As possibilities rise about the Tata Group expecting to invest around $ 250 million $ in the online grocery platform BigBasket and acquire the majority stake in the platform it could result in the entry of the large conglomerate into the online grocery space.
It is also expected to be a game-changer in the Indian e-commerce space. Online grocery segment that gained maximum traction during the lockdown phase is poised to grow further with this development. The space had been quite under-penetrated and is now seeing good traction.
As per market expert Rohan Agarwal, director at RedSeer Consulting, till the year 2019 online grocery segment was just 0.3 per cent of the overall grocery segment in India.
“The sector grew very significantly due to the COVID-19 induced lockdown that prompted Indian households to purchase from online grocery platforms in large numbers. At the same time, there were many partnerships with offline players that were seen in the market segment. For instance, there were online and offline partnerships such as Flipkart with Spencer, Reliance Retail with JioMart, that all received good traction. The online grocery business is expected to be around $3.3 billion in 2020 and this is expected to reach around $20-25 billion by 2025 in India,” added Agarwal.
This expert further adds that the Tata-BigBasket partnership is expected to help both the entities to leverage each other's strengths in the offline and the online space. Overall it will be beneficial to the entire e-commerce ecosystem in the country.
Experts feel that while electronic goods remain the mainstay of e-commerce markets, over time as e-commerce homogenizes across consumer segments, Grocery and staples will most likely emerge as a dominant category. Additionally, grocery and staples do not suffer from cut-throat price competition, so the upfront losses can be tempered.
“Big basket has established viable business processes that can support rapid scale-up under Tata's ownership. Lastly, Tata's have shown success with the dual format, comprising traditional stores and digital formats with Chroma. The learnings acquired from Chroma can be very much migrated to Bigbasket,” said Alok Shende of Ascentius Consulting.
It is expected that the game-changing entry of Tata's into e-commerce both on retail and possibly the wholesale part through merchants. “While the size of the Indian market attracted Amazon and Walmart earlier, it is good to see the entry of Tata group into this competitive market despite Jio having the first-mover advantage. Indian consumers will benefit from this in the near future until any realignments take place,” remarked Subramanyam Sreenivasaiah, CEO at Ascent HR.
Many reports point out that a stake in BigBasket can help Tata's in its SuperApp plan that aims to bring all the Tata Group consumer businesses on one platform.
