Mumbai-headquartered USD 113-billion conglomerate, Tata Group is looking to strike a partnership with the country’s top online grocery platform Bigbasket to level up its game in India’s e-grocery market, which is poised to touch USD 3 billion by year-end.
The 153-year-old software-to-automobile conglomerate may acquire a 20% stake along with securing two board seats in the Alibaba-backed startup Bigbasket, a report by Financial Times said, citing sources. The decision on the deal is expected to come by the of October.
Tata Group has a diversified business across automotive, airlines, chemicals, defense, FMCG, finance, home appliances, hospitality industry, IT Services, retail, e-commerce, real estate, steel, and telecom.
In late 2017, Tata had quietly entered the online grocery segment, and is hoping this proposed deal will give its efforts a leg up. The e-grocery segment is increasingly becoming competitive with incumbents such as Bigbasket and Grofers, e-tailers Amazon and Flipkart, delivery companies like Swiggy and Dunzo, and new entrants like JioMart, ramping up their operations aggressively to get a bigger pie of this burgeoning market.
Last month, Bigbasket said the number of new customers has risen by 84% compared to the pre-COVID-19 levels while the retention rate grew by 50% against the earlier 30-45%. During the peak of the pandemic, the company claims to have catered 300,000 orders per day. In May alone, the company clocked USD 90 million in sales after discounts.
The company has reportedly been looking to raise a USD 350-400 million round and has been engaged in discussions with Temasek, US-based Generation Partners, Fidelity, and Tybourne Capital at a valuation of about USD 2 billion, 33% more than the current valuation. To date, the company has raised USD 1.02 billion across 14 funding rounds from investors like Alibaba, Helion Venture Partners, Bessemer Venture Partners, Abraaj Group, LionRock Capital, among others.
The development comes at a time when Tata Groups’ digital arm Tata Digital is in the process to roll out a super app to offer its retail products. It is expected to entail food and grocery ordering, fashion and lifestyle, consumer electronics, consumer durables, insurance, financial services, education, healthcare, and bill payments. Reportedly, Walmart is looking to invest up to USD 25 billion in the proposed super app that may go live by December.
At present, Tata Group’s online presence is scattered as it has separate apps and websites that cater to different categories. Tata’s StarQuik app is to order groceries, Tata CLiQ and Tata CLiQ Luxury apps is for fashion, jewelry, and home furnishings, while Croma online store is for electronic products. Now that Tata Group is gearing up to jump into the e-commerce fray with a super app, it will compete head-to-head with Amazon, Walmart-owned Flipkart, and Reliance’s newly launched e-tail platform JioMart.