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Bengaluru, NFAPost: Leading e-grocer in the country BigBasket is going ahead with its plan to further raise fund to take on exponential growth registered due to Covid-19 influenced demand and growing competition due to the entryof  JioMart.

According to sources privy to the development, the Bengaluru-based venture is in talks to raise up to $100 million led by Temasek, said three sources aware of the conversation.

“The talks have been on for the past few weeks. Temasek could invest anywhere between $50 to 70 million,” said one of the sources on condition of anonymity. Existing investors including Mirae Asset and CDC Group are likely to join,” said sources.

Profitability

Arvian Research stated that the country’s second and third largest e-grocers BigBasket and Grofers have been feeling the heat due to the entry of JioMart.

“It is a reality that within a few months of its launch, the JioMart platform has emerged as the largest e-grocer in the country. To maintain their positions, the other players needs to raise large funding rounds and BigBasket appears close to raising a fresh round. Since profitability for both companies is nowhere close, they need to raise large funding rounds to deal with JioMart’s onslaught,” said Arvian Research

According to the sources, JioMart does over 600K orders every day. The quick growth of the platform has put BigBasket and Grofers in an uncomfortable position.

Alibaba

To take head on the competition, BigBasket had raised $60 million bridge financing from Alibaba and the aforementioned existing investors in April. It’s worth noting that Alibaba couldn’t leverage the automatic route to infuse equity capital in BigBasket due to change in FDI regulations.

Following the tension over the border, the Indian government had barred Chinese and other bordering investors from putting money in local companies without its approval since June.

“The valuation of BigBasket will not see any significant increment. More or less it would be the same as the last round raised in April,” added the second source who also wished not to be named. To be sure, the deal may or may not materialize.

Sources emphasised that BigBasket has a monthly burn of around $7-8 million and the last fundraise would last until November-December. In May, BigBasket had claimed to reach Rs 650 crore in monthly sales. Besides grocery, the company also runs subscription commerce platform BB Daily.

Competition

Analysts and entrepreneurs in the skin of the game believe that the market is large enough to accommodate multiple players, but it won’t be an easy ride for both BigBasket and Grofers. Besides JioMart, Indian grocery market is witnessing heightened competition from firms like Zomato, food tech unicorn Swiggy and ecommerce majors like Flipkart and Amazon India.

According to Arvian Research study, the total size of the Indian e-grocery market is expected to grow from $1.9 billion in 2019 to reach over $3 billion by year-end. “If the pandemic influence continues and steady spike in e-commerce will have its effect on the grocery to register an annual growth rate (CAGR) of 57% and likely to touch $18.2 billion by 2024,” said Arvian Research.

India is witnessing a unique situation where the GMV of fresh food has grown by 144% in the first six months of this year, while staples and FMCG have grown by 85% and 62% respectively. Besides steady growth of categories such as fresh food and staples sourced from farmers, now FMCG companies are directly contacting egrocers to sell their products.

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