Tata Digital: The super app play


The Tata Group is now making clear the ambitious plan for Tata Digital, its youngest business being built around the 'super app' theme.

Tata Digital: The super app play
What is a super app? It is pretty much a digital mall, where the customer can get everything they need from the same app - be it groceries, medicines, and much more.
No wonder then that large conglomerates are eyeing the 'super app' play to keep the customers within their digital premises, to cross-sell products across categories and get the maximum share of their wallets.
While Reliance's Jio and Amazon have been aggressively building this for the past few years, some would assume that one of the oldest business houses in the country - the Tata Group, may be late to the party.
But late or not, the Tata Group is now making clear the ambitious plan for Tata Digital, its youngest business being built around the 'super app' theme.
Tata Digital was first announced by Tata Group in 2019, and it brought in Pratik Pal as the chief executive officer. Pal had earlier served in various leadership roles at Tata Consultancy Services and was the global head of retail, travel, hospitality and CPG industry unit.
Tata Sons chairman N Chandrasekaran had told CNBC-TV18 in late 2019 that the Tata Digital platform would be launched by the middle of 2020. While the pandemic may have pushed those deadlines, in the middle of 2021 currently, the Tata Digital picture is now becoming more clear.
The company last month announced that Tata Digital has acquired a majority stake in Supermarket Grocery Supplies Private Limited, the B2B arm of popular e-grocery platform BigBasket. The deal will entail control over BigBasket's B2C arm as well.
As per sources, Tata Group shelled out over a billion dollars to acquire a 64.3 percent stake in BigBasket, valuing the Bengaluru-based startup at $1.8 billion.
Such a large cheque by a traditional business house may seem odd to some, but the future of e-grocery in India is only set to explode.
"In 2011, people didn't think that consumers would buy groceries online, especially fresh fruits and vegetables. And now in hindsight, everyone is in e-grocery since it is the fastest-growing sector of e-commerce," K Ganesh, promoter of BigBasket, told CNBC-TV18 in an interview on May 28.
"We have only scratched the surface, e-grocery is less than 10 percent of total grocery retail," he added.
BigBasket's numbers justify Ganesh's bullish attitude. The company now has a presence in 30 cities in India and records 15 million customer orders per month. In 2020, BigBasket reached $1 billion in annual revenues.
"Grocery is one of the largest components of an individual's consumption basket in India, and BigBasket is India's largest e-grocery player, fits in perfectly with our vision of creating a large consumer digital ecosystem. We are delighted to welcome BigBasket as a part of Tata Digital," Pratik Pal, CEO of Tata Digital said in a statement.
Everyone agrees that the Tatas have managed to bag the biggest e-grocery platform in the country, and that shows their determination to create one of the best super app platforms.
"We have rarely seen large industrial houses paying top dollars for acquiring new-age companies, and this is a big bold move by the Tatas," Ganesh said.
"The general trend is that we are seeing an evolution of platforms. We are seeing full ecosystems developing, whether it is Reliance, Amazon, Flipkart, and now the Tatas. Large platforms with logistics, finance, payments systems, etc. are coming together to become a super app, and we have seen the success of this in China," he added.
It is a win-win for the startup ecosystem that the Tata Group is now out shopping for digital platforms.
"Under Tata, BigBasket will get a great brand and fillip. Because of the Tata brand and multiple aggregations of the various services under their super app, we expect to see huge traffic and cross-selling happening," Ganesh said. The BigBasket leadership, led by CEO Hari Menon is set to continue in their roles under the new structure, as per sources.
On Monday, Tata Digital announced that it has entered a memorandum of understanding for investing up to $75 million in CureFit Healthcare, which runs the fitness platform Cult.fit.
