BigBasket eyes $500 million war chest as Walmart, Amazon loom
Bengaluru: BigBasket, India’s largest grocery start-up, is in talks with investors to build a large war chest to prepare for a long-drawn-out battle with deep-pocketed rivals Amazon India and Walmart Inc., which is nearing a deal to buy online retailer Flipkart, three people aware of the discussions said.
BigBasket, which raised $300 million from Alibaba Group Holding Ltd and others in February, is in talks to raise between $300 million and $500 million from Alibaba and new investors, the people cited above said, adding that the talks are at an initial stage. All three people requested anonymity.
While BigBasket is in talks with new investors, it is possible that the funds could be raised entirely from existing investors led by Alibaba, one of the three people said.
Although BigBasket does not require additional funds immediately, it wants fresh capital because the grocery business will likely be a priority for both Walmart and Amazon and they are expected to pump in hundreds of millions of dollars into the business, the people cited above said.
Additionally, given that the start-up ecosystem is currently enjoying a favourable fundraising environment after more than two years, BigBasket wants to fill its coffers.
“For BigBasket, it makes sense to take advantage of the funding environment and raise money while it can,” said.
BigBasket is also aggressively expanding and undertaking a number of new initiatives. Some of its initiatives include launching offline stores and kiosks, as well as a subscription service. The company is also looking at acquisitions of two smaller rivals, Milkbasket and DailyNinja, Mint reported last month.
BigBasket is also attempting to strengthen its capabilities in the so-called micro-delivery space—the delivery of a relatively small number of daily essentials such as dairy products, fresh fruits and vegetables, within a few hours of an order being placed.
According to the second person mentioned above, BigBasket is also in the middle of re-organizing its supply chain to make it more efficient and to help strengthen its capabilities for same-day deliveries.
“It’s not like BigBasket is scared of the prospect of battling Amazon and Flipkart-Walmart. But they recognize that with Walmart’s entry, this will be a long-drawn-out battle against even deeper-pocketed rivals and that it needs to have a big enough war chest to have a reasonable shot at maintaining its leadership position,” said the second person.
BigBasket did not respond to emails seeking comment.
The firm, operated by Supermarket Grocery Supplies Pvt. Ltd, is currently the market leader in the online grocery segment and on the back of its recent fundraising, is going all out to ensure that it keeps its lead. BigBasket had previously raised $150 million from investors such as Sands Capital, International Finance Corp. and Dubai-based private equity investor Abraaj Capital and is easily the most well-funded grocery start-up in the country. The Bengaluru-based start-up, which was valued at $950 million after its last fundraise, was founded in December 2011.