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Ninjacart Planning to Raise $100 M Funding From Flipkart
The Ninjacart funding will be one of the largest investment rounds by the e-commerce major in a startup as it races to expand its footprint in India’s fast growing online grocery business.
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Flipkart is in advanced talks to lead a new funding round of about $100 million in fresh produce supply chain startup Ninjacart, people briefed on the matter said. This will be one of the largest investment rounds by the e-commerce major in a startup as it races to expand its footprint in India’s fast growing online grocery business.
Ninjacart’s valuation is likely to jump to around $750-800 million post the financing round from the previous level of $500 million, according to sources who said that Flipkart parent Walmart is also likely to participate in this round. Once the investment is formalised, it will deepen Flipkart’s partnership with Ninjacart as it looks to boost its grocery business to take on rivals like Reliance Industries' JioMart, Amazon India, and Tata-owned BigBasket.
"Ninjacart’s business has made a good recovery over the last one year and the new funding is closing now; other existing investors are also likely to participate in this round," said one person cited above, who estimates the total investment could even "stretch to over $100 million".
As part of its increasing focus on the sector, the Flipkart Group is scaling its online store Supermart as well as 90-minute hyperlocal delivery service Flipkart Quick, which largely focuses on groceries and has select products in other categories like electronics.
Quick Commerce Space
Swiggy’s Instamart, Dunzo Daily, and new entrant Zepto are among the startups that are currently competing intensely in the quick commerce space, offering delivery of groceries and essentials in 15-30 minutes.
Ninjacart founder Thirukumaran Nagarajan declined comment.
Last year, Walmart and Flipkart had together invested around $30 million after having first backed the startup in 2019.
Ninjacart counts Tiger Global, Accel Partners as well as Nandan Nilekani and family among its investors. New York-based Tiger Global is its largest investor with nearly 23% stake in the firm, according to shareholding data as of of October 2020 sourced from data tracking platform Tracxn.
Founded in 2015, Ninjacart currently operates in seven cities including Bengaluru, Chennai, Hyderabad, Pune, Delhi and Mumbai while Flipkart Quick is available in ten cities with plans to reach 200 cities by end 2022.
Flipkart’s wider grocery selling service that competes with Amazon Fresh and JioMart has been taken to around 500-600 cities.
"They (Flipkart) were in around 100 cities earlier in the year and scaled it to more than 500 before the Big Billion Days sale. Flipkart will continue to focus heavily on grocery and will be expanding across the country. Ninjacart’s support on the supply side will be crucial," another person aware of the matter said.
As ecommerce companies increasingly favour a dual approach to the e-grocery business — instant delivery with limited items while also offering a wider range of products with discounts and other incentives — "having control over the supply chain helps in ensuring wider selection of products, higher quality control, certainty in terms of supply, and better unit economics," said Ankur Pahwa, a partner at EY India who tracks the e-commerce and consumer internet sector.
"They (Flipkart) are essentially looking at Flipkart Quick as a service for the top 20-30 cities where the urban user is looking for faster deliveries and might even want to pay a premium for such deliveries. The broader grocery business is for across the country where it has also partnered with kirana shops," sources said.
According to data from PGA Labs — the market intelligence unit of Praxis Global Alliance — the Indian e-grocery market is estimated to reach $22 billion in size by 2025 compared with around $3 billion in the financial year ended March 2021. BigBasket was the leader with around 37% market share while Grofers held 13%. Flipkart had a market share of around 11% with Amazon India holding 15% and JioMart 4%.
"In grocery, the fresh category (vegetables and fruits) leads to more stickiness," said Kartik G Iyer, head of ecommerce consultancy firm Publicis Commerce.
"Fresh category can be a differentiator for both BigBasket and Flipkart as they can offer more products and better quality because of their control over the supply chain," he added.