Tata Group has entered negotiations with online supermarket, BigBasket, for a possible partnership valued at $1.3bn. Tata Group is after a 20% share in the online food and grocery store company BigBasket with a decision on the deal expected to be made by the end of October.

BigBasket would complement Tata Groups digital and online retail ambitions. The company is hoping to launch an app that would sell all of the groups consumer products under a single channel. The all-in-one e-commerce app is scheduled to launch by the end of 2020 or early 2021.

Consumer companies under Tata Group ownership already include Tanishq’s jewelry stores, Titan watch showrooms, Star Bazaar supermarkets, chain of Taj hotels and a joint venture with Starbucks in India. The addition of BigBasket could further expand its retail offerings as well as accelerate the growth of its e-commerce network.

Tata Group wants to compete with leading e-commerce

Amazon and Indian conglomerate, Reliance Industries are two leading digital retailers that Tata Group would be going up against in the India e-commerce market.

Amazon also launched an online food-delivery service called Amazon Food in select post codes across India May 2020. During the same month Reliance Industries launched JioMart, an online grocery service available in over 200 cities and towns across India.

Walmart, owner of leading Indian e-commerce platform, Flipkart, could invest $25bn into the Tata Group digital platform. The investment could accelerate the development of Tata Group’s e-commerce business, leveraging synergies between the two companies.

Tough competition but huge rewards

Despite facing competition from Amazon and Reliance industries in online retail and food retail, Tata group appears to be confident it can capitalize on India’s growing digital economy and e-commerce market

Chinese service-focused e-commerce company, Meituan Dianping, performed well in 2019 with revenue growing 49.5% year-on-year to $13.7bn. Like Tata Group’s intended digital business, Meituan offers an omni-channel platform that provides multiple consumer services and has demonstrated growth despite competing with e-commerce giants such as Alibaba.

The growth of similar platforms in a crowded Chinese e-commerce market should show signs of encouragement for Tata Group and its digital ambitions. Especially given that India has one of the fastest growing number of internet users in the world.