Ankur Barot started his career in engineering and soon transitioned to business. Currently, he is an e-commerce expert and is working as the manager of strategic initiatives at BigBasket, one of the biggest online grocery platforms in India.
In this episode, Ankur talks to us about the important strategies when it comes to pricing in the world of e-commerce. He shares valuable tips on how to make customers choose your platform over your competitors’, and how to charge different prices on different customers depending on their buying behavior and your competitors’ prices.
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Why you have to check out today’s podcast:
- Find out the factors to consider in pricing your products in the online market
- Learn how to make customers choose your platform over your competitors’ platforms
- Discover how to charge different prices on different customers by monitoring their buying behavior and your competitors’ prices
“In pricing, it is definitely very important considering how your costs are aligned and how the competitive prices align. A large part is also on how you are communicating the price to customers.”
– Ankur Barot
Topics Covered:
01:32 – How Ankur got into pricing
02:17 – The work that BigBasket does, and what makes it unique
04:29 – COVID gave the companies that did delivery a chance to explode in growth
05:54 – Ability to shop in stores again did not stop customers from ordering online
06:39 – COVID was almost like a forced trial where people had to order online; and they found it to be easier and more convenient
08:11 – Promotions and other factors that determine whether customers will place an order on your platform or not
11:21 – How to get customers to order on your platform instead of your competitor’s platform
16:12 – Analyze how much your customers are willing to pay for a product; Make sure the customers would get what they want even right before the billing process
20:05 – How to charge different prices to different customers by monitoring their buying behavior as well as the competitors’ prices
23:29 – How companies in India find the prices of their competitors’ products
27:02 – Ankur’s pricing advice
29:36 – Connect with Ankur
Key Takeaways:
“We learned that pricing plus the stock availability as well as assortment, as well as how you are charging the convenience fee – all these aspects will decide whether the customer is placing an order on your platform or not.” – Ankur Barot
“It is not about only the product pricing that the e-commerce portal has, it is what other parts of the chain that will bring in a customer and place an order on your platform.” – Ankur Barot
“At the back end, what the company or what we are trying to do is select our key value items that the customer will remember the prices for, and we’ll definitely build a long-term perspective that they are the cheapest among all the competitors.” – Ankur Barot
People / Resources Mentioned:
- BigBasket: https://www.bigbasket.com/
Connect with Ankur Barot:
- LinkedIn: https://www.linkedin.com/in/ankurbarot/
- Email: [email protected]
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Ankur Barot
In pricing, it is definitely very important considering how your cost are aligned and how the competitive prices align. A large part is also on how you are communicating the price to customers.
Mark Stiving
Today’s podcast is sponsored by Jennings Executive Search. I had a great conversation with John Jennings about the skills needed in different pricing roles. He and I think a lot alike. If you’re looking for a new pricing role, or if you’re trying to hire just the right pricing person, I strongly suggest you reach out to Jennings Executive Search. They specialize in placing pricing people. Say that three times fast.
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value and the hand-in-hand relationship between them. I’m Mark Stiving, and our guest today is Ankur Barot. And here are three things you’d want to know about Ankur before we start. He is the manager of strategic initiatives at BigBasket. He is an e-commerce expert, and surprisingly, he transitioned from engineering into business. Oh, and he’s even a fan of Korean drama, even though he’s Indian. Welcome, Ankur.
Ankur Barot
Thank you, Mark.
Mark Stiving
Hey, how did you get into pricing? Or do you even think that you’re in pricing?
Ankur Barot
My role currently is strategic initiative, but I have kind of worked majorly on pricing and I have worked on how we can drive revenue through pricing as well as profitability and how we can work towards profitability in the e-commerce world.
I started my career working in marketing front and then slowly I kind of moved into PNL management, that is profit and loss management where I worked majorly on how we can drive the top line revenue using the pricing rate as one of the key drivers, and also making sure that we are generating enough margins to become profitable.
Mark Stiving
It’s funny that you say that because I think pricing relates to almost everything in a business. And so, if we’re not focused somehow on pricing and the value and how we’re going to get it from our customers, we’re leaving a lot of money on the table.
You work at a company called BigBasket. Can you tell us what does Big Basket do and why is it unique?
