Chinese e-commerce giant Alibaba Group has plans to invest around $200 million in India’s online supermarket Bigbasket, leading a $280 million funding round in the six-year-old firm, said sources familiar to the matter, as per a Bloomberg report.
According to people close to the ongoing discussions, Alibaba will be taking a 25 percent stake in Bigbasket, post months of negotiations. According to Bloomberg, the Bengaluru-headquartered grocery e-tailer had previously been in talks for an investment from e-commerce pioneer Amazon.com, which in June agreed to acquire US grocer Whole Foods Markets.
The report said, “the investment marks an escalation in the competition between the world’s two largest e-commerce companies in India, one of the world’s fastest-growing—and as yet unconquered—online retail markets. Amazon founder Jeff Bezos has vowed to invest $5 billion in the country as he challenges local leader Flipkart Online Services. Alibaba has invested in One97 Communications, which runs digital payment and e-commerce businesses.”
According to Bloomberg’s sources, the Bigbasket deal is now waiting to be approved by India’s antitrust authority, the Competition Commission of India
Bigbasket and Alibaba did not comment on the new funding, said Bloomberg.
The deal values Bigbasket, a supplier of groceries and household items, at $800 million. An affiliate of One97’s Paytm E-commerce may join Alibaba in its $200 million stake with a small investment, sources told Bloomberg.
Selling grocery and perishable goods online is a challenging business globally, even in advanced markets such as US and China. Owned by Innovative Retail Concepts, Bigbasket, operates in a country where expansion outside the biggest cities is difficult because of basic logistics and a shortage of refrigerated trucks and warehouses, reported Bloomberg.
Growth will require capital expenditures, and Amazon got government approval earlier this year to invest $500 million into food retailing. Several high-profile grocery startups have collapsed in the last couple of years in India, said the report.
At the same time, online retailers can build loyalty and push high-margin private labels and fresh produce to buyers in the e-commerce segment that sees the highest repeatability. Bigbasket’s existing sponsors include the Dubai-based Abraaj Group as well as Sands Capital. The e-tailer now delivers in over two dozen Indian cities and offers 18,000 products from over 1,000 brands, said the report.
