Tata Group, one of the biggest MNC in India, is all set to buy a 68% stake in an Indian startup called BigBasket. Tata Group will complete the purchase with a whopping amount of $1.3 billion. This business deal also highlights the exit of Chinese e-retail giant Alibaba Group from the startup. Alibaba Group was previously holding 27% stakes in BigBasket.
The Indian startup BigBasket, headquartered in Bangalore, was founded in 2011 as an online grocery delivery service. BigBasket is quite a competitor to other Indian grocery delivery services like Grofers, JioMart, Amazon Fresh, etc. BigBasket has a strong outreach to 20+ cities across India. The growth of BigBasket boomed further during the Covid-19 pandemic. Besides selling a variety of grocery brands, BigBasket has also launched its own labels.
In March 2020, the startup acquired micro-delivery firm, DailyNinja The growth of BigBasket boomed during the Covid-19 pandemic. Last year alone, BigBasket has witnessed an 80% growth in its user base. In 2020, BigBasket’s annual Gross Merchandise Value was $1 billion-plus, and the service delivered over 30000+ orders per day.
Tata Group’s Interest in Consumer Goods Market
Tata Group has been planning to launch a “Super app” for a while now. Tata is planning to sell different consumer goods like grocery items, fruits, vegetables, etc., through this app. This “Super app” will be Tata’s answer to the current e-retailers like Amazon Fresh, Flipkart (Wal-Mart occupied), and Reliance Fresh, which are ruling the Indian market right now.
Reliance Industries’ expansion in eCommerce in 2020 can be a major reason behind Tata Group’s decision to launch the “super app”. Reliance has raised $26 billion+ in 2020 for its e-retail and telecom operations. In fact, global investors like Facebook and Google have also taken part in this gigantic move by Ambani.
Also, the sales of consumer goods have doubled in the post-pandemic Indian market. Tata Group, the salt-to-software conglomerate, is clearly not ready to give up this opportunity.
What does this acquisition mean for the Indian market?
The Tata Group-BigBasket integration can create several breakthroughs in the Indian e-retail sector. The new app Tata Group is yet to launch will offer different ranges of products, including food and grocery items, clothing, consumer electronics, healthcare, different types of bill payments, and so on. In fact, American retail giant Wal-Mart, which is currently controlling Flipkart, is also planning to invest in this project.
Wal-Mart is willing to invest up to $25 billion in the “super app” project. Therefore, this deal will cross Wal-Mart’s purchase of Flipkart in 2018 for a whopping $16 billion. Also, the trend of super apps is not very famous in India yet. Super apps like Amazon, Uber, WeChat, Alipay are already dominating the international markets, and India needs to catch up.
Hence, this integration between Tata Group and Indian startup BigBasket is only the first step to a retail revolution in India.