Chinese e-tailing giant Alibaba has sought formal approval from the Competition Commission of India to acquire a stake in the country’s top online grocer BigBasket, a person aware of the development told VCCircle.
Alibaba.com Singapore E-Commerce Pvt. Ltd, a subsidiary of Alibaba Group Holding Ltd, will infuse the funds into Supermarket Grocery Supplies Pvt. Ltd, a wholesale products supplier that owns the BigBasket brand. (A separate firm, Innovative Retail Concepts Pvt. Ltd, runs the BigBasket property under licence from Supermarket Grocery.)
E-mail queries sent to BigBasket CEO Hari Menon did not immediately elicit a response.
Media reports said in September that Alibaba and homegrown e-wallet company Paytm were set to invest about $200 million (Rs 1,277 crore) in BigBasket. The Ken reported that the e-grocer was raising $280 million as part of a Series E round that also saw participation from existing investors Sands Capital and The Abraaj Group.
Alibaba's backing will not only help BigBasket consolidate its numero uno position, but also give it the much-needed firepower to fight Amazon. The Seattle-based e-tailing giant recently got regulatory approval to set up a retail unit in the country to manufacture private food labels. Amazon has also committed $500 million over the next two-three years towards this food retail unit.
Though Paytm may not invest in BigBasket as earlier speculated, the investment will indirectly give it a toehold in online grocery, besides keeping competition at bay.
Earlier this week, homegrown e-commerce major Flipkart also announced its second innings in the space through a soft launch of its grocery delivery service Supermart. However, considering that rival Amazon and now Paytm will have a head start, Flipkart faces a Herculean task ahead, notwithstanding its $4-billion war chest and strong tech capabilities.
Online grocery is set to witness hectic activity in times to come, as the country’s e-commerce majors have identified it as the next big battle ground. Getting a stronghold in the space ensures frequent repeat purchases and a boost to gross merchandise volume.
A recent report by research firm RedSeer says India’s online grocery market is on track to hit $1 billion in 2017, driven by strong growth in transactions and average order value. “2017 is on track to be a robust year for e-grocery market with 60% year-on-year growth likely. Sales have been driven largely by volume growth, which points to growing acceptance and penetration of online grocery,” the report says.