Ankur Barot
BigBasket is an e-commerce company which is majorly focusing on grocery in India, and it is the largest company in the e-commerce platforms which almost drives close to around 800 million revenue per year. And it was the first pioneer which started Indian groceries and brought online platforms as well as brands online in terms of the grocery segment for India. Slowly and gradually, post-COVID, we have boomed and we succeeded in driving the overall business in e-commerce world for India. And now, it has uniquely placed where we are there in the online platform. We started slotted deliveries where we started with 3 to 4 days orders being delivered after 3 to 4 days. Then, we now are slowly transitioning to Q-Commerce World as, where across the globe. you might see that the quick commerce industry has kind of come up where we delivered the orders in 10 to 15 minutes. BigBasket as well has transitioned to that that we deliver in 30 minutes. Apart from that, we have also started a few other lines of business be it offline channel as well as we have started bb instant where we have specific kiosks being placed within societies as well as corporate offices in India where the customers can directly buy them from there.
Apart from that, we were recently acquired by the Tata Group. So, it is now a big transition to the e-commerce world that India is seeing as well as we are definitely one of the pioneers in the grocery industry.
Mark Stiving
You’re saying that Tata recently bought BigBasket?
Ankur Barot
Yes.
Mark Stiving
Nice. Believe it or not, I had a chance to teach for Tata a couple of times. It was it was pretty fun and interesting. Not the e-commerce grocery side, I’ll assure you of that. It’s pretty fun.
Now, COVID, I think COVID helped every company that did delivery, right? Amazon, and Uber Eats, and DoorDash. This is in the US, right? And I’m sure in India it was very, very similar. It gave you a chance to just explode in growth if you were the only ones doing it.
Ankur Barot
Yes. Before COVID, we were placed in a situation where we were the only company which was operating during COVID, and we also grew like almost 10x to 20x during COVID when customers were looking for online platforms to deliver basic groceries. So, we definitely grew up and post COVID, also, we bought a new set of customers who had continued ordering on BigBasket as well.
So definitely, COVID helped our business grow as well as we saw a huge amount of customer change as well. In terms of behavior, customers are kind of now accustomed to the online platforms and ordering in India. And so, you can definitely see it really kind of grew more than 3x to 5x due to COVID. And that has been a story that is a great shift in terms of getting new customers.
Mark Stiving
Out of curiosity, did you lose many customers? Once COVID relaxed and people were allowed to go back and shop in stores again.
Ankur Barot
We did not. We did not lose a lot of customers. Definitely, customers somewhat transitioned to our first few basic add-on orders, a few frequency-led items, or transitioned to the offline markets once the offline channels were open and shops and stores that opened in their locality.
But we saw that a large chunk of customers are still continuing with us and ordering on the platform due to the customer service that we have kept as a standard and maintained, and we have bought that customers to the platform as well.
Mark Stiving
You know what’s funny is you can almost imagine that COVID was a forced trial where people had to use you because they didn’t have a choice. And so, once they used you and had a chance to try you out, they said “Hey, that’s easier, more convenient. I like it. I’m going to stick with it”. So, it’s an interesting concept from that perspective.
Ankur Barot
Yes, definitely an interesting perspective where Indian market seems to be finding that they are more price-led than price-driven. Very, very elastic to the pricing. So, with price, in our offline channels, our customers are switching in terms of different players as well while looking out for promotions or discounts. Customers are very much non-loyal to a brand when we come to see and look at a specific Indian market. And that is where they found convenience and value in terms of ordering on BigBasket. And then we also worked very, very specifically in terms of building a bit in terms of how the customer experiences as well as specific to grocery when you have items like fruits and vegetables being bought by the customer. So, the customer is having an assurance from BigBasket like “Yes, the quality, what I am expecting is definitely going to come from BigBasket” and we will definitely deliver on that.
So, that trust-building kind of happened during COVID. And post COVID as well, when that trust is built, they are accustomed to BigBasket on the platform and ordering on BigBasket.
Mark Stiving
Nice. Let’s twist this and talk about pricing and promotions for a second. Is there an interesting promotion in this world of e-commerce and online delivery that you found and been able to implement that we may not have thought of?
Ankur Barot
Yes, I’ll take you through any interesting case study in terms of how pricing has been working out in specifically, but also within India. We are very, very traditionally accustomed to specific fruits and vegetables as well as a few items where the customer will definitely look up on different portals before buying the product. Be it low product value or a high product value, the customer is definitely looking on different platforms and monitoring and assessing the platform based on the promotions that they are giving out, and what kind of pricing the platform is offering. And then in India, we had a large number of players entering in the market in terms of e-commerce where they started with free deliveries as well and giving high discounts on specific products as well as overall platform was kind of trying to gauge and bring in the first-time user through discounting.
