Zomato To Try Grocery Again, This Time With Grofers

A Zomato food delivery courier sets off on a motorcycle with a customer order in Mumbai, India. (Photographer Dhiraj Singh/Bloomberg)

Zomato To Try Grocery Again, This Time With Grofers

Zomato is investing in Grofers as it takes a second shot at the grocery market during the pandemic.

The food ordering and delivery company has sought Competition Commission of India’s approval to acquire 9.3% stake each in Grofers India, wholesale unit Hands on Trade Pvt., and their parent Grofers International, according to filings with the competition regulator.

Zomato and existing investor Tiger Global will plough in about $120 million in Grofers, a person aware of the development told BloombergQuint on the condition of anonymity as he is not authorised to disclose details. Zomato, after its listing, would eventually want to acquire a controlling stake, the person said.

BloombergQuint awaits Zomato and Grofers' response to emailed queries.

Ant Financial-backed Zomato delivered staples to vegetables during the first wave of the pandemic but discontinued it. Its second foray mirrors the strategy of its biggest rival Swiggy that provides daily household items at doorstep in many cities.

The market, however, is crowded. Tata Digital acquired majority stake in Big Basket, India's largest online grocer. Amazon.com Inc., Walmart Inc.-owned Flipkart and JioMart are eyeing a larger share. Supr also provides subscription-based grocery and milk delivery.

Zomato said in its filing with CCI that multiple players will impose "significant competitive constraints" in the market.

Last month, Grofers Co-Founder Saurabh Kumar said he’s leaving the firm but will remain a shareholder on its board. While Kumar and Albinder Dhindsa, also co-founder of Grofers, together own less than 8% stake in the company, SoftBank’s Vision Fund holds about 51%, and Tiger Global owns nearly 19.2%. Other investors in startup include Sequoia Capital and DST Global.

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