'Strategic blunder': Tata concerned over BigBasket's performance in quick commerce
What's the story
Tata Sons is unhappy with the slow growth of its subsidiary BigBasket in the booming quick commerce space. The conglomerate sees this as a "strategic blunder" that has left BigBasket trailing behind rivals like Blinkit, Zepto, and Swiggy Instamart. To rectify this, Tata Digital is pushing the e-grocery firm to bring on board external investors for a funding round to raise up to $1 billion.
Funding strategy
Tata Sons won't lead funding round for BigBasket
Interestingly, Tata Sons has no plans to lead the proposed funding round for BigBasket. Instead, it is pushing for the onboarding of another financial investor. A source familiar with the matter told The Economic Times, "Given how things have evolved, the idea is to onboard a large financial investor independently in BigBasket." The source further explained that following this strategy would permit Tatas and other existing investors to contribute additional capital.
IPO prospects
Funding could pave way for IPO
The proposed funding strategy could pave the way for an independent IPO by BigBasket. This was revealed by another person familiar with the matter. Despite cash burns, quick commerce firms continue to capture market share, leaving BigBasket behind. A recent Citi report revealed that Blinkit and Zepto have captured a larger market share in India's competitive rapid delivery market, beating Swiggy Instamart.
Market dynamics
BigBasket's market position and future plans
Citi's report pegged Swiggy's market share at 23%, while Blinkit leads with a 41% stake. To counter these market dynamics, BigBasket's CEO and co-founder Hari Menon announced plans last year for the Tata-owned grocery delivery platform to start its own quick food delivery service in 2025. The move is aimed at competing with services like Swiggy's Bolt, Zepto Cafe, and Blinkit's Bistro.