Alibaba Group Holding Ltd led a $300 million investment into India’s biggest online grocer Bigbasket, signaling that the region’s segment is firing up.
Hari Menon, Bigbasket’s co-founder and chief executive officer, said the investment values the company at $950 million — just $50 million under the $1 billion valuation that would have earned it tech unicorn status.
“We wanted a strategic investor and saw Alibaba as the best fit,” Menon said in an interview.
India’s retail market is worth over $900 billion and grocery shopping accounts for about $600 billion of that, Menon said. Bigbasket’s rivals include India’s leading online retailer Flipkart Online Services Pvt, as well as the SoftBank Group Corp.-backed Grofers.
The company will deploy the funds into building farmer networks, warehouses and delivery infrastructure with a goal to penetrate deeper into the more than two dozen cities it currently operates in, Menon said.
The Bangalore-based startup, founded in December 2011 by Menon and four other entrepreneurs, sells everything from fresh leafy greens to kitchen mops, spice mixes and savory Indian tea-time snacks.
Bigbasket has attracted interest from a wide swath of companies and held initial investment discussions with global retailers Amazon.com Inc. and rival Walmart Inc. before the Chinese e-commerce giant arrived on the scene.
Grocery is a challenging e-commerce segment worldwide and Bigbasket, owned by Innovative Retail Concepts Pvt, operates in a country where expansion is hampered by rudimentary logistics and a shortage of refrigerated trucks and warehouses.
Growth will require capital expenditures, and Amazon got local government approval last year to invest $500 million into food retailing. Several high-profile grocery startups — such as PepperTap and LocalBanya — have collapsed in the past couple of years in India.