While some hyperlocal delivery business like Peppertap shut down and Grofers shut operations in 9 cities, BigBasket has been doing pretty decent in this space. More so because BigBasket got huge funding in the past which it has been able to utilise well.
Amazon too made its entry into the hyperlocal business last year when it launched Amazon Pantry grocery delivery on its website. However, we all know that Amazon’s ideology is either to be the number one in business or acquire the number one business to become the top player.
In a report by ET, Amazon is in talks to acquire BigBasket as the industry is growing and is going to be one of the hottest sectors for business. Amazon sees a lot of potential in the market too and wants to leverage BigBaskets customer base for that.
According to the report both the companies have declined to comment on this topic and it might be in the very initial stages, but still, it could be a possibility. Amazon is looking to get into the business with full force and BigBasket might be the best way to do that.
If you remember, Amazon was planning to set up retail stores in India just as the ones in the US and has also invested $500 million into packaged food delivery service in India, which shows the seriousness of its actions.
BigBasket, on the other hand, is in talks to acquire Grofers and Softbank has been keen on investing in the former. This news is confirmed and the two companies are in talks to merge into one business.
If the above happens, then Amazon will have a huge portfolio to invest in, along with plenty of cities that these companies operate in. At a valuation of $700-800 million, BigBasket is looking to raise funds and this merger might be a possibility.
Amazon’s Aggression in Hyperlocal Business
BigBasket is about to reach break-even in India which is a healthy news for both the company and the investors. At this point of time, it does not make sense to merge with Amazon at all. In fact, it should go head-on with Amazon Grocery delivery and improve its services in India.
However, Amazon is one of the kinds that will just sit and watch its competitors take over. Either it will invest heavily, without thinking about the losses, and reach the top slot or it will acquire its largest competitor.
A few examples of the same are Souq.com in the Middle East, Audible.com and Zappos in the US and a massive $5 billion investment in India to take on Flipkart. The aggression shown by the company is huge and it can really scare its competitors.
If Amazon is able to acquire BigBasket, it will have a monopoly in the market considering BigBasket and Grofers are single-handedly the largest players right now. Jugnoo Hyperlocal is still relatively new and limited to a few cities only, posing least threat to the company.
We’ll keep you posted as more information leaks about the two companies, Amazon and BigBasket.
Source: ET