Yet, what we had learned I think through the existence of almost close to around ten years, is that pricing is definitely one that kind of works very well when you are kind of price-competitive with the competition. Where your pricing is on par with the competition. But apart from that, a large chunk is also dependent on how your assortment is. How is the ability of the product that builds the basket for the customer? Apart from that, in terms of how you are pricing the convenience side in terms of the delivery fee that you are charging to the customer.
So, it is not about only the product pricing that the e-commerce portal has, it is what other parts of the chain that will bring in a customer and place an order on your platform. A large chunk is being dependent on the pricing, but apart from that, there are kind of parameters or assessment or different aspects that customers are considering before placing an order.
This learning that we got helped us because traditionally when we started, we were kind of actually having a lot of assortments, as well as we were delivering after 2 to 3 days post the order being placed. So, to bring that assortment down on a lower side as well as to reduce and be closer to the customer to bring in and deliver quicker to the customer, we started doing and experimenting on other aspects of business. But we learned that pricing plus the stock availability as well as assortment, as well as how you are charging the convenience fee – all these aspects will decide whether the customer is placing an order on your platform or not.
Mark Stiving
It makes all the sense in the world because you think about all of the other issues. How fast is the delivery going to be? How big is the assortment? What are the things you can choose from? Those are – let’s call those value features or capabilities of your company relative to a competitive alternative.
And then when we think about price, there’s actually two different prices we have to deal with: One is, what’s the price of the product? And the other is, what’s the price of the delivery? What are we going to charge you as a delivery fee? And what I find fascinating about this problem – and I don’t know if you thought about this and I’d love to hear how you think about this – is I’ve got at least two different decisions my buyers are about to make. One is, are they going to shop at my platform, or someone else’s platform? And then the second one is, once they’ve chosen my platform, how do I get them to choose the right object so that I make more money?
How did you think about those two different questions? And then let’s just do it the first. How do we get them to our platform instead of a competitor’s platform?
Ankur Barot
When we’re working on the platform that we’re looking at, it’s kind of a pathway that the customer is going through. So, what are the prices that you have at the product level? And then deciding on that basket, first thing is how they build the basket and what are the products that they are definitely going to buy for. Understanding the customer behavior and assessing the customer and having a sense on which customer are probably going to definitely buy on their basket.
There are like key value items for any retailer that we look for. You know, they are staples like in terms of the oil price, or probably be the basic fruit and vegetables or onions or very, very basic things which you are having on your platform. And out of the 100% of the customers, 80% to 90% customers will definitely buy that product.
Mark Stiving
Let me pause you for just a second, Ankur. So, I think what you’re saying is that, if 80%, 90%, 100% buy these staples all the time, it’s likely that they know the prices, so when we have a high price, it looks like a high price. And if we have a low price, it looks like a low price. And so, we can look like a low-price retailer if we have low prices on these common items, on these staples, essentially. And it has everything to do with do our customers know what price they should be paying or do they have a reference price for those objects?
Ankur Barot
Yes. There are two aspects to this: One is how the price is currently with your competitor, what are the other aspects that they are taking in terms of deciding and keeping it as a reference with yours versus the competitor. Apart from that, it is a kind of a long-term perspective if we think far is the perception-building. If you look globally, when you see a company like Walmart, which had a long-term perspective and a definite idea where they are saying “everyday low pricing”, they are building a long-term perspective that they are the cheapest across all the platforms or all the companies that the customer is looking or comparing for.
But at the back end, what the company or what we are trying to do is select our key value items that the customer will remember the prices for, and we’ll definitely build a long-term perspective that they are the cheapest among all the competitors. So, it’s more working with the customers in terms of understanding what they need and what they think of our pricing and making sure that we build that perspective in a long-term perspective so that they definitely think of us when they are thinking of buying a new product as well as they think that we are among the cheapest as compared to all the competitors.
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Mark Stiving
I think it’s absolutely brilliant. Now, if I were to take this a step further, do you charge different prices to different customers? For example, if I have a single customer who shops with me every week and I know they always buy these ten items and then there’s a miscellaneous other set of items, I can imagine how I would make sure those ten items were always very inexpensive so that any time they went and look somewhere else, it’s like “Oh, I got the price and I get the cheapest here.” But the other items have much higher margins on them because they don’t know the prices, they don’t know the competitors’ prices and they don’t buy them that often so they wouldn’t.
