TATA group is all set to acquire around 68% stake in BigBasket for INR 9,500 crores as it is planning to expand in the fast growing ecommerce in India. TATA is one of the large conglomerates which has been looking to gain majority control in Bengaluru based BigBasket which handles around 1.2 million orders per day. This deal came at a time when online shopping accelerated in the country.
India has large and growing population using internet based services for various daily needs. In recent time, there has been increase in exposure and usage of internet to connect customers to buying portals like BigBasket. Although this market is at early stage in India, it is expected to grow fast. Overall grocery market is already a wroth over US$ 360 billion making it the sixth largest in the world and it is expected to cross US$ 1 trillion by 2021.
First generation starts-ups acquired by tech giants like TATA can use already established own technological advancement, supply chain and they are expected to catch up the changing consumer behavior. Every step in the expansion needs huge fund and hence TATA with its US$ 113 billion market size is expected to list the BigBasket in public market by early next year.
TATA’s plan is to expand in consumer businesses and it will compete with other established Softbank backed Grofers and JioMart of Reliance which are already operating in many Tier1 cities in India. Bigbasket already has its own in-house labels of items that helped it to improve its profit margin. COVID-19 also increased the consumer base of Bigbasket.
Bank of America analysts estimated that by 2023, the online market for grocery delivery could be worth $12 billion in India. The digital efforts of TATA can work on providing consumer focused digital services for targeting Tier 2 and Tier 3 cities in India which is still mostly unexplored when it comes to online grocery market. So, there is a lot of headroom for the growth in all region of country and scaling up remains a challenge but big firms like TATA is expected to cater the huge consumer base all across the country.
