BigBasket tracks the cost of quality using various metrics to improve processes and reduce costs. This includes preventing poor quality, appraising products/services, and addressing failures. Costs include planning, inspection, verification, audits, and analysis. While prices are higher than markets to cover costs, strategies like discounts on large orders aim to increase sales volumes. Competitors include Grofers and DMart, with the main differences being cities served and delivery operations.

1. COST OF QUALITY
BIGBASKET
DANESH DASWANI-3260
NISCHAY MALHOTRA-3215
SHRITAN VARMA-3256
KHUSHI LUNKAD-3211
KOMAL MUNDRA-3249

2. The ability of a product or service to meet or exceed customer expectations.
Why to measure Quality?
❖ It gives managers a way to judge the overall impact of quality on their area of
responsibility.
❖ It offers managers a finical method to evaluate the level of their quality and
cost associated with different levels of quality.
QUALITY

3. Cost of Quality is a methodology that allows an organisation to determine the
extent to which its resources are used for activities that :
● Prevent poor quality
●
● Appraise the quality of the organization’s products or services, and that result
from internal and external failures.
Having such information allows an organization to determine the potential
savings to be gained by implementing process improvements.
COST OF QUALITY

4. The Relationship between Cost and Quality
•Total Cost of Quality
(CoQ) is a financial model of the costs
incurred to operate and maintain the
function of quality in a business.
•It is also known as The Economic
Conformance Model, shows us the rising
costs associated with proactive management
of quality as compared to the decreasing
costs associated with improving quality.

5. CONT..

7. •For the last few decades, management has been told that quality pays.
That doesn't mean that someone pays you for quality, but that any
resources spent on improving quality will have a very positive return on
investment.
•Whatever you spend on improving quality will be returned to you in
decreased costs.
•What you need is a quality regime that tests items cumulatively, that
reports errors immediately that addresses problems when they occur,
and uses performance measurements throughout the business to
ensure high quality is established and continually monitored
COST AND QUALITY

20. BIG BASKET’S QUALITY CONTROL

21. INCREASING SHELF LIFE

22. QUANTITY CHECK

23. PACKAGING

24. INSPECTION

25. RADIO IDENTIFICATION TEST

26. FLOWCHART- FOR CONTINUOUS
IMPROVEMENT

27. COST OF QUALITY AT BIG BASKET
● Every organisation has to apply various methods in order to implement the
cost of quality and so does BigBasket.
● Cost of quality prevents poor quality and appraise the quality of their products
and services.
● The cost of quality is divided into two types - Prevention and Appraisal Costs
● The Prevention Costs that are implemented by BigBasket are quality planning
which involves following a set pattern of plans as does BigBasket and Quality
Assurance is followed by methods of inspection before the products leave the
warehouse.

28. ● The Appraisal Costs involves measuring and monitoring plans related to
quality of providing services to the customers.
● It implements appraisal costs through Verification, Quality Audits and Supplier
Appraisal.
● Verification by the washing of the produce in citric acid.
● Quality Audits by inspectors coming from the head office to the all the
warehouses to check if all the processes are according to the pre-established
standards.
● Supplier Appraisal involves routine checks by the executives of warehouses to
make sure that they follow the guidelines of BigBasket.

29. ● With the scaling up of business, it has to constantly scale up the workforce to
keep up with the operations since it is a very operation oriented business.
● The business works on the efficiency of the delivery guys who, if fail to delivery
correctly or on time, and the customer service staff who, if fail in delivering
optimal solutions, would lead to customer complaints and thus degrade the Big
Basket brand amongst customers.
● This is an indicator of external failure costs which include complaint lodging
and returns.
● Another external failure cost are cybercrimes and minimum waiting periods.

30. ● When Big Basket started it used to follow a Just in time model where the
delivery staff used to procure the items from the local retailers as and when
the order is received. But with time it started to follow Inventory model.
● The model of Big Basket is a hub and spoke model.
● Currently, it has been focusing on implementing the hyper-local strategy where
it has tie-ups with the local vendors to deliver goods within an hour or two.
● Internal failure costs that BigBasket had to implement was Failure Analysis
when in changed its model from JIT and follows an inventory model.
● And it will avoid wastage for obvious reasons through proper storage facilities.

31. PRICING STRATEGY
● BigBasket is the leading company in the online grocery delivery services.
● Big Basket is the first to venture into this sector and has many competitors
currently.
● It tries to increase its margins by setting a nominal price of Rs.20 as a delivery
charge for items ordered below Rs.1000.
● It also provides a nominal discount on the order of Rs.3000 or Rs.5000 and
above to encourage households to buy their monthly groceries from Big
Basket thus providing economies of scale.

32. ● They mark up the prices of the groceries a little higher from the market prices
so as to cover their high variable costs.
● High variable costs are incurred due to wastage of perishable items, cost of
transportation, cost of labor, transportation damage, cost of storing inventory
etc
● Although there’s a markup in the price it still tries to keep the prices
competitive with the other players in the market.
● BigBasket earns a Gross Profit of around 20-30% and a Net Profit of around
5-7%.

33. BIG BASKET AND COMPETITORS
The top 10 competitors in Bigbasket's competitive set are Grofers, Nature's Basket,
DMart, Anandha Grocery, Jiffstore, OrderRabbit, GrocerKey, Tokri, Kingbasket and
urDOORSTEP.com.
Bigbasket's revenue is the ranked 2nd among its top 10 competitors.
Bigbasket has 2,935 employees and is ranked 1st among it's top 10 competitors.

34. GROFERS vs BIGBASKET
POINTS OF DIFFERENCE:
● Cities of operations
● Product Categories
● Association with farmers and suppliers
● Delivery service
● Tie ups
● Convenience (Time and Delivery Services)

36. TO CONCLUDE:
The cost and quality of such E-Groceries stores are on similar level.
The major difference is in the way they operate and terms and policies.
The cities in which each platform dominates also differs.

37. BigBasket’s Key Performance Areas
- $550 Million Retail Market, 60% Grocery share
- Tier 2 City/ Semi-urban expansion
- Cross-Selling
- Value Packaging/ Product Bundling Analytics
- Shelf Life Sustenance

38. Suggestive Improvements
Inventory back-up, to minimize order cancellations (Quality
Circle)
Loyalty Based Product bundling, for retention framework