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BENGALURU: Alibaba-backed online marketplace Paytm Mall has initiated discussions to pick up a stake in BigBasket , while the online grocer’s sale talks with Seattle-based online retail giant Amazon have been stuck the past few weeks, according to two people familiar with the development.Paytm Mall is likely to invest aboutmillion in the Bengaluru-based company for a significant minority stake, and has begun due diligence, one of them said.A third person said BigBasket was seeking a pre-money valuation of at leastmillion. The company was valued at aboutmillion when it raised capital in March, 2016.“The deal will help Paytm Mall strengthen its online-to-offline strategy (using BigBasket’s partnerships with corner stores), helping them take on Amazon,” this person said. Amazon is likely to begin directly selling groceries and other food products online after it recently got the government’s approval for its proposed $500-million foreign direct investment in the business.BigBasket and rival Grofers , too, have applied for the licence.Paytm, through it’s online payments and mobile wallet business, has been targeting categories such as movie and travel ticketing to encourage repeat purchases. Grocery claims the largest share of the overall retail market, bigger than categories such as smartphones and fashion that currently dominate online retail.BigBasket’s discussions with Paytm Mall, which was spun out from parent One97 Communications this year to an entity called Paytm E-commerce, come after the online grocer explored various strategic options, include a sale to Amazon and a merger with SoftBank-backed Grofers. BigBasket had been discussing a fundraising from financial investors as well.Paytm E-commerce, which recently appointed One97’s Amit Sinha as chief operating officer, raisedmillion from Alibaba Group and SAIF Partners in March.BigBasket’s discussions with Amazon India have been on hold as the two sides have not been able to agree on various issues, including valuation. While BigBasket sought a valuation of $700-800 million for the entire company, Amazon had proposed an initial valuation of less thanmillion, according to a person aware of the deal talks. But the two parties, who have held talks multiple times, could revive discussions.Investment bank Morgan Stanley is advising BigBasket in these talks.A Paytm spokesperson declined to comment. BigBasket cofounder Hari Menon said over a text message that information about Paytm Mall’s investment in the company was “not true at all.”According to Arvind Singhal, chairman of retail consultancy Technopak, the food and grocery segment is where Amazon and Paytm would like to have a lead after losing out in the fashion category to Flipkart.“Paytm and Amazon lost out when they did not get Jabong or Myntra, giving unassailable lead to Flipkart in the fashion segment. They may now be looking at the food and grocery category, which makes upbillion of the $630-billion retail market opportunity in the country,” Singhal said.BigBasket’s private labels including Fresho for fruits and vegetables and Happychef for gourmet foods accounted for over one-third of its sales. BigBasket also started express delivery in 60 minutes last year to take on Grofers. The company registered about Rs 1,400 crore in revenue in fiscal year 2017.Amazon India has already started building its infrastructure for retailing fresh produce through its platform, besides building a significant presence in the segment through products like Pantry and Amazon Now.Rival marketplace Flipkart has also announced plans to enter the online consumer goods and grocery sector by July, though it is likely to stay away from selling fresh produce to begin with.(With inputs from Mugdha Variyar)