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Alibaba Said To Invest $200 Million In Indian Online Grocer

Published on Dec 10 2017 9:00 AM in Technology tagged: Trending Posts / India / Alibaba / Online Grocery / Bigbasket

Alibaba Said To Invest $200 Million In Indian Online Grocer

Alibaba Group, China’s e-commerce giant, plans to invest about $200 million in India’s largest online supermarket, Bigbasket, leading a $280 million funding round in the startup, according to people familiar with the negotiations.

Alibaba is taking a stake of about 25% in Bigbasket after months of negotiations, said the people, asking not to be identified because the matter is private.

The Bangalore-based grocery business had previously been in talks for an investment from e-commerce pioneer Amazon, which in June agreed to acquire US grocer Whole Foods Markets.

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.

The Bigbasket deal is awaiting approval from the country’s antitrust authority, the Competition Commission of India, the people said. That is now seen as a formality and should come through any day, one person said.

Bigbasket and Alibaba did not respond to emails seeking comment on the new funding.

Online Grocery

The deal values Bigbasket, a purveyor of groceries and household needs like toothpaste and freshly-ground masala powders, at $800 million. An affiliate of One97’s Paytm E-commerce may join Alibaba in its $200 million stake with a small investment, the person said.

Grocery and daily essentials is a challenging business the world over, even in advanced markets like the US and China. Bigbasket, owned by Innovative Retail Concepts, operates in a country where expansion is difficult beyond the biggest cities because of rudimentary logistics and a shortage of refrigerated trucks and warehouses.

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.

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 TV commercials feature Bollywood actor Shahrukh Khan shopping for his home and then endorsing in Hindi “Main ek Bigbasket-eer hoon, aur aap?” (I’m a Bigbasket-eer, and you?).

The company now delivers in over two dozen Indian cities and offers 18,000 products from over 1,000 brands. Its existing backers include the Dubai-based Abraaj Group as well as Sands Capital.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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