Ecommerce giant Amazon looks to invest in Grofers; know about reason behind it

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New Delhi | Updated: August 29, 2017 6:36:25 PM

As the market is diversifying, e-commerce giant Amazon, which already deals in a variety of products from books to cosmetics to home products is now thinking about investing in Grofers, an on-demand online grocery delivery service.

Amazon, Grofers, amazon investment, alibaba, ecommerce, bigbasket, SoftBank, industry news, ecommerce sector, online retail market, Tiger Global, Paytm Mall, flipkart, industry newsThis move by the eretailer comes after its talks with Big Basket failed to turn into a deal. (Photo: Reuters)

As the market is diversifying, e-commerce giant Amazon, which already deals in a variety of products from books to cosmetics to home products is now thinking about investing in Grofers, an on-demand online grocery delivery service. According to the Times of India, Amazon is discussing plans of investing in Grofers, a SoftBank-backed e-grocer in order to counter Alibaba-BigBasket. This move by the eretailer comes after its talks with Big Basket failed to turn into a deal. Amazon is looking into online grocery portals as this market is emerging as the next stop for top internet companies in the country.

If the talks between Amazon and Grofers comes through, it will have to cross multiple hoops as two of the investors in Grofers – SoftBank and Tiger Global – are also investors in Flipkart. The report stated that Flipkart too is prepping for taking a dive into the online grocery sector and it is being speculated that a possible merger between Grofers and Flipkart is very unlikely. Only if Amazon invests over $100 million in Grofers can it prevent Flipkart from aligning with it, according to report. Recently, Alibaba closed in on a deal with BigBasket and invested $200-million in the company. The report further stated that Alibaba’s capital infusion through Paytm Mall will see $150 million being ploughed into BigBasket, while the rest of the $50 million will be going straight to its existing investors in a secondary transaction.

While the Amazon spokesperson and co-founder & CEO of Grofers remained unavailable for any comment on the merger. TOI quoted a person close to the matter saying, “Both Alibaba and Amazon want to get a toehold in the grocery category, which is why they are not looking to acquire any of the two companies but only back them with capital.”

The current estimation of the overall grocery and foods market including packed foods is $400 billion. Out of this only 5% of the sales is contributed by organized retailers.

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