Tata-BigBasket deal to ensure faster entry for Tata into e-grocery segment: RedSeer

has sought Competition Commission of India’s approval on its deal to buy a majority stake in , indicating that the two enterprises have inked an agreement, it is learned as per a report by Economic Times.

Tata Group will buy a 68% stake in Alibaba-backed online grocery startup BigBasket for about Rs 9,500 crore ($1.31 billion), ET Now reported.

In light of Tata Group acquiring a stake in BigBasket, Rohan Agarwal, Director at consulting firm RedSeer, said, “Tata Group has a significant presence in the Indian retail market across the categories, and given an online presence is now necessitated, the potential deal will ensure faster entry into the eGrocery segment. For Bigbasket, the deal helps in getting the needed funds and support for the next wave of growth.”

According to RedSeer, this is what the market looks like:

Grocery is the largest contributor to the retail basket of Indian consumers, and the online penetration has been quite limited compared to other categories (like electronics, fashion, beauty etc.).

With the COVID lockdown in 2020 and the associated tailwinds for the e-grocery, the GMV grew to USD $3.3 billion. The consumer base got democratized (smaller towns, diverse income groups), all categories including fresh (fruits & vegetables) were purchased, and the brands started focusing on the online channel.

Even on the offline retail front, a number of organized retailers venturing online (on their own like Reliance Jiomart or via partnerships) were seen.

“This is just the start for online grocery, and we believe it will grow quite strongly over the next few years to become USD $24Bn by 2025 (up from our pre-COVID estimates). The opportunity is quite sizable, and we expect multiple large winners here catering to varying customer segments (convenience vs. value/ Metro Tier I vs. Tier II+) and use-cases (stock-up vs. top-up vs. on-demand). Definitely an exciting space to watch out for, with the large offline retailers intensifying the already competitive space of multiple online models (horizontal etailers/ grocery verticals/ hyperlocal/ social commerce). And also, how this segment caters to larger value focused masses beyond the top-10 city play currently,” says Rohan Agarwal.