Indian Online Grocer To Receive Investment Of $200 Million From Alibaba

A $280 million funding round in the Indian startup Bigbasket, the largest online supermarket in India, has seen it raising the amount as an investment from Alibaba Group Holding Ltd., China’s e-commerce giant, according media reports quoting sources. familiar with the matter.

The sources reportedly said that there had been months of negotiations that had preceded the taking up of about 25 percent in Bigbasket by Alibaba. Talks about a possible investment with from e-commerce pioneer Inc was held by the Bangalore-based grocery business earlier. Amazon had acquired U.S. grocer Whole Foods Markets Inc in June this year.

The Indian online market is amongst the fastest growing and yet there is enough scope for growth and this latest round the investment denotes an increase in the rivalry between the two of the largest e-commerce giants in the world in India. Amazon has been challenging Indian local leader Flipkart Online Services Pvt. and its founder Jeff Bezos has promised to invest $5 billion in the Indian e-commerce market. investments in digital payment and e-commerce businesses company One97 Communications Ltd. has been made by Alibaba.

Sources said sad that the Competition Commission of India, the country’s antitrust authority, is currently reviewing the Bigbasket deal and approval is awaited. One of the sources said that the approval appears to be just a formality.

There were no comments from either Bigbasket and Alibaba about the new funding.

$800 million is the value accorded to Bigbasket by the deal. The company is source of groceries and household items and sells everything from toothpaste to freshly-ground masala (spice) powders. One of the sources said that Alibaba can be joined by Paytm E-commerce Pvt., an affiliate of One97, in the $200 million stake. A small stake is to be taken up by Paytm.

The advanced markets such as the U.S. and China are also hotbeds for the grocery and daily essentials and it is a very challenging business the world over. The lack of elementary logistics and a lack of refrigerated trucks and warehouses makes expansion of grocery online retail business is difficult in the area beyond the large cities and Bigbasket, owned by Innovative Retail Concepts Pvt., operates in such a market.

Government approval for investment of $500 million into food retailing has been already secured by Amazon earlier this year which proves that in the Indian market, growth in this sector would require capital expenditures. In the Indian market, there has been collapse of a number of high-profile grocery startups.

But e-commerce segment sees the highest repeatability and therefore online retailers have the opportunity to create loyalty and push high-margin private labels and fresh produce for the buyers.

Bigbasket now operates in two dozen Indian cities offering 1000 brands and more than 18,000 products.

(Adapted from Bloomberg)


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