Along with the deal, the Tata Group also found a seasoned tech leader to guide the company. CureFit founder and CEO Mukesh Bansal is set to join Tata Digital in an executive role as president of the company, while also continuing in his leadership role at CureFit.
While CureFit was badly impacted last year during the pandemic, even being forced to shutter its gyms in smaller towns, the company swiftly moved towards the digital platform. The Tata Group is also bullish on the overall fitness sector in the country, stating that the Indian fitness and wellness market is growing at 20 percent per annum and is expected to reach $12 billion by 2025.
"CureFit is uniquely positioned to capture a large share leveraging its comprehensive solution and differentiated tech platform. Curefit, with its range of fitness & wellness offerings, will help Tata Digital expand into pro-active health management space," the company said.
N Chandrasekaran of Tata Sons said, "The CureFit partnership with its industry-leading platform in fitness and wellness aligns very well with our overall healthcare proposition where fitness is increasingly becoming an integral part of a consumers’ life. We are delighted to have Mukesh Bansal as a part of the key leadership team of Tata Digital. With his deep consumer experience and an entrepreneurial mindset of having incubated and grown two very successful businesses, his expertise will bring immense value to us."
During the pandemic, the e-pharmacy model, which had earlier struggled to take off, was vindicated, with order volumes for medicines exploding and these platforms adding more customers than ever. The sector has already seen aggressive M&A activity since the beginning of the pandemic.
In August last year, Reliance Retail acquired a majority equity stake in Vitalic Health and its subsidiaries Netmeds for a cash consideration of approximately Rs 620 crore. Later in 2020, Pharmeasy moved to acquire Medlife, and recently also became the first unicorn in the e-pharma space.
The only other big player on the block is 1MG, making it ripe for an acquisition, and the company is reported to have found a permanent address at Tata Digital.  1MG's addition will add a lot of traction to Tata Digital, given the jump the platform has seen in volumes in recent months.
Last month, the company had shared that it had seen a 4X increase in sales of COVID related products in April 2021 vs March 2021, 20X growth in product categories like pulse oximeters, oxygen cans, face shields, PPE kits, and 5X growth in sales in the month of April for vitamin supplements.
Beyond the pandemic as well, the e-pharmacy sector is expecting to see the traction remain as people become comfortable ordering medicines online. Even Amazon has started trials in India to enter the e-pharmacy space, adding to the competition.
The company is now eyeing the Google-backed hyper-local delivery platform Dunzo, which has become a popular concierge service in many metros. Sources said two rounds of talks have taken place between the Tatas and Dunzo for investment, though the talks are still exploratory in nature.
While Tata Digital did not offer comments, Dunzo said, "While we are currently in advanced discussions with multiple investors on raising additional capital to the tune of $150-200 million, a buyout or sale of controlling interest is definitely not up for discussion."
Dunzo has seen fast growth in recent months, with the company stating it has doubled its business in the last 75 days and continues to grow 50 percent month on month.
The company, however, is seeing stiff competition in the hyperlocal space from the likes of Flipkart and Swiggy, which have also turned to the hyperlocal delivery space since the pandemic.
But even as the Tata Group is on a shopping spree on startup street, the company is still to launch its Tata Digital platform for consumers, and it remains to be seen how the different services will be integrated.

Market Movers

NTPC116.95 3.40 2.99
Adani Ports708.95 14.60 2.10
HUL2,510.90 28.00 1.13
BPCL475.00 2.65 0.56
HDFC Life713.45 4.25 0.60
NTPC116.85 3.30 2.91
HUL2,511.15 30.40 1.23
ITC205.60 1.00 0.49
Asian Paints3,061.80 12.15 0.40
ONGC120.80 0.45 0.37
NTPC116.75 3.20
Adani Ports709.85 15.50
HUL2,511.90 29.00
HDFC Life714.45 5.25
ONGC121.00 0.75
NTPC116.85 3.30
HUL2,510.80 30.05
ITC205.55 0.95
Asian Paints3,061.80 12.15
ONGC120.90 0.55


Rupee-100 Yen0.67540.00520.77