Tata plans $1.3B push as BigBasket lags behind Blinkit, Zepto
What's the story
Tata Group is gearing up to raise $1.3 billion for its digital businesses, BigBasket and 1mg.
The conglomerate has roped in global investment banks Citi and Moelis to help with the same, according to The Economic Times.
The money will be utilized mainly for BigBasket, which focuses on scheduled grocery deliveries but has recently pivoted toward quick commerce in light of market demands.
Concerns
Tata Sons expresses dissatisfaction over BigBasket's performance
Tata Group holds a 65% stake in BigBasket, with Mirae Asset VC and the UK's CDC Group as the other key investors. The company is currently valued at around $3.2 billion.
Reportedly, Tata Sons, the group's holding company, is unhappy with BigBasket's recent performance.
During a business review earlier this year, the company had criticized BigBasket for lagging behind Blinkit and Zepto.
This is despite Tata Sons' massive investment of over $2 billion in the Neu superapp so far.
Business growth
BigBasket's financial performance and future plans
BigBasket contributes a lot to Tata Digital's revenue, which doubled to ₹420.5 crore in FY24 over the last fiscal. The FY25 figures are yet to be released.
The company hopes to become a leading quick commerce platform across multiple Tata Neu categories and has announced plans to consolidate services by merging its BBdaily subscription service into the main BigBasket app.
Market strategy
Market share and integration plans
Quick commerce makes up for almost 80% of BigBasket's orders, but the platform only commands a 10% share of the market.
To improve its standing, BigBasket is merging its quick commerce service BB Now with Tata stores like Croma, 1mg, Carat Lane, and Zudio for electronics, jewelry, and fashion.
The integration process has already started as part of the company's plan to bolster its presence in these segments.
BigBasket is also planning to go public in the next 18-24 months.
Investment
1mg's valuation and future
Tata Digital owns about 63% of Tata 1mg, which was valued at $1.25 billion in its last funding round in 2022.
The platform plans to invest in bolstering its physical presence as well as rapid delivery services.
It provides diagnostics and other healthcare services, and promises delivery within four to five hours in select locations, including Delhi-NCR.