Tata Group set to acquire online grocery platform Grocermax

Grocery seems to be a hot vertical at this moment in the online space. After talks of Amazon interest in buying Bigbasket and re-entry of Flipkart into the space, Tata Group is reportedly buying out the management team and technology infrastructure of Gurugram-based GrocerMax.

Grocermax will help set up the online platform for Trent Hypermarket, an equal joint venture between Tata and British retailer Tesco, reported ET. Following this deal, Grocermax will cease its operation in Gurugram as Tata group's grocery business doesn’t operate in North India.

Founded by Gaurav Juneja and K Radhakrishnan, GrocerMax is a hybrid platform for buying grocery and vegetables. To remain asset-light, it keeps only 10 per cent inventory, sourcing the rest from supermarkets and provisional stores in real time.

Launched in February 2015, Grocermax currently claims to clock 350-400 orders on a daily basis with an average bill value of Rs 1,300. At present, the Tata Group operates three formats under the Star banner - Dailies, Market and Hyper - and has around 42 stores.

The new entity will take on market leaders such as Bigbasket and Grofers in the online grocery space. Post acquisition, Grocermax’s team will help Trent Hypermarket establish an online platform.

So far, GrocerMax raised about $2.5 million risk capital from reputed family offices and HNIs.

The grocery segment holds a share of 60 per cent of total market value in the Indian retail market as food is a basic requirement. Presently, online food and grocery is in the nascent stage with less than 1 per cent penetration.

Morgan Stanley estimates the food and grocery segment to become the fastest-growing segment, growing at a compounded annual growth rate of 141 per cent by 2020.

Currently, the online grocery retail war is largely being waged between two players — Grofers and Bigbasket. However, recently Amazon entered the space with Amazon Now, and Flipkart is also slated to add grocery later this year. With entry of heavyweights like Tata and Tesco, the online grocery space will further heat up with more competition.

Going forward, the battle for the online grocery pie between incumbents Bigbasket and Grofers and new deep-pocketed entrants Amazon, Flipkart and Tata will be worth watching.