Paytm Mall may acquire majority stake in BigBasket, talks on fast track

BigBasket wants a seat on the board of Paytm Mall, according to sources

Paytm Mall, Paytm’s e-tail platform, could soon pick up a majority stake in online grocery provider BigBasket. Sources said that discussions on the deal, which began last year, were on a fast track. 

A Paytm spokesperson denied that the company was in talks with BigBasket. However, according to sources, the company has been trying to team up with an e-grocery provider ever since there were rumours last year that Walmart wanted to tie up with an e-commerce partner in India.

In February, Paytm’s backer Alibaba invested $200 million in BigBasket. While closing the financing round, the Chinese tech and e-commerce giant told the Bengaluru-based company about its plans to buy a majority share in the firm and has been pushing for the purchase ever since.

According to sources in BigBasket, the talks were stuck over the valuation of the company. BigBasket also wanted a seat on the board of Paytm Mall. “Negotiations are still on. BigBasket wants the company to be valued at a premium,” said a source.

Two years ago, Amit Agarwal, senior vice-president and country manager of Amazon India, predicted that grocery would be the biggest money-spinner for online marketplaces. Though they mocked him then, his competitors are now trying to play catch-up in this space. 

Analysts, too, are bullish on the e-grocery segment and predict that it will be worth $28 billion by the end of 2018. Little wonder that every e-commerce player wants to have a finger in the lucrative grocery pie.

Amazon, Flipkart and the soon-to-be-launched Reliance e-commerce are all pumping significant resources in this space. Sources at Flipkart said that the Walmart-backed firm had allocated close to $400 million for the e-grocery segment alone. It has already launched its grocery vertical, Supermart. 

Reliance e-commerce, too, is said to be developing the biggest omnichannel grocery store network in the country, riding on the back of its 3 million merchants and close to 8,000 stores. And Amazon India is planning to introduce some of its Whole Foods range on the platform by the end of this year or early next year.

“At the moment Flipkart and Amazon India own almost 95 per cent of the country’s e-commerce space. If Paytm Mall, or rather, Alibaba wants to elbow its way in, it needs a strong platform. BigBasket is one such and more importantly, it is one among a few that deals in fresh produce. Walmart is planning to push the sale of fresh produce via Flipkart. If Paytm Mall can tie up with BigBasket, it might get repeat customers,” said a source close to Paytm. Hooking up with BigBasket makes sense as it is an important player in the market.  It brings in the highest number of orders in the segment (almost 7 million a month) although it is still struggling to break even on a unit level basis.

BigBasket has started a pilot in Bengaluru where it is making early morning deliveries in an attempt to replace the traditional modes of taking morning deliveries of eggs, milk, and fruits. However, the experiment has turned out to be somewhat costly for the company as it has led to clashes with various local kirana stores, some of which are its partners when it comes to making express deliveries. If Paytm Mall does team up with BigBasket, the fight for supremacy in the e-grocery market will clearly hot up.