The Sam Walton of India-Mr.Kishore Biyani yet again surprised the entire nation by his super ambitious plan of launching Big Bazaar Direct (BBD). With BBD, Mr.Biyani is all set to take retail to all together new levels.
The month of September saw the release of full page ads by Future Group in the TOI. The advertisement featured various brands of Future Group including the national and International brands. However the ads never communicated the launch of a new venture, but were successful in engaging customers by asking them to give a Missed call on a toll free number.
After building up the excitement and releasing a few print ads continuously, the group finally announced its ambitious plan of launching Big Bazaar Direct. Big Bazaar Direct is basically a direct selling platform wherein local kirana stores and others register under Big Bazaar. These local vendors go door to door collecting orders from customers and the products then get delivered to the customers directly. These local vendors are addressed as Franchises and have to make an initial investment of Rs 3 lakhs, while the company provides all the remaining back end system support.
Well Mr. Kishore Biyani has always had the muscle to experiment with new businesses and also new business formats. BBD is one such ambitious plan of Mr.Biyani. The model is a fusion of e-tailing and direct selling. The e-tailing market is only 0.2% of the overall pie and is expected to reach 6.5%, while on the other hand direct selling is $1 billion market.
With the brick and mortar retailers bleeding due to low margins, high rentals and other operating expenses, the BBD models seems to be a viable one especially for a company like Future Group which sold of its profit making departmental chain Pantaloons to Aditya Birla Group to reduce the debt burden on the company.
A lesser known fact is Big Bazaar had already started a store called Big Bazaar Best Deals in Mumbra, a suburb of Thane in Maharashtra, and started offering deals—in store, through a catalogue and via online retailing. The idea at that time did not reap results however it paved way for BBD.
It’s always advised to learn from others' mistakes and this time with BBD, the Biyanis have done the same, a similar pilot project was on in Thane with 70 franchises on board. The model ignored selling FMCG items but focused on high margin items which led to its failure. BBD surely must have done their research and come up with an apt merchandise mix which is easily sellable to the masses in India. Products of regular use like shampoos, oils, soaps, toothpaste etc work best for this kind of a model especially in India. However the company plans to stock high margin goods like furniture, electronics and plans to offer an assortment of 1800 SKUs to customers.
Along with the merchandise mix which is very critical BBD will also have to look into certain other key aspects of this model like managing efficient logistics. With Big Bazaar the goods were delivered directly from the warehouses to the store. Now with BBD, the company has to ensure delivering it to the customer within the said time. The company currently aims to deliver the goods within 7 working days. This kind of a lead time is justified for high margin items like electronics but for FMCG products it is advisable to reduce the lead time to 48 hours.
Another critical aspect of this model is managing the franchisees- they should be selected properly, proper training has to be provided to them and the compensation systems should be well designed, as the business of BBD grows its essential to provide proper compensation to these franchisees. It is imperative here to ponder on the fact will Indian consumers be receptable to such a new concept?
The Big Bazaar format provides consumers with over 10,000 + SKUs while the BBD model provides a meagre selection of 1800 SKUs. Will the consumers settle for such a less choice? Further keeping high margin products like electronics is a huge bet since as Indians we still believe in the touch and feel of a product especially when it comes to electronics and the kind of huge payout a family makes for it. In Tier 2 cities, will this merchandise mix help BBD prosper? Considering a major population for this model is housewives and in Tier 1 cities majority of the female population is working, how can the delivery model be customized as per the needs of a customer? In the long run there is a possibility of the BBD model cannibalizing the various brick and mortar formats of Future group like Big Bazaar, Food Bazaar and KB’s Fair Price.
Well all these apprehensions of the BBD model will soon be cleared: It’s a matter of time and BBD’s impact will be known to all. Till then Happy Shopping!
[The article has been written by Aamisha Naik. She is presently pursuing her Masters in Retail Management from KJ Somaiya Institute of Management Studies & Research, prior to which she has worked with Ernst&Young.][/sociallocker]