BigBasket PESTLE Analysis

Published in Companies category by MBA Skool Team

Here is a detailed PESTLE analysis of BigBasket which examines political, economic, social, technological, legal & environmental factors.

Political Factors:

The political factors in the BigBasket PESTLE Analysis can be explained as follows:

BigBasket has recently launched its operations in Kochi. The company expects to grow at a constant rate with an increase in the growth potential of the overall online grocery business. After the current launch BigBasket would establish its presence in 25+ cities in India. Due to favorable political conditions for the business model they have expanded into a variety of new product lines such as milk supply, unmanned vending machines and beauty products.

Recently, in April 2019, the BigBasket company had received huge amounts of funding from two different investors which boosted the company’s ability to expand into new areas and their ability to achieve smooth functioning of operations. The Mirae Asset Naver Asia Growth Fund and Alibaba group invested around $150 million into the company which helped the company to enter the unicorn club of India.

Image: company website

Economic Factors:

Below are the economic factors in the PESTLE Analysis of BigBasket:

BigBasket’s wholesale market has seen a significant improvement in revenues. Their revenues grew by 35% upto an amount of Rs.

1606 crore. The company also experienced a reduction in losses of 53% to Rs.310 crore. The company also raised an amount of $300 million from Chinese group Alibaba. The company also has a subsidiary known as Delyver Retail Network which was eroded in 2018. The company has been acquired by BigBasket in 2015 but due to non-profitability from the current operations of the company it was eroded. The company’s future growth returns are very promising where they expect a return of 6300 crore in 2020, a valuable increase from 3200 crore in 2019. One of the greatest advantages that BigBasket enjoys is the growth potential of the online grocery which is expected to grow to a sizeable number of $2.5 billion by 2020.

Social Factors:

Following are the social factors impacting BigBasket PESTLE Analysis:

Since BigBasket is an online grocery site, the user interface of the company should be user-friendly in order to keep the customer interaction with the site as smooth as possible. For customers who are looking to save their money, BigBasket targets them by luring them with discounts and offerings at regular intervals and also providing them with products at very competitive prices. The payment portals on the website should be easily accessible as that is the point when a potential customer turns into a buyer. A lot of consumers are apprehensive of the security concerns regarding the payment of bills through an online platform. The preferences of the users in India have switched to mobile devices. The number of smartphone users and 4G users have improved at an increasing rate which has provided a boost to e-commerce websites.

Technological Factors:

The technological factors in the PESTLE Analysis of BigBasket are mentioned below:

The funding received by the BigBasket company from its recent investors has provided the company with large amount of available funds to invest in different kinds of technology. Of the $150 million received in funding the company has decided to invest $100 million to improve the supply chain of their firm. The proposal includes installation of vending machines and setup of small distribution centers across different cities where the operations of the company currently are. They have also decided to invest in reseller channels. The main goal behind the investments to BigBasket is to provide its customers with a two-hour delivery in the top ten cities in which they operate.

Since they deal with perishable products it would ensure that the products are delivered in a timely manner and quality along with freshness of the products is maintained.

Following are the legal factors in the BigBasket PESTLE Analysis:

In 2018, BigBasket faced a major legal trouble when Mumbai based tea company Girnar Food and Beverages sued BigBasket of infringement of company’s “Royal” trademark. They have alleged that the company was selling a variety of products including tea through their website and they were selling them under the umbrella of Girnar’s Royal trademark. BigBasket does sell a royal tea which is manufactured by a firm known as Mohini Tea and is a white label product. The nature of the e-commerce business allows for such concerns where the companies face such legal allegations over the issues of trademark. These legal affairs act as a hindrance for the smooth functioning of the enterprise and can sometimes act as a very costly affair. Apart from this the e-commerce players are often accused of selling counterfeit or fake products across their website.

Environmental Factors:

In the BigBasket PESTLE Analysis, the environmental elements affecting its business are as below:

As part of its CSR activity BigBasket has joined a partnership with the Robin Hood Army which is a not for profit organization. They have launched a joint campaign known as MissionMillion 2018, to eradicate the striking problem of hunger. The initiative includes the inclusion of 16,000+ “Robins” across the India and those Robins would be assigned the task of serving the food. They have conjointly decided to create a difference in the lives of 1 million people.

For this purpose, a Hunger Independence Kit which includes 1 kg of rice and 500 gm of Dal which was available on their website from 7th August till 16th August 2018. Although the Robin Hood Army has been working to eliminate the problem of hunger from the past four years, BigBasket has joined the initiative and they would be contributing additional 10% for the donation purposes. Before this the company was part of a Go Green initiative in which a sapling was delivered with every order placed by the customer.

To conclude, the above BigBasket PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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