Ankur Barot
Yeah, definitely in India, if you look at the last 3 to 5 years, that has been an online competition as well as competitors building proper sophisticated backend systems to kind of monitor the pricing with the competitor. So, we actually monitor what our pricing is with respect to the competitors, as well as there is a systematic pattern in terms of understanding which are the key value items and how do you want to price yourself as compared to other competitors. And yet we definitely don’t try and go with a pattern where we segment the prices for a specific set of customers. But we do run promotions specific to customers where we are trying to understand and get a sense that whether they are willing to pay for the thing at a certain price or not. So, we try to then bring them on our platform and try to gauge their understanding as well as we try to understand how much they are willing to pay for a particular product.
Apart from that, this is more on working towards the basic items that the customers are definitely going to buy. A large part of working also is being done in terms of understanding the long tail set of SKUs, which are high margin type of SKU. So, how do we make sure that the customer is building and using and buying this product in their overall basket? How do of place them in our overall assortment? While definitely there are days in the offline market where you could actually see chocolates being placed near the billing counter as well as a few key items you might have forgotten being placed right or during the billing process where you would definitely go and buy them. There has been development in terms of how your product or the app is below that, which are the key items that the customer might have forgotten and they might kind of like to add them in their basket. So, there has been kind of development on that part as well. So yeah, definitely some interesting work being done on that piece.
Mark Stiving
That’s interesting. So, what you’re doing is you’re saying when I walk out of a grocery store and I see the aisle at the cash register, I can buy my candy bars and my chocolates and stuff. And so, this is this spontaneous acquisition, right? Which we didn’t really want it, but we bought it. And you’re finding ways in e-commerce to do essentially the same thing. And so, it could be related to what’s already in their shopping cart. It could be related to past behavior. So, you’re just testing them to see, “Hey, do you really want a candy bar when you’re checking out?” And so then, I can offer that to the specific customer.
Ankur Barot
Yeah. Apart from that, we also try and understand what is the last order that you had placed and then what are the supplies that you might need a refill for. So, we try and assess that. We try and showcase the SKUs and the products that you might be not having as of now or that you might have used up until now. And we keep on existing and probably price them better as well so that you come back to the platform and get hooked on to the app.
Mark Stiving
Yeah. And so, I ask this question, but I’m not sure that you answered it or I don’t think you answered it the way I thought. Do you charge different prices to different customers?
Ankur Barot
Yeah. We definitely do that.
Mark Stiving
Okay. Got it. So that gives us a lot of flexibility and things that we can do, which is really fascinating. I got my head spinning with all of the different ideas that I want to go try now.
I could imagine that you can watch a single customer’s behavior on a single type of product, let’s call it milk. And so, they go through two gallons of milk or four liters of milk a week. And we know that this shopper buys from us always and never goes to our competition. So, this type of shopper, we still want to keep those comparable prices low, but we can probably inch prices up a little bit over time because we know they’re a loyal customer of ours. Is that something you guys consider?
Ankur Barot
We consider it as a lifetime value of the customer as well. What frequency they’re buying it, what is the overall order value that he is looking for, and apart from that, whether is he buying a set of custom items which are actually on a low margin part, or is he definitely buying it in a mix of things where he’s getting an average order value, a good average order value, as well as he’s working and buying all the complete set of baskets. Because at India we see customers specifically buying only a few select items which are actually on discount on our platform. So definitely, we monitor them. We understand how the pricing is working on that set of products as well as what we normally do is we assess them and we don’t reduce the discounting for customer. But we definitely keep a close eye on them on how they’re assessing and moving in terms of our price perception as well as what is their say in terms of itemized in terms of it.
So, in India, we saw a good 5 to 6 year period where all the e-commerce companies were getting very good funding in terms of venture capital coming in as well as the customers were spoiled for choice. So large customers were kind of looking at different companies and getting those good discounts as well. But now, with almost inflation coming in, as well as when we see the funding market being drying up across the world, we are seeing that the discounting has slightly now reduced across all companies. And we, as a competitor, we are always monitoring how the customer is doing. So gradually, all companies are trying to move in to a direction where we are just going for growth, not looking at the bottom line in terms of margin, but now across the industry, what we are seeing is that everybody’s assessing them and also working on their bottom margins as well as getting good, sustainable growth, which will not get haywire or not going very high in terms of discounting.
Mark Stiving
That’s pretty fascinating because you can imagine when we’re trying to grow an industry, everybody’s pricing is competitively as they can to gain market share. But once they have to be profitable, and they can’t just lose money to gain share, then we’ve got to figure out how we can do it sustainably. You’re absolutely right. How do you find the prices of your competitors’ products?
