Baxi pivots to hyperlocal delivery as bike taxi biz turns unviable

Gurugram-based startup Baxi has pivoted from employing full-time bike taxi riders to hyperlocal delivery of milk and other daily essentials.

The startup will rebrand its app as B-Fresh that will focus on hyperlocal delivery in Delhi-NCR. It will use the same bike taxi partners for hyperlocal delivery and they can continue roadside bike taxi pickup using Baxi app as meter. 

“Anyone in the bike taxi business will have to dole out attractive incentives to keep riders on the platform as full-time employees. You need to burn a lot of capital to do that because the margins are too low here. We find that partners are not willing to pick up rides even for a short distance because we don’t give them incentives, so we have decided to remove the on-demand bike taxi service,” Baxi co-founder Ashutosh Johri told TechCircle.

Baxi has tied up with Mother Dairy for milk deliveries, as well as Patanjali Ayurved and another retailer for other fast-moving consumer goods. It had launched a pilot of hyperlocal delivery in October and has served around 1,800 customers with a weekly active user base of about 800 currently with Mother Daily alone.

It works on a pre-paid model wherein users can select products and pay for their orders the previous day for next-day early-morning delivery.

B-Fresh will employ local part-timers who will collect milk directly from nearby Mother Dairy booths while an area supervisor will hand them non-milk items he picked up the previous day for early-morning delivery.

“None of the companies that does local deliveries is helping the local retailers. Everyone has their own inventory, warehousing and logistics mechanism. We use a local retailer’s inventory and we find a local part-timer,”Johri said.

The company is preparing to launch a subscription-based model as well.

Johri said the company will raise a bridge round by January-end and will follow it with an institutional round soon.

Baxi (legally called 74 BC Technologies Pvt. Ltd) was founded in 2014 by Johri and Manu Rana, both alumni of IIT-Delhi. Prior to setting up the bike taxi startup, Johri worked with Cisco, Mara Ison Technologies, AT Kearney and IBM, while Rana, who also studied at the University of Toledo, was with Bigtree Entertainment, IgniteWorld and Match.com.

“The ride of a bike taxi is straight-jacketed between a shared auto and an auto. A shared auto runs at Rs 10 and auto at Rs 40 on average (per ride). So a bike taxi has to be Rs 20-25 ride. How many rides one has to do a day to earn a reasonable amount to cover his bike EMI, fuel costs, and aggregator’s commission to earn a good amount? That’s the reason bike taxi concept as a standalone business has not picked up yet,” Johri had told TechCircle recently.

Baxi had raised an undisclosed amount from multiple investors in July. Existing investor Alok Mittal, co-founder of fin-tech startup Indifi Technologies, had put in money. New investors who also participated in the round were Ramesh Awtaney, founder and chairman of info-tech firm Ison Technologies; Mohit Khurana and Deekshant Sahrawat, founders of Roots Education; and Ashish Chhaparwal, founder of US-based children transportation firm KidzJet.

The startup had previously raised funding in November 2015, when it secured $1.4 million in seed funding from a group of high net-worth individuals.

In the hyperlocal space, B-Fresh will compete against grocery delivery startups BigBasket, Grofers, DailyNinja and daily tasks management app Dunzo, besides horizontal marketplaces Amazon and Flipkart.

Meanwhile, the micro-delivery segment that offers subscription-based services such as milk, bread and eggs delivery is emerging as a key component in the overall hyperlocal play.

Gurugram-based micro-delivery grocery startup Milkbasket raised $7 million in an extended Series A round led by US-based early- to growth-stage venture capital firm Mayfield Advisors last week while TechCircle recently reported that Doodhwala, which delivers milk and daily essentials on a subscription basis, was in talks to raise up to $12 million in a Series A round of funding. BigBasket acquired subscription-based e-grocery startup RainCan to strengthen its micro-delivery operations in October.