Home Brief With the Acquisition of BigBasket, TATA Aims The Lion’s Share Of $12...

With the Acquisition of BigBasket, TATA Aims The Lion’s Share Of $12 Billion Online Grocery Market In India

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E-grocery segment sits up and takes notice, there’s a new player who has thrown his hat into the fray. Tata is acquiring Bigbasket!

According to recent blockbuster reports, the much respected Indian conglomerate Tata Group has reached an agreement to acquire a majority stake in grocery delivery startup BigBasket.

The terms of the Bigbasket acquisition deal will see the salt-to-software giant formally move into the online grocery segment with a deal worth $1.2 billion, giving India’s largest consortium a 67% stake in the e-grocery startup. The enterprise is further looking to invest about $940 million into BigBasket, which was successful in raising upwards of $1 billion prior to the Tata deal.

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The nitty-gritty of the deal will also see Chinese internet giant Alibaba, which owned nearly 30% stake in BigBasket, and a handful of other investors including Abraaj Group, being shown the exit door. This is also in line with the new restrictions introduced by the Indian government last year, making it difficult for investors from the other side of the border to operate with the freedom as they had done before.

It was only last May that BigBasket, launched in 2011 by VS Sudhakar, Hari Menon, Vipul Parekh, V S Ramesh, and Abhinay Choudhari, entered the unicorn club after raising $150 Mn in Series F funding from Alibaba, South Korea’s Mirae Asset Global Investments and the UK government-backed CDC Group.

Now the move to acquire BigBasket from the Mumbai-headquartered Tata Group, overseer of several popular brands such as the Jaguar Land Rover and more importantly, its beverages icon, tea maker Tetley, is set to intensify the congested e-commerce market in India.

As such, if there was a more suitable party, Tata appears to be polishing its fork-to-farm-strategy appears to leave its own imprint in India’s e-commerce market, which grabbed eyeballs amid a rip roar in online sales induced by COVID-19.

BigBasket, in September, had sounded optimistic when revealing that the number of new customers on its platform had increased by 84% from pre-pandemic levels. With retention rates rising to 50% from the 30-45% initially, the company was reported to process more than 20 million orders per month, achieving $1 billion in annual revenue.

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The deal will also give the $113-billion firm the opportunity to tap the world’s second-largest internet market, helping both the companies dip into and leverage each other’s customer base to grow heavily.

Also, the acquisition of BigBasket by TATA will blow the battle horns in the online grocery delivery market, which could be worth $12 billion in India by 2023, according to the Bank of America. In SoftBank-backed Grofers, Reliance’s JioMart, and Amazon Fresh, BigBasket, which led the online grocery sector until recently, hitting $1 billion annualized GMV, faces a bloody quest to scale the top of the sector.

From what has transpired, the milestone agreement will give impetus to Tata’s super app digital service, which aims to roll up online shopping for groceries, medicines, electronics, fashion, and other vogue segments, to hand consumers single-point access to branching services, as part of introducing omnichannel retailing.

As it stands, it looks like being the highly credible, value-adding qualities that the Tata Group are known to bring to the fore, it will add a new dimension to BigBasket’s arsenal to compete with rivals.

After the BigBasket acquisition by TATA, the dynamics in the online grocery sector are bound to become more interesting!

Stay tuned for more updates.

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