Grocery continues to be a high priority vertical for online behemoths Amazon and Alibaba. To dominate the market share in grocery space, both companies have been talking to Bigbasket and Grofers for investments.
According to latest ET reports, Alibaba-backed Paytm Mall has extended the exclusivity period of negotiations with Bigbasket by two weeks while Amazon is eying a minority stake in Grofers.
Talks of Alibaba and Paytm Mall investing into Bigbasket have been around the corner for over a month. Noida-based company along with its backer are looking to pump-in about $200 million in BigBasket. The Bengaluru-based e-grocer is reportedly seeking a valuation of $1 billion.
The investment seems to be a strategy to take on Amazon in the grocery segment. Amazon entered grocery space last year via Amazon Now. It’s currently operational in Bengaluru, Mumbai, Delhi (NCR) and Hyderabad, and does about 6,000 to 8,000 orders on a daily basis
Paytm Mall aims to strengthen its online-to-offline strategy using BigBasket’s partnerships with corner stores. The report mentions that Alibaba will deploy around $150 million directly in Bigbasket, remaining $50 million will go to existing investors in a secondary transaction.
Earlier, Amazon had also shown interest in Bigbasket, however talks failed owing to differences over valuation. After failed attempt to invest in Bigbasket, now Amazon is talking to Grofers for a minority stake in the Gurugram-headquartered company.
Interest of Alibaba and Amazon in grocery is growing as overall growth of e-commerce has been sluggish from the beginning of the last year. According to the research firm Forrester, growths of e-commerce players were merely 12 percent as opposed to 130 and 180 percent in 2014 and 2015.
E-commerce majors in India are struggling to bring new buyers. Currently, India has about 70-90 million online shoppers and this number is not growing as it used to be. Meanwhile, grocery is considered as sticky category as consumers tend to buy it at least twice a month.
The frequent buying in grocery can drive more transaction and enhanced loyalty to the e-commerce platforms. Amazon’s rival Flipkart also slated to re-enter grocery space soon.