After months of speculation, the stage is now set for Chinese ecommerce major Alibaba to pick up a stake in online grocery player BigBasket. The deal has received the approval of the Competition Commission of India, reports Economic Times.
There have been media reports over the past few months of Alibaba being in talks with BigBasket to buy over one-third of the online grocer. The deal, as per reports, is pegged at $300 million. ET reports that the transaction will add to a portfolio of strategic investments Alibaba is making in India as it competes with Amazon in India’s highly competitive e-commerce space.
For BigBasket, the investment from Alibaba will give it the required ammunition to cement its position as the market leader of the fast growing online grocery space in India.
ET reports that Alibaba-backed Paytm’s Paytm Mall is also likely to invest in the online grocery player as part of the deal. Post the deal, Paytm Mall will own about 35-40% stake in BigBasket along with Alibaba.
BigBasket is one of the few players that have survived the online grocery space after players such as Local Banya shut shop and Grofers scaling back operations only to a few cities.
Going by news reports, BigBasket saw revenues of Rs 1,400 crore in FY17. It has also been expanding its private labels Fresho and Happychef which now make up for more than one-third of its sales. It last received funding in October where it raised $8.02 million Abraaj Basket, Bessemer Venture Partners, International Finance Corp and Sands Capital. Around the same time it also raised $5.8 million from Helion Ventures and Trifecta.
The online grocery space has been seeing a lot of action over the past year. Analysts say that food is the next big thing in India’s online space. Cashing in on the potential, Amazon has committed $500 million over the next three years towards its food retail unit after having received regulatory approval for food retail. It already runs its Amazon Now service across a few cities in India
Flipkart too, re-entered the grocery space with its grocery segment Supermart in November. Online classifieds player Quikr too announced plans of entering the online grocery space.