Ankur Barot
In India specifically, we kind of have built out systems at banks as well that are competitor monitoring channel partners as well. So, they would assess what the competitors are doing in terms of pricing as well as how they price and what are their assortments. So, there are systematic things that are being done in terms of understanding the competitors. So, India, being a large set of cities, I am working on tier one and tier two segment cities in India. So, with grocery being very, very local in nature, the segment or the products which are sold in the north are very, very different as compared to the south. But here, a local assessment is being done in terms of what products are being carried by the competitors offline as well as we do market research in terms of understanding the customer behavior and talking to the customers, about which are the key products that you like to have in their basket. And what are the key items which sell well in your specific city, which are very, very local to you. So, we gauge an understanding of the city as well as how the consumer is behaving. Apart from that, a large part of learning can be definitely done from the competitors as well. Like what is the assortment that they are offering, and apart from that, what is the pricing like for the competitors as well.
Mark Stiving
Yeah, I can imagine how it would benefit the entire industry to have a data, a centralized data warehouse where everybody puts their information in and allows everybody to have access to it. But I can also see how governments might consider that collusion and not allow you to do that.
Ankur Barot
Yeah. I think this is more of a probably community thing that people try and assess the competition, how they are doing. But it’s not very regulated or probably just learning through the competitors and understanding through them. Apart from that, when we look at the grocery market in India, there are private labels as well as there are branded products The branded products are kind of definitely coming through a huge brand like P&G where they are I think just pushing the product from them to us and they keep a close eye on the online as well as the offline players, how they are priced. Because for them giving an advantage to any particular competitor, be it online or offline, is definitely shifting the customer from one token to another. So, they try to avoid any kind of disturbance or disruption by any player in terms of pricing. Definitely a new entrant. They are coming into the market. They might probably put in some add on money from their pocket in terms of discounting, but that too is kind of being regulated by the brand in terms of how much discounting you can do and how much can you disturb the market in terms of gaining the market share.
Mark Stiving
Ankur, this has just been a ton of fun. I appreciate it. But we’re going to have to start wrapping it up. I’m going to ask you the final question. What is one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?
Ankur Barot
I think the pricing is definitely very important considering how your cost are aligned and how the competitor prices are aligned. A large part is also on how you are communicating the price to customers. The communication part I’m seeing from the B2C front where you are kind of communicating to the end customer, and the customer is deciding on buying the product or not. So there, what I see is how you communicate the price to the customer. What is the type of communication? what is the medium or the channel of communication in terms of the price? Definitely decides whether the customer is buying it or not.
Mark Stiving
Nice. Can you give us an example of a time where you’ve used this to your advantage?
Ankur Barot
I’ll give you an example where we brought in a large amount of traffic during the non-peak season. We had a promotion in terms of specifically ordering on snacks and branded food as well as beverages. Despite having these products on our platform where the customers can definitely come in and buy, we actually found out a specific period of time when the customers are actually on their mobile. Push notification communication to the customer with a specific product being highlighted that they are probably looking or thinking of during that period, kind of raised our organic traffic by a very large chunk and ordering that product from us.
So, understanding that thing has helped us in terms of how this channel is working, as well as what is the key product that you want to approach the customer with, at what price. So, we almost brought in like 50 to 60% traffic by doing this specifically.
Mark Stiving
Wow, that’s pretty awesome. Even though I could imagine how that would work for a candy bar, right? I’m in the mood for candy bar. You got me in the right spot. But even if I ordered a candy bar, I don’t get it for 20 minutes or until I’m home or something else. So, it isn’t an instantaneous satisfaction. And yet people would still buy more because they were thinking of it.
Ankur Barot
Yes.
Mark Stiving
That is fascinating. Awesome. Ankur, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Ankur Barot
People can reach out to me on LinkedIn, Ankur Barot. They can find me on LinkedIn and I work at BigBasket. So, Ankur Barot, BigBasket.
Mark Stiving
Alright. And we’ll have a link to your LinkedIn profile in the show notes as well so people can find it.
Thank you so much for listening. If you enjoyed this, would you please leave us a rating and a review? The easiest way is to go to ratethispodcast.com/impactpricing. And finally, if you have any questions or comments about this podcast or pricing in general, feel free to email me at [email protected]. Now go make an impact.
Mark Stiving
Thanks again to Jennings Executive Search for sponsoring our podcast. If you’re looking to hire someone in pricing, I suggest you contact someone who knows pricing people contact Jennings Executive Search.
Mark Stiving
Don’t forget to attend our workshop. “How to Fearlessly Raise Prices Now” go to impactpricing.com/rpn.
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