Dive Brief:
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Amazon has entered discussions to acquire BigBasket, the largest online grocery retailer in India, according to a Bloomberg Technology report, as the company continues to plot a strategy in the hotly competitive e-commerce environment there.
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A spokesman for BigBasket told Bloomberg the report was false and Amazon declined to comment on the report. The news arrives as Flipkart, Amazon’s biggest e-commerce competitor in India, reportedly is closing in on an acquisition of Snapdeal, another large player in the market.
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Amazon CEO Jeff Bezos has said his company plans to invest as much as $5 billion in India’s e-commerce sector in the coming years, while other reports have suggested that the company will spend at least $500 million on e-commerce grocery endeavors alone.
Dive Insight:
India's e-commerce market, which is very much driven by mobile commerce, is growing fast and Amazon, which has been operating there for several years, is trying to stay ahead of that growth. The company recently made progress gaining on market leader Flipkart, largely by improving its mobile app engagement rate by 46% in the span of one year.
But that's not the only way to grow a business, and if Flipkart's Snapdeal acquisition goes through, Amazon may move fairly quickly to take advantage of new regulations in India allowing 100% foreign ownership of native e-commerce marketplaces.
The Bloomberg story also suggests that BigBasket could be talking to other parties, including private equity firms, about a deal, even though the company raised about $150 million from investors last year and another $7 million in venture debt just three months ago. That may be another sign of how fast the market is growing, as even a well-funded, fast-growing online grocery firm appears to need even more money help to keep up.
Amazon is "deadly serious about Indian e-grocery," according to Deepanshu Mandlekar, retail analyst with Planet Retail, who wrote up his opinion of the Amazon-BigBasket report. Mandlekar suggested Amazon needs to move quickly to make this acquisition if Flipkart is working on its own deal to gain greater scale and resources.
Though most recently Amazon has been obsessed with entering the brick-and-mortar grocery market, it could also focus on international expansion of those efforts. In India, being able to absorb an established player would be a shortcut to market prominence might be too hard to ignore.
