Reliance & Amazon deadlocked to buy Future Retail, Tata buys BigBasket for $1.2 billion:

Understanding the corporate race to acquire grocery giants.

From a young age, all of us are told to study, get good grades and do well in our lives. We are all conditioned to lead a rich, luxurious life and work for the pure motive of profits and gains. We all want that business class ticket during a flight, we all want to be able to spend on all we can and fulfil our desires.

In the year 2020, Kishore Biyani- the CEO of the future group let his debts consume him. Due to his unfortunate circumstances, he had to sell the company to Reliance. Being one of the biggest corporate giants of today, Reliance is seen to be expanding and Mukesh Ambani holds a near-monopoly.

In our current situation, where the pandemic restricts regular activities, ordering online has become the new normal. The drastic increase in the ease of shopping has made the switch to e-retail - inevitable. Reliance saw Future Retail as a potential way of success for them. Amazon and Reliance are bitter rivals and competitors, and Future Retail signed a deal with global e-commerce giant Amazon last year. As part of the deal, Amazon had acquired a 49 per cent stake in Future Coupons, the promoter firm of Future Retail in a deal worth nearly Rs 2,000 crore.

While Future Retail would be able to place its products on Amazon’s online market place, the two had also agreed that the Future Retails products would also be a part of Amazon’s new plan, which intended to deliver products in select cities within two hours of a customer ordering them. Future Retails has more than 1,500 stores pan India. The deal had also given Amazon a ‘call’ option, which enabled it to exercise the option of acquiring all or part of Future Coupon’s promoter, Future Retail’s shareholding in the company, within 3-10 years of the agreement.

Kishore Biyani is still at a loss and his debts have increased as the Reliance deal is still on hold. Amazon has contended that according to its contract with Future Group, the sale of the business to Reliance was barred.

Tata bought Big Basket in February 2021 for 1.2 billion USD. The deal which would cost the 152-year-old corporation as much as $1.3 billion has been many months in the making, with the Tatas inherent wish to become a majority player in the Indian e-commerce market. It’s a win-win situation for both companies.

BigBasket can easily deploy more capital, manpower and take advantage of Tata Group’s logistics. For BigBasket, it is definitely a big step in competing with the likes of Amazon and JioMart.

Tata’s acquisition of BigBasket comes at a time when the Indian e-grocery sector is heating up with the world’s richest man Jeff Bezos betting on it with Amazon Pantry, India’s richest man Mukesh Ambani upping the game with JioMart and even one of the world’s largest retailers Walmart saying that its India entity Flipkart will put grocery as one of its focus areas in 2021.

Reliance’s JioMart is also reportedly set to acquire MilkBasket, the online grocery startup based out of Delhi-NCR. And this deal is yet another signal of the soaring value of the e-commerce market. Especially in a country like India, where the demographic dividend is the age of 26 and a huge population is present, e-commerce is expected to rise as the most successful way of earning profits.

Contrary to what people might think, apps like BigBasket aren’t food/grocery apps, they are technological apps. Because of the evident demographic dividend, Indian citizens are becoming more tech-savvy and can easily operate gadgets and fulfil their needs with a click of a button. We are adapting to newer technologies every day and I believe that it’s

high time for India’s existing retail giants to take on the new world.

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