BigBasket.com is one of India's largest online supermarket and allows a customer to walk away from the drudgery of grocery shopping and welcome an easy relaxed way of browsing and shopping for groceries. According to the Times of India, Amazon is discussing plans of investing in Grofers, a SoftBank-backed e-grocer in order to counter Alibaba-BigBasket.
Amazon's investment in Gurgaon-based Grofers of around $100 million could be a well-planned strategy to stay ahead of Flipkart and prevent it from investing in Grofers.
The Alibaba-Paytm Mall combine, which has begun due diligence, has offered to invest $200 million in BigBasket at a valuation of almost $900 million post the investment. The report stated that Flipkart too is prepping for taking a dive into the online grocery sector and it is being speculated that a possible merger between Grofers and Flipkart is very unlikely.
American e-commerce giant Amazon will likely pick up a minor stake in Grofers after it failed to invest in BigBasket last month, with disputes over its valuation and differences over their operating models.
An Amazon spokesperson said the company doesn't comment on rumours and speculation, while Albinder Dhindsa, co-founder & CEO, Grofers, did not reply to TOI's query. A person close to the matter said, "Both Alibaba and Amazon want to get a toehold in the grocery category, which is why they are not looking to acquire any of the two companies but only back them with capital".
The grocery retail market in India is growing at about 10% CAGR and is $400 Billion in size while e-grocery accounts to only 0.1%. Online retailers contribute just $300 million to this market, indicating that there is strong growth potential in the future.
Grofers, which emerged as one of the most well-funded startups of 2015, had earlier held talks with Paytm as well, a source privy to the matter said, but those discussions did not progress.
Paytm Mall, operated by Paytm E-commerce Pvt. For this, it is partnering with local players to service same-day and next-day deliveries.
We believe that as these two global players look to establish themselves in the region, the Indian e-commerce market may witness consolidation, with Amazon and Alibaba becoming the two main players. But when that category started slowing, players like Amazon began focusing on grocery and consumables, which occupy the largest part of a household's spend. Grofers and BigBasket dominate the market.