With Tata Digital filing an application with the Competition Commission of India (CCI) to clear its proposed acquisition of a 64% stake in the 10-year-old startup, BigBasket, the contours of India’s online retail are now clearly delineated.

Approval for the deal should come soon, considering the speed with which the competition regulator had cleared Reliance’s acquisition of Future Retail last November.

Supermarket Grocery Supplies-owned Big Basket has been one of the pioneers of the food and grocery delivery business and among the most successful startups in India. Its sale, while providing an exit option to its investors like Alibaba and Abraaj, also signals an end to the phase of the business in India in which startups provided all the impetus.

Flipkart’s 2018 sale to Walmart was the beginning of the end to a decade of entrepreneurial frenzy. While there are a few remaining ventures at the fringes of the rapidly growing e-commerce business, it is now a battleground featuring large Indian groups and multinationals like Amazon and Walmart-Flipkart, who have the lion’s share of the $33 billion business. Online sales in India grew a disappointing 7-8% last year, a period when the US and China posted a hefty 18-20% sales growth.

Still, future prospects are encouraging enough as Indians, having got a taste of shopping online during the pandemic-driven lockdown, eagerly embraced digital payments, a key driver of e-commerce growth. No wonder then that two of India’s biggest business groups–Reliance and Tata–have now thrown their hats, along with billions of dollars in investments, into the ring. What’s interesting is how both these groups are looking at leveraging distinctly different strengths as they look for success. Reliance, of course, is using the momentum gained from its success in telecom to construct its online retail foray around the Jio platform. For Tata, it is about taking its existing offline retail business comprising chains like Chroma and Trent into the digital space.

The pity, of course, is that the advent of these large groups in the sector is coming at the expense of the many small entrepreneurs who once dotted the space and held out the promise that one or more among them would emerge as India’s Alibaba or Jingdong Mall, the two Chinese startups that lord over the country’s retail sector or even Coupang, which in just 10 years has grown to become South Korea’s top online retailer.

Indeed, the contrast with how online retail has evolved in other developed markets, including the US, where the dominant player is a company that didn’t exist before 1994, couldn’t be sharper. Amazon’s staggering success galvanized e-commerce in that country, but it has also served as an exemplar of entrepreneurial success.

Tata’s gain, as well as that of Reliance, comes with the lingering regret that the dominance of big business in India will now extend to emerging sectors as well.

(Sundeep Khanna is the author of Azim Premji: The Man Beyond the Billions)

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