In what could be a major step for Zomato in expanding its service offerings, the food discovery and delivery major is reportedly in talks to buy online grocery major Grofers. According to an Economic Times report, it is going to be an all-stock deal and the valuation of Grofers will be pegged at $750 million, $100 million more that the last valuation of the grocery delivery startup when it received funding.
It has also been reported that SoftBank Vision Fund, which has made investments in Zomato and Grofers both, will bring in fresh investments of up to $200 million once the merger process is completed. It is pertinent to point out here, Zomato had recently acquired Uber Eats, the food delivery arm of the cab aggregator.
To many, this Zomato-Grofers association may not throw such a big surprise since they are currently working together already with Zomato’s door delivery mechanism being used to reach grocery items to customers on behalf of Grofers. So, Zomato has included a new category Zomato Market within its app, that lets customers place orders of their regular requirements for items of grocery without stepping out of their homes. Grofers has tied up with many offline neighbourhood kirana stores for its business and these are also integrated into the service being offered through the Zomato app.
Zomato itself is valued at $3.2 billion and Ant Financial, the investment arm of Chinese giant Alibaba is the major investor in Zomato. Sequoia Capital is one VC which has made investments in both Zomato and Grofers.
Zomato has been competing with rival Swiggy in the food delivery business, while Grofers has remained behind BigBasket in the grocery segment. The entry of Amazon and Flipkart and Indian giant Reliance in the fresh foods and grocery segment is going to generate a lot of heat in this segment. It won’t be a surprise if more consolidation ensues in the segment.