Big Idea

Wee-hour Surprise

Milkbasket’s differentiated model makes it stand out in the online grocery business

Vishal Koul

It is 10.00 pm. You open the refrigerator to discover you have run out of milk for the next day. And if you are one of those people who can’t function without having coffee first, Gurgaon-based Milkbasket may well be your Santa Claus. There are no sleighs or reindeers, there’s nobody sliding down the chimney, but if you make your wish before midnight (and yes, pay for it), Milkbasket will make sure you get it before you wake up the next day. 

Founded in 2015, the start-up was launched when co-founders Anant Goel, Ashish Goel and Yatish Talvadia realised the universal problem that was last-minute grocery shopping. The trio delved deeper into it, and soon after, their college friend Anurag Jain, too, joined them. Milkbasket claims to be India’s first micro delivery platform for groceries. The app allows a customer to order groceries till midnight and delivers it the next day between 5-7 am. There is no minimum order value and the prepaid orders, are dropped off without any contact between the customer and the delivery personnel.

It was only a few years ago that scores of on-demand grocery start-ups started mushrooming in the hyperlocal segment. The rush was a time-bomb waiting to explode given the unviable cost structure of some of the firms. In January 2016, Grofers withdrew its operations from several cities. Flipkart attempted a ‘nearby’ app, but wound it up in five months. In April, the third biggest start-up in the space, PepperTap, which had raised $51 million from the likes of SAIF Partners and Sequoia, announced its decision to shut shop citing poor unit economics and no sight of profitability in the long term. Abhinay Choudhari, co-founder of BigBasket, notes, “The business model was not viable because they didn’t have inventory of their own. They had to go to stores they had tied up with and pick up the items. So they were basically buying into someone else’s margin, which would come up only to 5-10%. Since their average order size was Rs.400-500 at best, even at 10%, they would only make Rs.50 while delivery costs would be around Rs.60-70. So the more you deliver, the more you lose. No wonder, some guys scaled down, shut or pivoted to our inventory-led model.” 

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