Swiggy, BigBasket discover next cash cow: Milk supply


Image result for Swiggy, BigBasket discoverFood-delivery platform Swiggy and online grocer Big-Basket have zeroed in on their next big cash cows: milk-delivery startups that can enrich their frequency of orders and make customers stick.

Swiggy, flush with funds and looking to start a grocery-delivery business, is in early talks to acquire subscription-based milk-delivery startup Supr Daily, according to three people familiar with the developments. Alibaba-backed BigBasket has held buyout talks with Pune-based RainCan, Gurgaon-based Milk Basket and Bengaluru-based Daily Ninja, said other people aware of the discussions. None of these talks are near finalisation. “Given the kind of capital these companies have raised, they need to invest significantly in capacity-creation and customer acquisition, and subscription-based companies could give them a loyal base of customers,” said Vinod Murali, managing partner at venture debt firm Alteria Capital. “So, wherever Swiggy and BigBasket can leapfrog their growth, they will try and do so through an acquisition.”

The milk-delivery startups could help Swiggy and BigBasket increase their frequency of orders to 15-20 times a month from 4-5 times a month now, said one of the unnamed persons mentioned above. BigBasket and Swiggy did not respond to queries from ET. A spokesperson for Supr Daily said the company does not “comment on speculations and rumours”, and RainCan denied talks with BigBasket. Milk Basket and Daily Ninja declined to comment.

Indian households buy milk almost daily, each spending more than Rs 1,000 a month on average. And since margins earned on milk are low, online milk-delivery startups are adding other grocery products to their platforms, RedSeer Consulting said in a report.
Swiggy, BigBasket discover next cash cow: Milk supply BigBasket handles 60,000-70,000 orders a day across India, and Swiggy more than 300,000 food-delivery orders a day, as per industry estimates. Daily Ninja, which recently launched in Hyderabad, handles about 25,000 orders a day, according to the company. RainCan handles about 10,000 orders a day, Milk Basket about 8,000 and Supr Daily about 5,000, according to industry estimates.

The grocery segment is becoming hyper-competitive with Amazon India and Flipkart doubling down on the category.

Flipkart is preparing to expand its grocery service to five cities by July, while Amazon Now is present in four cities.

“Considering Flipkart is also going to go aggressive on grocery, Big-Basket will look to acquire as much space as they can in the next couple of quarters,” said an industry expert.

Grofers launched a subscription service in January. BigBasket raised about $200 million this year in funding led by Chinese ecommerce conglomerate Alibaba. Swiggy, after recently securing $100 million in funding led by South Africa’s Naspers and Chinese delivery giant Meituan-Dianping, is in talks for another $200 million from Russia’s DST Global and US-based hedge fund Coatue Management. The investment is expected to lift Swiggy’s valuation to above $1billion, ET reported last month.