Paytm Mall looks to invest in online grocery firms to boost its essential delivery business3 min read . Updated: 28 May 2020, 11:31 PM IST
While the talks are still at the initial stage, Paytm Mall which took a lean approach last year by shutting down its warehouses, wants to invest and partner with these firms to get access to their warehousing infrastructure, as it looks to boost its hyperlocal delivery play
In a bid to boost its play in delivery of essentials, Paytm Mall has begun discussions with online grocery delivery firms such as Grofers and MilkBasket to make a potential investment, according to two individuals, directly aware of the discussions.
While the talks are still at the initial stage, Paytm Mall which took a lean approach last year by shutting down its warehouses, wants to invest and partner with these firms to get access to their warehousing infrastructure, as it looks to boost its hyperlocal delivery play.
“Paytm Mall has had initial level discussions with both Grofers and MilkBasket, as grocery accounts for a big chunk of the company’s business. While, it is figuring out the terms of investment with Grofers, it is looking to lead the round for MilkBasket, which might give Paytm Mall a sizeable stake in the company," said an individual directly aware about the talks, who didn’t want to be named in the story.
At present, close to 40% of Paytm Mall’s GMV (gross merchandise value) comes from grocery deliveries, after e-commerce firms was forced to deliver essentials, during the first three lockdowns in the country, due to the covid-19 crisis, starting 25 March.
Both Paytm Mall and Milkbasket declined to comment on the talks.
"We are not aware of any investments by Paytm Mall. Our business continues to exceed our expectations and we are on track to be EBITDA profitable for the month of May. We are an independent business and do not comment on speculation," said a Grofers spokesperson.
Starting last year, Paytm Mall started restructuring its business, stopped cashbacks and shut down several warehouses, as it decided to keep a lean approach.
Now, over the last two months, the company has pushed its focus towards catering to hyperlocal demand, by ramping up hyperlocal deliveries in more than 50 Tier 2 and Tier 3 cities, while tying up with 10,000 local kirana stores, small shops, and businesses to boost its grocery play in the market, and make faster delivery to customers.
Recently, Paytm Mall also said that it is helping its seller base to restock inventory, by partnering with several suppliers and FMCG brands directly.
“Hyperlocal play is one of the major focus areas for Paytm Mall now, and it looks to leverage the strength of these grocery players to boost this category on its app, and make faster deliveries. The company has been evaluating investments in Grofers and Milkbasket for more than a month now," said another individual close to the discussions.
In July, last year, eBay had reportedly invested close to $150 million in Paytm Mall for a 5.5% stake in the company. Further, Softbank Vision Fund holds a substantial stake in both Grofers as well as Paytm Mall, which sport valuations of $700 million and $3 billion, respectively.
Last month, Mint had reported that food delivery unicorn Zomato was in early stage discussions to acquire Grofers. While both Zomato and Grofers denied these discussions, a source aware of the discussions confirmed that the deal might not materialize.
Gurugram-based MilkBasket, in a recent interaction with Mint, stated it was not keen on being acquired, according to a top official.
Amidst reports that MilkBasket was in talks with Amazon India for a potential acquisition, Milkbasket’s CEO and co-founder, Anant Goel had told Mint in a recent interview that the company is not “looking for… or keen on it (being acquired)."
Goel said, “...I really cannot comment on anything regarding this. These discussions with multiple players are a part of the ecosystem and we have been doing it for many years now. It’s an ongoing thing….There is nothing specific going on. But we’ll see, conversations happen from time to time."
However, the company which counts Unilever, Kalaari Capital and Blume Ventures, as investors, has been in the market for some time to raise its next round of funding.