Future Group scripting e-com enabled direct selling for its hypermarket with Big Bazaar Direct; what's on offer?

3 Sep, 2013

Big-Bazaar-DirectFuture Retail Ltd, which houses a string of retail chain formats, has launched a new venture called Big Bazaar Direct which seeks to create an e-commerce enabled direct selling business for its flagship hypermarket Big Bazaar. Big Bazaar currently does not have an e-commerce interface though customers have the option to order products for home delivery over the phone.

With the new venture the firm is potentially targeting customers who may not necessarily have a computer or be savvy enough to access an online interface to buy the products. This is through leveraging a tablet based e-commerce backend.

Big Bazaar Direct is basically a direct selling platform that will enable customers to place orders with the company's franchisees, post which they will receive their orders in three-seven days.

Wannabe entrepreneurs or direct sellers can sign up by filling a franchisee application form on BigBazaarDirect.com, after which they will need to send their Know Your Customer (KYC) documents and an application fee of Rs 1,000. For sealing the deal, an investment of Rs 3 lakh will be have to be made by the franchisees that includes Rs 1 lakh each as non-interest bearing refundable security deposit; initial advance that is to be used for placing orders; and set up charges for Big Bazaar Direct tablet, initial branding, one year training, and launch material, etc.

Franchisees need to simply take orders from the customer on the tablet provided by the company, post which customers will receive a confirmation SMS and will need to make the payment to the franchisee. Customers will also be offered over 1,000 deals by Big Bazaar.

In addition, franchisees don't need to stock and deliver goods; Big Bazaar will handle the same. The company will also provide a dedicated team for franchisee and customer support; in case of any product related issue, Big Bazaar Direct will arrange for the return pick up. Franchisees will get a cut of every order placed via their tablets.

The franchisees or direct sellers are being added by Future Value Retail Ltd, a wholly owned arm of Future Retail Ltd which is being merged with its parent company as part of a larger group restructuring.

According to Afaqs, Big Bazaar is aiming to have 100,000 franchisees in two years. This roughly translates into Rs 3,010 crore in direct cash flow (in addition to the sales of products) for the company, considering the amount it is charging for setting up a single franchisee.

There are already many direct selling firms such as Amway and Tupperware but their product basket is limited in scope and largely revolves around private label lifestyle and personal care products. In contrast, Big Bazaar Direct with its assortment of products could yet evolve into a big direct selling move.

While all of this does look good on paper, the niggling issue is the delivery period of three-seven days. Even assuming that consumers would bypass the nearest kirana store and purchase the products from Big Bazaar Direct, existing grocery e-tailers offer much swifter deliveries with some promising same-day home delivery.

There are players like AaramShop, BigBasket, ZopNow, MyGrahak, LocalBanya and Ekstop which offer online interface for ordering products similar to Big Bazaar. Big Bazaar Direct's advantage would be much larger product basket to choose from and its reach in multiple cities as against limited reach of a few cities or mono-city operations of some of these online grocers. But it would need to up its game with faster delivery if it seeks to make its venture a big success.

So what's in it for Big Bazaar? The firm can also potentially retain its regular customers who currently drive to the stores once a month for shopping. Big Bazaar stores already faces a challenge, especially during the weekends, with rush at the payment counter and the new venture could possibly try and build revenues without generating as many physical foot-falls to its hypermarkets.

The big question is why not simultaneously build a direct e-com site? After all the company will be handling its own logistics even with Big Bazaar Direct and has to also share a part of the revenues with its franchisees as against running its own e-com site. The answer could lie in making a success of its direct sales model which, besides bringing in upfront one-time cash from the franchisee, also gives it inroads into a wider base of mass consumers.

(Edited by Joby Puthuparampil Johnson)