Alibaba To Invest In India’s Online Retailer, Bigbasket

Chinese e-commerce giant Alibaba is planning on making an investment worth approximately $200 million in the biggest online supermarket in India, Bigbasket. Currently there is an ongoing funding round for the online retailer which is seeking to raise about $280 million. The deal has placed the value of Bigbasket at $800 million. Following negotiations which took months Alibaba will acquire a stake of around 25%. Six months ago BigBasket had also held talks with Amazon about a possible investment though nothing came out of it.

The investment in Bigbasket by the Chinese online retailer is a sign of the escalating competition between the Amazon and Alibaba in India which has one of the fastest-growing online retail markets in the world. The founder, chairman and chief executive officer of Amazon, Jeff Bezos, has promised to invest approximately $5 billion in India as he seeks to battle, Flipkart, another e-commerce giant in the world’s second-most populous country.

More investments in India

Alibaba also made an investment in One97 Communications Ltd, a firm which operates e-commerce as well as digital payment businesses. According to sources Alibaba’s investment in Bigbasket is now awaiting the approval of India’s antitrust authority. This is now being regarded as a mere formality as a rejection of the deal is not expected.

Daily essentials such as groceries have proved to be a challenging business across the world including in advanced markets such as China and the United States. In India expansion beyond the country’s biggest cities is difficult due to rudimentary logistics as well as a shortage of warehouses and trucks which are refrigerated. Growth will therefore require capital expenditures. Earlier in the year, Amazon received the approval of the government to invest approximately $0.5 billion in food retailing.

‘Automotive Vending Machine’

Alibaba’s investment in Bigbasket comes in the wake of the Chinese online retail giant partnering with Ford to sell cars manufactured by the Dearborn, Michigan-based automaker online. This will see Ford sell its motor vehicles on Alibaba’s e-commerce platform, Tmall.

Additionally the partnership will see Ford experiment with a store concept known as ‘Automotive Vending Machine’ where vehicles will be sold directly to consumers. This will give Ford a headstart in the world’s biggest market for cars. It will also help Ford revive sales which have fallen in the recent past.

According to Alibaba the ‘‘Automotive Vending Machine’ concept involves potential buyers being granted the opportunity to browse vehicles before deciding whether to make a purchase or test-drive.

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