Through its programme called Farmer Connect, Bigbasket is sourcing almost 60% of its fruits and vegetables directly from the farmers. The programme, which was launched in January, eliminates the need for middlemen, significantly increasing the profit margin as well as giving a boost to farmer’s income due to direct procurement.
According to Economic Times, fruits and vegetables category directly contributes nearly 20 percent of the overall revenue for Bigbasket and the online grocery delivery platform hopes to increase its direct sourcing from farmers to 80% by the end of this fiscal year. Speaking to ET regarding the programme, Hari Menon, co-founder and CEO of Bigbasket, said, “We established 15 collection centres in the first six months and are working with 1,100 farmers. By March 2017, we will be working with more than 3,000 farmers.” Through the programme, the company has increased margins by nearly 6-7% as well as 10-15% increase in farmer’s income, according to ET.
Direct sourcing from farmers has led to significant advantages in procurement of fruits and vegetables. Since Bigbasket has its own fleet of trucks, the collection process of fruits and vegetables is much more hassle-free while eliminating the need for middlemen. The payment process to the farmers also has become easier since Bigbasket pays them directly instead of middlemen holding the payment for more than 15 days. “The Jan Dhan Yojana has meant that all these farmers already have bank accounts. We settle all payments through bank transfers,” said Menon.
With an increase in direct sourcing of fresh produce, Bigbasket also has plans to supply fruits and vegetables to hotels, restaurants and caterers. Currently, the company sells fresh produce to its customers ordering through its online platform as well as to over 2,000 kirana stores.