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Alibaba is on fire since the last 3 months, right from launching a data center near Mumbai to feed its growing acquisitions in India as well as expanding its financial arm Paytm as payment bank, It is strategically expanding its reach to get going its execution plan encapsulating digital leadership in India.
One of the recent announcements where Paytm CEO and Founder Vijay Shekhar Sharma told media persons that Paytm Mall is looking forward to invest $2.5 billion in next 3 years owing to the growing competition in India between the trio viz Flipkart, Amazon and Alibaba.
Now with all this already into play, Alibaba has just started to work over the next mass scaled project to start selling groceries in India after the recent interests of Tata, Amazon and Flipkart. Alibaba along with its ecommerce arm Paytm Mall is reportedly taking up around 35% – 40% stake in hyperlocal grocery delivery startup BigBasket for an investment of $300 Mn.
Also with this deal some of the existing investors would want to take exit. On the other hand, to compete against Flipkart and Amazon in groceries, Paytm Mall will get the required userbase, reach and distribution right from its launch.
Big Basket had been ailing for a while
BigBasket had raised INR 45 crore from venture debt firm Trifecta Capital recently. The company had been seeking investments for around $100 million however was unable to obtain it from existing VCs including India and abroad. To keep up the operations and the growing demands served, the company had raised debt from Trifecta Capita.
The CEO and the Co Founder Hari Menon said “We have a clearly identified use case for debt. We are present in 25 cities and continue to optimize our supply chain. A significant part of our business is fresh fruits and vegetables, the bulk of which is sourced directly from farms. It is crucial that we maintain the quality right up to the last mile. We are in the last leg of a pilot which will ensure that all fruits and vegetables are maintained at constant temperature and thereby improve shelf life of the produce by almost 10 days. This will be done using large-scale equipment such as pre-coolers and ventilators. Funding such capex requirements is best done through debt.”
Hyperlocal services market segment Startups are seeking mergers as scale seems to be a deterrent rather than a growth factor, because of the limited funds and operations for such Startups. Hence mergers are the possible way out to act profitably and efficiently, also ensuring that the demands of the consumers don’t go unmet.
Taking on India means taking leap Globally
Clearly India is becoming a huge market for all this digital companies to grow into manifolds and since the launch of these Digital Behemoths in India, investment has been the tool to keep up the rank and perception value (in the eye of the user) rather than evaluating its ROI (return on Interest).
According to Forrester Research “one fifth of total retail sales (approx.) will take place online by or before 2021 in Asia Pacific. The major pie of 78 percent of that will be coming from mobile (against 63 percent in 2016) “.
The study further adds that “online retail via mobile will grow at CAGR of 15.6 percent, to reach $1 trillion in 2020 nearly double from $539 billion in 2016. China may remain the largest market for e-commerce globally, followed by the US; but it is India that is the fastest-growing e-commerce market.”