Twitter
Advertisement

Spencer's takes over fund starved start-up meragrocer

CESC arm Spencer's Retail, having 122 stores across the country, was considering entering into the grocery e-commerce space to leverage its sourcing and warehouse infrastructure, dna had reported.

Latest News
article-main
FacebookTwitterWhatsappLinkedin

Sanjiv Goenka-owned Spencer's Retail has acquired Omnipresent Retail that operates meragrocer.com in Delhi and Gurgaon, for an undisclosed amount.

The deal marks the entry of a leading offline retail chain into the e-commerce space and also signals early signs of consolidation of e-grocery sector that has seen difficulties in hitting upon sustainable business model and getting follow-up funds, crucial for scaling up in a crowded market.

CESC arm Spencer's Retail, having 122 stores across the country, was considering entering into the grocery e-commerce space to leverage its sourcing and warehouse infrastructure, dna had reported.

The opportunity came in the form of taking over Omnipresent, a deal which Shashwat Goenka, head of Spencer's Retail described as a "bargain buy".

Spencer's plans to scale up meragrocer by the first quarter of fiscal 2017, starting off with Kolkata followed by rest of the metros, Goenka said.

It currently logs a gross merchandise value of about Rs 5 crore a year and has 20 people in its role, all of whom would be absorbed.

Spencer's plans to upgrade meragrocer into a full fledged e-commerce platform under the Spencer's brand name offering everything that the chain sells.

While Goenka refused to comment on the valuation except that it came cheap, VC sector sources put the value at around Rs 75 crore considering the GMV figure.

Promoters Saurabh Chadha, Manoj Kumar, both of whom worked for Spencer's at some point, have a difficult past marked by the failure of their first e-commerce venture edabba.com, positioned as a hybrid brick and click model backed by Singapore-based early stage fund CCube Angels, among others, which picked up about 25% in the company.

Omnipresent then launched meragrocer.com at the end of 2014 starting off with Gurgaon and Delhi.

While it has notched up a modest base in these markets, already overcrowded by a host of e-grocers, Omnipresent has failed to firm up its second round of funding of around $10 million from existing and new investors in July-August.

Raising subsequent rounds have proved to be difficult for several e-commerce venture with VCs taking a re-look at business models.

"Recently, there has been instances of e-grocers like Localbanya, which was really large, had to close down as they couldn't find follow on funding at desired terms," said a promoter of a fund raising platform.

The deal brings backs the memory of Sanjiv Goenka acting as a white knight taking over Firstsource when the leading outsourcing firm was about to default on its foreign loan.

The takeover, as against organic development of own-e-commerce model, would help Spencer's accelerate its foray into the sector and help hitting the turnaround mark early, which, so far, as remained elusive with losses hovering around Rs 2 crore loss a month.

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement