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Exclusive: Paytm Mall eyes the grocery segment through Grofers and Milkbasket

As online grocery picks up across the country, more players are eyeing this segment. E-commerce platform Paytm Mall is in talks with Grofers for a potential investment in a bid to build up its grocery vertical, according to three people familiar with the matter. 

“SoftBank has been leading the conversation since it’s a common investor in both companies,” said one of the sources requesting anonymity. “Paytm Mall is left with about $200 million and if it invests in Grofers then Paytm Mall may explore a merger opportunity with the online grocery company.” 

Entrackr couldn’t ascertain how the merger will take place as Paytm Mall is valued nearly $3 billion and Grofers had been valued at about $700 million during the last fundraise.  

Paytm Mall is also in conversations to invest in subscription commerce platform Milkbasket, added the people mentioned above. “The conversation has been underway for the past few weeks as Paytm Mall wants to ramp up its grocery business,” said the second source. He requested anonymity as he’s not authorised to speak to the media.

We couldn’t ascertain the size of potential investment from Paytm Mall in Milkbasket.

Responding to Entrackr’s queries, Paytm Mall, Alibaba and Softbank have said they don’t comment on speculation. Grofers didn’t reply to our queries whereas a comment from Milkbasket is awaited. We will update the post as and when it responds.

The Covid-19 pandemic and a nationwide lockdown have triggered two things. One is that several startups have been foraying into the online grocery to tap into the growing demand. The second impact of the pandemic is possible consolidation within various tech industries.

Grofers was also in talks with foodtech major Zomato for a potential merger. However, it is unclear if the conversations have moved forward. Entrackr had exclusively reported the development last month.

Paytm Mall had raised $150 million from eBay at a valuation of about $3 billion in July last year. Unlike in their payments business, the effort of One97 Communications to build a commerce business has not fared up well. Despite backing from two heavyweight backers — SoftBank and Alibaba — it wasn’t able to emerge as a leader.

Paytm Mall is also weighing its options to shift its base from Noida to Bengaluru, which was exclusively reported by Entrackr on May 20.

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