This move by the eretailer comes after its talks with Big Basket failed to turn into a deal.
The online grocery shopping market seems to have taken off quite well in top service-driven cities in India like Bengaluru, Mumbai, Chennai, Hyderabad and Delhi.
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 study expects e-commerce volumes in India to grow at 28% each year between 2016 and 2020 and reach $63.7 billion by 2020. 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. Only if Amazon invests over $100 million in Grofers can it prevent Flipkart from aligning with it, according to report.
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.
The current estimation of the overall grocery and foods market including packed foods is $400 billion. But only 5% of the sales is contributed by organised retailers, according to consulting firm Technopak.Still in their early days, the online grocery platforms rack up sales of about $300 million. But getting a robust supply chain for fresh vegetables and fruits has been tough for players in India, which will be a worry for the Jeff Bezos-led company. “We believe working with a million retailers is a much bigger goal than creating one single, large online retailer”, Paytm Mall COO Amit Sinha said. Amazon is not giving up on the grocery segment in India – while acquisition of Big Basket would have made it the strongest player in the market, reports suggest that the company is now looking to acquire a minority stake in Grofers, another online grocery site in India which is backed by Softbank.
Paytm Mall, operated by Paytm E-commerce Pvt.
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. Grofers and BigBasket dominate the market.