E-commerce buyouts: Mahindra, Godrej to leverage on physical stores

To use online buyouts for physical stores

The Mahindra and Godrej groups, which have bought niche e-commerce companies in baby care and gourmet food, respectively, want to replicate their business model in physical stores.

Mahindra Retail, a part of the $17 billion Mahindra Group, has brought its online venture Momandmeshop.in under acquired online retailer babyoye.com and plans a single website. Mahindra Retail operates baby products and maternity stores Mom & Me.

“Baby Oye is complementary to Mom & Me and positions us well as the largest player online and offline in the maternity and baby care category,” said Sanjay Nadkarni, chief executive officer, Mahindra Internet Commerce.

“The Baby Oye acquisition has helped us to step up our e-commerce foray with consumer insights, inventory management, user experience and shipping,” he added.

The integrated website is expected to complement Mahindra Retail’s network of 115 stores. With Baby Oye, Mahindra Retail expects a 10-12 per cent revenue contribution from e-commerce in the next financial year and 20-25 per cent in coming years.

The Godrej Group’s gourmet food retail arm Nature’s Basket is regrouping under recently bought online grocery retailer Ek Stop.com as its online platform. Nature’s Basket has 32 stores in Mumbai, Pune, Bangalore, Delhi and Hyderabad, and provides home delivery of products bought online in these cities.

“Baby care and gourmet food are niche categories. Acquisitions will help in building scale,” said a senior partner and director at Boston Consulting Group.

According to him, acquisitions also help transform mind and skill sets required for e-commerce. “That is why you see physical retailers buying e-commerce firms globally,” he said.

Kishore Biyani’s gourmet retail chain Foodhall, however, has its own online portal and Reliance Retail is conducting pilots with Reliance Fresh Direct for grocery supplies in Mumbai. Experts said growth through acquisitions would help companies expand without having to spend too much.

“Mahindra’s acquisition of Baby Oye is a head start for the retailer without spending too much cash,” said Arvind Singhal, chairman of Technopak Advisors. “If the Tatas and Birlas want to buy Snapdeal or Flipkart, it would be very expensive because valuations of e-commcerce sites are very high,” Singhal added.

BABY BOOM

• Mahindra Retail has brought its online venture Momandmeshop.in under acquired online retailer Babyoye.com. It plans a single website.
• Mahindra Retail operates baby products and maternity stores Mom & Me.
• The integrated website is expected to complement Mahindra Retail’s network of 115 stores
• The Godrej Group’s gourmet food retail arm Nature’s Basket is regrouping under recently bought online grocery retailer Ek Stop.com as its online platform