One97 to enter e-grocery with new app Zip

One97 Communications Ltd, which runs a mobile payments, recharges and mobile-first e-commerce marketplace Paytm, is floating a new app named Zip to connect users to both local offline as well as online grocers. This will mark the second such consumer facing product for One97 which currently operates a single app under Paytm brand for all its existing services including a mobile wallet.

Paytm's existing e-com marketplace is also available on the web.

A beta version of the new app is to be launched later in the day, a company executive told Techcircle.in, requesting anonymity.

This would mark the entry of another big funded venture in the e-grocery space, which is currently dominated by a handful of regional or city-based companies. Most of them operate in a marketplace model connecting grocers with users.

The new 20-member business wing launching its mobile-only online grocery platform is based in Bangalore.

"With this pilot programme in Bangalore, we are trying to identify the most scalable model. We are going to expand our operations to Delhi in a month," the source in the Noida-headquartered firm said.

When contacted, the company spokesperson declined to comment. Earlier during the day Business Standard reported the company's plan to launch e-grocery unit.

The app will function as an affiliate plus payment system for others. The company pins its hopes on the fact that the online grocery shopping crowd is the similar kind of people engaging in small ticket size recharges in the range of millions of transactions daily on its platform.

It is in talks with a number of grocery e-commerce players for potential partnerships.

While top horizontal e-com firms like Flipkart, Amazon, Snapdeal and eBay has been selling a few grocery and food products, they have largely limited themselves to gourmet food.

Several e-grocery startups have raised funding recently.

Last week, Locodel Solutions Pvt. Ltd, which runs hyper-local grocery and fresh food delivery platform Grofers, raised $35 million (Rs 218 crore) from its existing investors Tiger Global Management and Sequoia Capital. This came just two months after it closed a Series A fundraise worth $10 million from Tiger Global and Sequoia. The startup had previously raised seed funding from Sequoia and Deepinder Goyal, co-founder and CEO of Zomato.

Gurgaon-based Nuvo Logistics Pvt Ltd, which runs a hyperlocal grocery and food e-tailing startup under PepperTap, secured $10 million (Rs 62 crore) in Series A funding from SAIF Partners and existing investor Sequoia Capital.

ZopNow also raised $10 million from Dragoneer, Accel Partners, Qualcomm Ventures and Times Internet.

Other ventures in this space include the most heavily funded venture in the business BigBasket besides Aaramshop and MyGrahak among others.

Early this year, Mumbai-based EkStop was acquired by offline food retailer Godrej Nature's Basket, which is now expanding its own e-commerce property.

Amazon is also testing its business case in the vertical and has tied with neighbourhood grocers in Bangalore as a pilot programme to connect buyers to local grocers.

One97 recently got long term commitment of $635 million investment from Alibaba and existing investor SAIF Partners. This sets up a huge corpus of funds to use for expansion in m-commerce business. It is also looking to boost presence in more 'unstructured' categories such as fashion and home furnishing.

The company is looking to touch 3 million transactions a day by June this year, from the 2 million it claims to be logging currently. "We are chasing 50 per cent growth in the next three months. To reach there, we have to have as many categories accepting payments as possible. Grocery is a great category," the executive cited above said.

(Edited by Joby Puthuparampil Johnson)