The Competition Commission of India (CCI) has approved Zomato’s proposal for a 9.3% share in Grofers and Hands-on Trades, an online grocer. This would be Zomato’s first foray into online grocery retail.
“CCI authorizes proposed combination including the acquisition of approximately 9.3% equity in each of Grofers India Private Limited (Grofers India) and Hands-on Trades Private Limited (HoT) by Zomato Limited (Zomato). As well as, certain rights in each of the targets,” CCI said in a statement on Friday.
Grofers is a key player in the online grocery retailing market. Meanwhile, Grofers International Pte Ltd’s subsidiary Hands-on Trades is a B2B wholesale company that procures products from brands and manufacturers.
Zomato just paid $100 million for a minority investment in Grofers, a food delivery business. The company intends to expand its app to include a supermarket delivery feature.
Why this is a good potential investment?
Due to increased demand as a result of limited personal mobility caused by Covid-19. Online food retailers like; Amazon and Flipkart, Reliance Industries, BigBasket, Grofers, and Dunzo, competed for a piece of the pie. Aggregators such as Zomato and Swiggy also entered the market, with the latter outperforming the former.
After a hugely successful IPO, Zomato is now attempting to re-enter the online grocery game.
“It’s a huge opportunity (grocery). While online grocery is still in its infancy, it is fast expanding not only in India but around the world. We’re actively experimenting in that market, and we recently invested $100 million in Grofers for a minority share. Our goal is to gain more exposure to that space. Hence, tailor our strategies and plans to that business,” according to Zomato CEO Akshant Goyal.
“We’re introducing online grocery on the Zomato app very soon, and it will go live soon. With that, we’ll venture into the space and see how fast, how rapidly we can scale it,” he added.
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