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Internet giants like Flipkart, Paytm and Amazon India are all actively exploring investments, acquisitions or expansions into the food delivery business.
According to the news posted by ET, all these Internet giants have separately held talks with the food-delivery segment leaders Zomato and Swiggy besides cloud kitchen players like Freshmenu for investments.
Flush with cash following recent fund-raisings, they also have an eye on sector-specific online retail stores as well as travel and entertainment ticketing companies, these people said. This rush for diversified investments has triggered a race of sorts among the Internet giants to evolve into larger ecommerce conglomerates.
This is similar to the one triggered in China by their local internet giants, as the Indian ecommerce companies seek to increase the frequency of transactions on their platforms
Flipkart along with its investor Tencent held investment discussions with Zomato before the food-delivery company entered into an exclusivity agreement with Chinese ecommerce conglomerate Alibaba’s payments affiliate Ant Financial for capital infusion.
India’s largest online retailer has now initiated discussions with Swiggy, according to two people aware of the development, for an investment of up to $100 million. Swiggy and Flipkart share South African media giant Naspers, which is also the largest shareholder in Tencent, as an investor.
Seattle-based Amazon is said to have earlier given Zomato a term-sheet for an investment at a $600-million valuation before the discussions floundered over the food-delivery company’s estimated worth. Amazon’s investment talks with Swiggy last year weren’t successful either. The global ecommerce giant, which is also looking to expand its meal kit-delivery business in India, has most recently held early talks with cloud-kitchen startup Freshmenu for an investment, according to people aware of the development.
Paytm also held discussions with Swiggy for an investment earlier this year and now its largest shareholder, Ant Financial, is in talks to invest in Zomato. The Gurgaon-based food discovery and delivery company is expected to align more closely with Paytm as a payments platform if the Ant investment goes through even though it will continue to use all other payment modes, said one of the sources mentioned above.
As a part of these discussions, Ant Financial had also tried to push Zomato and Swiggy towards a merger deal with plans to invest in a combined entity, but that deal has beenstuck due to strategic and valuation differences, as ET reported last week.
All these discussions may not necessarily lead to deals, as all the companies mentioned above are involved in multiple discussions.
The online food delivery market grew 150% year-on-year in 2016 with an estimated gross merchandise value (GMV) of $300 million in 2016, according to data from RedSeer.
Amazon India and Flipkart, set to lock horns in the grocery-delivery segment, are seeking to increase applications for their payment offerings — Amazon Pay and PhonePe, respectively — to take on market leader Paytm.