The Tata Group appears have taken the first step towards its grand super-app ambitions.
The Tata Group has finalised a $200-250 million primary cash infusion in BigBasket as part of its larger deal to acquire a majority stake in India’s biggest online grocery company, reports ET. The Tata Group will shell out a total of $1.2 billion in a mix of primary and secondary sale of shares to eventually acquire a 60% share in BigBasket. The first transaction is expected to close over the next few days, and will become one of the largest startup deals in India’s burgeoning ecosystem.
As a part of the deal, Chinese e-commerce giant Alibaba and Dubai-based Abraaj Group, which has recently been fined $315 million for deceiving investors and misappropriating funds, will exit their positions in Big Basket. Alibaba currently has a 28% stake in Big Basket, and the Abraaj Group has another 18%, so buying shares from these two investors will give the Tata Group a majority shareholding in the grocery startup.
This isn’t the only startup investment that the Tata Group is pursuing — it’s also reportedly in the final stages of acquiring a minority stake in pharmacy startup 1mg. These acquisitions are a part of a broader plan to launch its own super-app, which will taken on Amazon, Flipkart, and JioMart. . “It will be a super app, a lot of apps in apps and so on . . . We have a very big opportunity,” Tata Sons Chairman N Chandrasekaran had said in August last year. “The Tata Group, depending upon how you count, touches several hundred millions of consumers in India, if you take consumers who are walking in everyday into a Tata facility … How do we give a simple online experience connecting all of this, and at the same time a beautiful omnichannel experience? . . . That is the vision,” he had added. The super app will provide food and grocery ordering, fashion and lifestyle, consumer durables, insurance and financial services, healthcare and bill payments.
While there might be lots of verticals on the anvil, it’s no surprise that the Tata Group is launching its super app with a grocery company — grocery delivery orders have low order values, which people can use to dip their toes into a new e-commerce app. They’re also high-frequency, which means that if the service works well, people can end up using it several times a month. It’s possible to build a whole e-commerce business around this, slowly graduating these users from buying milk and groceries on your platform, to getting them to buy higher value items like clothes, accessories and electronics. This is the game plan with which JioMart had launched its e-commerce venture — after starting off selling groceries, it’s now adding new categories, including electronics on its platform.
And the Tata Group has plenty of its own e-commerce operations to integrate on the app. It has digital arms in Tata CliQ and Croma, brands like Tanishq and Voltas, and even consumer products like Tata Salt, Tata Coffee and Starbucks. To top it all, it has deep pockets, and could really make a dent in the e-commerce space if it puts its mind to it. JioMart had been trying to emerge as an Indian competitor to Amazon and Flipkart, but it seems that yet another homegrown conglomerate — the Tata Group — is all set to throw its hat into the ring.