orders are taken by franchisee in a tablet which is integrated with Big Bazaar back-end server and shows the products catalog and its online availability to avoid discrepancy.
• Once the order is placed, customer will get a SMS confirmation and he/she have to pay the franchisee in cash.
• The order goods will be delivered at door steps by Big Bazaar in 3-7 days.

To learn how to become a franchisee, please check this link.

Business benefits through BBD model 

(Also read benefits of franchisee and customer from BBD) 

Mr. Kishore Biyani has introduced this business not merely to come up with an innovative model; rather he tried to eliminate some key existing problems in the retail industry.

1. Reduce high credit risk: High credit is one of the major factors which have to be in control for an efficient supply chain management. High credit to suppliers and dealers will increase the distribution cost and make the supply chain inefficient. So, through this model, Future group will slowly reduce the credit period since its getting the money from the franchises right immediately after the order.
2. More offers: This model will provide high working capital to Future group, especially from the security deposit from franchisees. For instance, if 1000 franchisees joined BBD then image the amount of investment Future group will accumulate in the next 4 months.
3. Reaching more customers: Now Big Bazaar will reach all corners of India for selling its products and the interesting part is the Kiran stores (who are meant to be the competitors) may promote their products to customers. Big Bazaar is planning to touch 70% of Indian population, from its present 30-40%.
4. Touching smaller cities: Future group is mainly focusing on Tier-II and Tier-III cities with BBD. These are the cities which has not fully explored the modern retail system and still at the early stage of development. Hence it has started a pilot project in Nagpur because Big Bazaar has its national warehouse in Nagpur and doesn’t required additional investment for setup. Currently, it has expanded its work to Amravati and Bhandara too. After this, they plan to test the market in Gujarat by kicking another pilot project.

Challenges:

1. Longer delivery time: Even though this business seems exciting, the real challenge lies in the execution part. It’s not easy to supply goods to a corner of India within 7 days. Big bazaar so far has handled business-to-business logistic however, in BBD, it has to handle business-to-customer logistic additionally.
2. Warehouse setup: The order in BBD will be supplied by Big Bazaar’s national and regional warehouse. However they are already overloaded with Big Bazaar’s store business. Hence Future group have to establish or rent more warehouses to handle BBD business.
3. Logistic: The delivery period of one week is very long especially for FMCG products. Most of the time, working class people order the products during their office hours and want it to be delivered within a day. So Future group should focus on reducing the delivery period to 2 days but it needs tremendous amount of manpower and technology investment (such as warehouse automation, vehicles for last mile deliver or bulk delivery and packaging) to do so.

BBD is a critical move especially during this bad economy situation in India. Any delay or error in delivering the goods to the customers will damage the mother brand Big Bazaar directly. Nevertheless, BBD is expected to make a national footprint by end of 2013. 

The whole retail industry (including the competitors and customers) are closing watching this business and looking forward a new revolution in Indian retail industry.