In yet another apparent sign of consolidation in the online milk delivery space, Milkbasket is now in talks with Amazon for a potential acquisition. The development comes barely weeks after BigBasket acquired DailyNinja. Preceding this acquisition, another prominent player Doodhwala sold its operations to FreshToHome in October last year.
The ongoing consolidation has set in as online milk delivery players have been unable to create a sustainable revenue model. The wafer thin margin coupled with capital intensive investment has proved to be major impendence for the online delivery companies. As a result, they have been left with no option but to look for fundraising or sale out to a bigger player.
Milkbasket itself has been trying to raise fresh funds or getting acquired during the last 6 months, sources privy to the matter claimed. The company reportedly did manage to raise a bridge fund almost a month ago but evidently the latest capital infusion is proving to be insufficient. Its struggle to keep up the business was all too evident when it recently decided to scale down the operations in Bengaluru and Delhi NCR.
The Gurugram based company had also raised $10.5 Mn from clutch of existing investors in June last year.
Even if the ongoing Milkbasket- Amazon talks does materialize into a deal, Milkbasket’s investors and promoters are unlikely to rake major profit from the deal. This is because it is likely to be a distressed sale or an all-stock deal.
The recent surge in the demand of online groceries in the wake of COVID 19 lockdown may not help much in spurring Milkbasket’s market valuation. But it may have propelled Amazon to take a fresh interest in the embattled startup.
Notably, Milkbasket has been involved in acquisition talks with slew of big players for quite some time now. This includes the likes of BigBasket and Swiggy but the talks apparently collapsed due to differences over valuation.