Alibaba-backed online marketplace Paytm Mall has initiated discussions to pick up a stake in BigBasket, while the online grocer’s sale talks with Seattle-based online retail giant Amazon have been stuck the past few weeks, according to two people familiar with the development.
Paytm Mall is likely to invest about $200 million in the Bengaluru-based company for a significant minority stake, and has begun due diligence.
A third person said BigBasket was seeking a pre-money valuation of at least $550 million. The company was valued at about $450 million when it raised capital in March, 2016.
“The deal will help Paytm Mall strengthen its online-to-offline strategy (using BigBasket’s partnerships with corner stores), helping them take on Amazon,” this person said. Amazon is likely to begin directly selling groceries and other food products online after it recently got the government’s approval for its proposed $500-million foreign direct investment in the business.
BigBasket and rival Grofers, too, have applied for the licence.
Paytm, through its online payments and mobile wallet business, has been targeting categories such as movie and travel ticketing to encourage repeat purchases. Grocery claims the largest share of the overall retail market, bigger than categories such as smartphones and fashion that currently dominate online retail. Ecommerce and payment platform Paytm launched a consumer shopping app Paytm Mall in February 2017. It is inspired by the model of China’s largest business-to-consumer (B2C) retail platform, TMall. In March 2017, Alibaba had invested $200 Mn in Paytm Mall.