The Tata Group has acquired a majority stake in online grocer Bigbasket in a deal that is set to intensify competition in and strengthen its play in the rapidly growing e-commerce industry in the country dominated by players like Amazon, Reliance and Walmart-owned Flipkart.
The deal had been in the making for months. The Competition Commission of India (CCI) had approved the acquisition of 64.3 per cent stake by Tata Digital in March. On Friday, the salt-to-software conglomerate announced that Tata Digital, a 100 per cent subsidiary of Tata Sons, has acquired a majority stake in Supermarket Grocery Supplies, which operates Bigbasket.com, India’s largest e-commerce player in the food and grocery segment.
Various companies of the Tata Group already operate e-commerce platforms, including Tata Cliq, StarQuik and Westside.com. The acquisition of Bigbasket, however, will propel it in the big league in the super competitive food and grocery market and also give a big boost to its plans to launch a superapp.
“Grocery is one of the largest components of an individual’s consumption basket in India, and Bigbasket as India’s largest e-grocery player, fits in perfectly with our vision of creating a large consumer digital ecosystem,” said Pratik Pal, CEO of Tata Digital.
Grocery has been among the fastest growing segments in the e-commerce space. The COVID-19 pandemic, which led to nationwide lockdowns and forced millions to stay and work from home, has only accelerated online grocery shopping.
According to a recent report by consulting firm Redseer, India’s grocery market was $603 billion in 2019, accounting for nearly 66 per cent of the total retail spends. It estimates the grocery market will touch $852 billion by 2025.
The gross merchandise value (GMV) of e-grocery platforms grew at a 60 per cent compounded annual growth rate to touch $1.9 billion in 2019. Despite this strong growth, the e-grocery penetration among overall grocery spends was just 0.3 per cent that year. Redseer forecasts e-grocery will touch a market size of $24 billion, penetrating 3 per cent of the total grocery market by 2025.
Bigbasket was founded in Bengaluru in 2011 and was among the early entrants in the e-grocery space. While many other smaller players shut down, Bigbasket has over the years expanded into more than 25 cities across India.
The company provides one of the largest assortments of more than 50,000 stock keeping units and also operates a farm-to-fork supply chain with over 12,000 farmers and several collection centres.
However, in the last couple of years, competition has intensified with Amazon and Flipkart strengthening and expanding their offerings in this space. In 2020, Reliance Retail also entered the market with JioMart. The acquisition by Tata Sons will give Bigbasket added muscle and power against these deep pocketed rivals.
“We are extremely excited about our future as a part of Tata Group. As a part of the Tata ecosystem we would be able to build stronger consumer connect and accelerate our journey,” said Hari Menon, the CEO of Bigbasket.
This acquisition presents an attractive opportunity for Tata Group in its overall vision of creating a digital ecosystem, Tata Digital said.