Chinese e-commerce giant Alibaba Group Holding has sought formal approval from the CCI (Competition Commission of India) to acquire a stake in Bengaluru-based e-grocer BigBasket.
In July this year, Paytm Mall and Alibaba jointly began due-diligence to pump-in $200 million round in Bigbasket. Amazon had also shown interest in e-grocer, however, talks failed owing to differences over valuation.
Alibaba will make the investment in wholesale products supplier (Supermarket Grocery Supplies Pvt. Ltd) that owns the BigBasket brand.
Online marketplace majors have so far struggled to crack the grocery business. In February 2016, Flipkart shut down its grocery app Nearby after only five months of testing the service. Alibaba-backed Paytm also closed its grocery service in 2015. Post-2016 winter, only heavily-funded players majorly Grofers and Bigbasket survived.
However, Flipkart giving it a second chance, launched its grocery delivery service under the brand name ‘Supermart’ in Bengaluru.
Flipkart’s rival Amazon India also launched its grocery ordering app, Amazon Now in February 2015. As per Kalagato, a data tracker platform, Amazon has about 31.2% market share in March 2017. Amazon delivers grocery in four cities – Mumbai, Bengaluru, Hyderabad and Delhi.
Bigbasket got Indian government approval for foreign direct investment (FDI) in August. Now, the firm can retail food products manufactured and produced in India.
Besides, Grofers and Amazon India also got approval from the government. All three companies had sought approval for FDI in food retail with an investment to the tune of $695 million over the period of time with the Department of Industrial Policy and Promotion (DIPP).
The latest backing from Alibaba will indeed give BigBasket, a much-needed firepower to maintain its leadership position and fight Amazon, Grofers, as well as newly entrant Flipkart.
Last month, BigBasket picked up two rounds of investments. The online grocery firm raised Rs 52 crore from its four existing investors, including UAE-based Abraaj Basket, Bessemer Venture Partners along with International Finance Corp and Sands Capital. The funding came on the back of raising another Rs 38 crore in two tranches from Helion Ventures and Trifecta Venture in the same month.
The development was first reported by VCCircle.