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BigBasket pulls off acquisition coup to sharpen focus on Micro-delivery Segment

It seems that online grocery Major BigBasket has decided to put its growth strategy on steroids.  The Alibaba backed company, after all, has acquired not one or two but three companies in one go. The market was already buzzing with the report that BigBasket was on a lookout for acquisitions, but probably few people had an idea that the company is pursuing such an aggressive acquisition strategy.

The three companies that BigBasket has acquired are RainCan and Morning Cart and Kwik24. While the online grocery major has acquired 100% stake in RainCan and Morning Cart, it has acquired controlling stake in the latter one. The exact valuation of these deals is still not known.

BigBasket acquires three companies to sharpen focus on Micro-delivery Segment

The acquisition marks company’s foray in milk delivery space and also in smart vending kiosks space. While I had already indicated through my several articles that BigBasket is planning to enter in milk delivery space, its foray in kiosks space has come as a surprise.

The grocery e-tailer is currently running milk delivery services on pilot project in Bengaluru and Pune. However, following the latest acquisition spree the company is mostly likely to expand its milk delivery services to other cities in coming months.

BigBasket, according to reports, has also installed Kwik24’s100 smart vending machine across Bengaluru and is soon likely to install more machines across other cities.

But do these acquisitions really make sense?

Well, it certainly does. Since BigBasket operates in a tough industry where profit margins are wafer thin, it will have to keep expanding its product portfolio and look to tap into promising markets. Besides, the spectra of intense competition following Amazon and Flipkart’s foray into the grocery business must be haunting the Alibaba funded company.

But BigBasket won’t be able to pursue this aggressive growth strategy unless it succeeds in one critical thing: keeping the balance sheet in check to attract more funds from investors. While this is an extremely challenging in a tough industry like online grocery, there is no other option for BigBasket.

It is also important to remember that it was unimpressive balance sheets resulting in lack of interest from investors that eventually resulted in the closure of high profile grocery startups like Doormint, Peppertap, Turant Delivery.

I also want to remind about the desperate situation of Grofers. The Gurgaon based online grocery startup, which counts SoftBank as its investor, is struggling to sustain itself as it struggles to raise more funds.

All said and done, there can be little doubt that there are lot of twists and turns awaiting the online grocery industry, which will eventually decide the fate of BigBasket. Only time will tell us whether BigBasket will be able to sail through or not.

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