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Paytm Mall Planning to Invest $200 million in Bigbasket, Amazon Eyes Stake in Grofers: Report

Bigbasket.

Paytm Mall to invest $200 million in Bigbasket: Report.

Paytm’s e commerce arm Paytm Mall and its largest investor Alibaba are in talks to pick up significant stake in the online grocery major Bigbasket. The Noida based online marketplace has extended the exclusivity period of their negotiation by another two weeks, according to two people familiar with the matter.  The initial 45-day exclusivity period was supposed to expire on August 25.

According to reports, Paytm Mall and Alibaba are looking to invest nearly $200 million in Bigbasket. Both are currently carrying out the due diligence to determine the valuation of the online grocery firm, which would determine the amount of stake they would pick up in return of their investment.

Sources claim that Bigbasket was seeking valuation of nearly $1 billion while negotiating with Amazon; an estimate that the Seattle based e commerce giant did not agree with and consequently dropped out of the negotiation.

After the failed negotiation, Amazon is now eyeing stake in SoftBank backed online grocery firm Grofers. However, there are no confirmed reports about how much investment the e commerce major is planning to make in Grofers.

Online Grocery – the next battleground for e commerce majors

With Paytm Mall and Amazon desperately vying for stake in established online grocery players, online grocery is now steadily emerging as the next battleground where big e-commerce players will try to outdo each other. Although the profit margin in online grocery is wafer thin, but India’s overall grocery and foods market is estimated to be whopping $400 billion. However, several consulting firms claim that online grocery firms as of today contributes only $300 to 400 billion in sales – a gap that big players like Amazon are aiming to close in.

Amazon already offers grocery services through Amazon Pantry and Amazon Fresh, but so far they haven’t managed to clock huge sales figure.

Paytm Mall, on other hand, is aiming to enter online grocery with an aim to get strong footing visa via Amazon and Flipkart, which are already established players in the e commerce sector.

Meanwhile, reports are rife that Flipkart is also in fray to enter the online grocery space. Flipkart’s aggressive move seems least surprising, given that it received huge funding of $2.5 billion from SoftBank earlier this month.

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