Future Group chief executive Kishore Biyani told CNBC-TV18 that via this new venture, the company is planning to sell 1,800 stock keeping units (SKUs) in the beginning and will is looking to sell high margin products like electronics and general merchandise.
"We have created a brand new supply chain to deal with delivery to the consumer directly. So it is not absolutely an e-commerce model. We believe we will be able to cater to a lot of India, which would have not been possible with physical retail," he elaborated.
Meanwhile, he said that the company's flagship Big Bazaar doesn't require additional funding as of now and would roll out 35 stores in the next one year.
Future Retail 's current debt stands at Rs 4,500 crore, Biyani added that he aims to make it debt free over next two years.
Below is the edited transcript of Kishore Biyani's interview with CNBC-TV18
Q: The big new venture that you are about to start on, you haven't started new ventures in quite some time so Big Bazaar Direct, what are your plans especially because there is a lot of competition in the online space?
A: Big Bazaar Direct is a model wherein we believe that to reach to the balance 60 percent of Indian which cannot be addressed to modern retail, how can we create a technology and a human interface for a franchise kind of model with a technology and which can serve the customers where modern retail can't.
So we used our brand Big Bazaar, we used our product portfolio. We are creating a franchise network for a human interface to make the transaction happen. We have created a brand new supply chain to deal with delivery to the consumer directly. So it is not absolutely an e-commerce model, but we are selling close to 1800 Stock Keeping Units (SKUs) to start with, we will go to around 10,000 SKUs. We believe we will be able to cater to a lot of India, which would have not been possible with physical retail.
Q: Can you just give us more details on what kind margins or profitability are you hoping to attain due to this model because many of the other e-commerce companies in this business are doing wafer thin margins at this point in time purely because of the competition?
A: I don't think it is about margin, it is a model which we are creating based on the products which we are selling in big Bazaar. It depends on what category it sells; it is a new business so depends on what category it sells. I believe food won't be a significant part of this business because food is a lower margin business. The whole idea is to sell general merchandise, home goods, electronics, mobile and clothing to the customers and they are all high margin products, it depends on what model we get and what category mix we get ultimately in this business.
Q: You are going to take Rs 3 lakh from your franchisees and then put in the system, give them a tablet which will be seamlessly integrated to your backend so that they take in customer orders and you supply it to them. Your delivery time is three-seven days, your competition would be I would assume a Flipkart where the delivery time is not so much. So do you think the market will give you the chance to wait for same day delivery at three-seven days competition from other onliners is pretty stiff.
A: Three-seven days is a promise which we are maintaining in the beginning. As we keep on moving forward we will see that our delivery matches what Flipkart has created. In Flipkart market also the delivery is not what they can deliver because it is a market place and the vendor will deliver and they are not so prompt. We are working on a supply chain model where delivery can be much more faster, may be two days but only time will tell how we are able to perfect that fulfillment model.
Q: Have some franchisees already come in, have you listed some of them, they are ready to pay Rs 3 lakh and get going with you? How many do you have?
A: Yes we would be close to 1200 franchisees by March, we have just launched Bombay recruiting of franchisee and Gujarat-Ahmadabad. We should be close to 250 franchises by the end of this month.
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