Reliance-funded Milkbasket was India’s first and largest micro-delivery service for milk, groceries, and daily essentials. However, it wasn’t a part of Reliance since its beginning. Although the firm witnessed a breakthrough success in the beginning, soon it landed in a topsy-turvy journey.
Not only did it lay off 600 employees but also may lose its identity. Apart from going through an economic downturn, it showed a lackluster performance.
What a sad story!
Are you curious to know how did Reliance-funded Milkbasket fail?
If yes, then stick to this write-up as we will unravel the anomaly failure of a skyrocketing startup!
A Brief History of Reliance Funded MilkBasket
A portion of wholesome nutritious food that you will find in almost every Indian household is none other than Milk! As per Statista, India consumed about 85 million metric tons of milk in 2022. Also, we contribute over 24% of global milk production. It shows that we are one of the largest consumers of milk.
Okay, so how is it related to Milkbasket? You may ask.
Let me first ask you, how do you obtain milk for your household? Either by directly purchasing from milk farms or packaged milk from dairy shops. In case you are a super-busy individual, what would you do? You would opt for milk delivery! Even local milkmen deliver the milk too from door to door. Don’t they? Yes, it is true. But here, we are talking about the delivery of packaged milk. The home delivery of packaged milk was still an unopened segment back in 2015.
Seeing the demand for home delivery of package milk, Milkbasket, a milk-delivery startup came into existence. Milkbasket is associated with the fresh supply of milk and daily needed groceries like eggs, butter, and bread. You can call it a “micro-delivery service.”
Milkbasket: An Overview
Have a look at the brief overview of the company-
|Legal Name||Doorstep Retail Solutions Pvt. Ltd.|
|Headquarters||Gurugram (Haryana, India)|
|Operating Segment||Delivery Services of Food & Beverage|
|Founders||Anant Goel, Anurag Jain, Yatish Talavdia, Ashish Goel|
|Parent Company||Reliance Retail Ventures Limited|
|Date of Acquisition||October 2021|
|Milkbasket Competitors||Big Basket, Blinkit, Dunzo, Zepto, Swiggy Instamart, Supr Daily, etc.|
It offers a seamless service. All you need to do is to place your orders by midnight and you will get the delivery by 7 am. Really? This much early? Yes, as early as that!
In October 2021, Reliance Retail Ventures acquired a 96.49% stake in Milkbasket.
How much Reliance paid for the Milkbasket acquisition? You may ask.
The conglomerate- Reliance Retail paid $40 million to acquire a majority stake in Milkbasket.
What’s the reason behind it? Go through the next section to find out the prime objective of reliance for acquiring Milkbasket.
Why did Milkbasket fail?
See, Milkbasket was a superhit startup idea in the Delhi NCR market. Within 5 years of its launch, it garnered over 1.5 million users across the following cities-
Sadly, it witnessed three unfortunate incidents-
- High competition
- Milkbasket Controversy
- Heavy Financial Losses
Let’s delve into it one by one-
1. High Competition: Milkbasket Competitors
Milkbasket mainly focused on the delivery of milk. But it arrived late in the e-grocery segment. It had to compete with well-established players in the grocery delivery segment like-
2. Milkbasket Controversy
What is the Milkbasket controversy? You may ask. Well, the controversy surrounds Milkbasket’s legal battle and change in ownership. It involved the following sequence of events-
- Venture Investor- Kalaari Capital abruptly sold its entire 15.26% stake to MN Televentures led by Mahendra Nahata.
- This led to a heavy dispute and stiff resistance from Milkbasket’s board members.
- Simultaneously, other potent investors backed out. Because they suspected a close association of MN Televentures with Reliance.
- Milkbasket faced a legal battle with MN Televentures for refusing to onboard them after Kalaari’s exit. MN Televentures accused Milkbasket’s registered entity Aaidea Solutions, of violating Sections 56 and 58 of the Companies Act 2013. Because the latter refused to register the transfer of shares.
- This series of events has created uncertainty and turmoil within the company.
- The controversy led to the resignation of Milkbasket’s co-founder and CEO, Anant Goel. Another reason for his resignation was the joining of two Reliance Industries executives on the board after the acquisition.
3. Heavy Financial Losses
Despite a significant user base, it was going through a rough patch with tremendous losses.
|Fiscal Year||Milkbasket Financial Losses|
As you can see, Milkbasket’s losses continued to rise. And when a company drowns in deep losses, it has two options. Either to permanently shut down its operations or to merge into a large entity.
Milkbasket chose the latter!
Why did Reliance acquire/fund Milkbasket?
Reliance acquired Milkbasket to expand its arm to the e-grocery segment. But why only Milkbasket and not any other startup? You may ask. Well, due to Milkbasket’s topsy-turvy journey that you read above. Its failure as an independent entity led to its acquisition by Reliance.
In October 2021, Milkbasket merged with Reliance Retail Ventures Limited. The deal was worth $40 million.
This wasn’t a cakewalk for the startup.
Being a late entrant in the e-grocery space and heavy financial losses, it couldn’t win the trust of the majority of investors.
Simultaneously, Reliance was looking to explore the e-grocery space. Remember, Jio Mart was in the pilot phase in those days. That’s why Reliance was keen to acquire a well-established e-grocery startup with a considerable and loyal user base. And Milkbasket was a perfect fit for it!
Therefore, Reliance acquired the subscription-based micro-delivery service by paying $40 million. It was one of the conglomerate’s efforts to expand its presence in the e-commerce and grocery delivery sector.
Post-acquisition Condition of Milkbasket & its side effects
After the acquisition, Milkbasket witnessed the following events-
1. Aggressive Expansion
The e-grocery firm witnessed a massive expansion after being acquired by Reliance Retail. The conglomerate aided the expansion of Milkbasket into 30 cities including-
Sounds interesting. Isn’t it? Well, just like every coin has two faces, this acquisition was dual-faced too! How? You may ask. Go through the next section and you will know the answer.
Since its acquisition, the company has expanded to numerous cities. Simultaneously, Reliance laid off 25-30% staff of Milkbasket. It accounted for over 600 employees. As per the sources, the layoffs include offline marketing, sales, and head office teams.
Also, it included the top-level exits including-
- The only remaining co-founder: Yatish Talvadia
- Chief Operating Officer: Abhinav Imandi
- Chief Financial Officer: Gaurav Srivastava
So, what happened to the remaining staff? Did they continue to work in Reliance funded Milkbasket? A kind of! Means what? As per the reports, the remaining staff of Milkbasket were offered jobs at Jio SmartPoint and Smart Bazaar teams.
3. Milkbasket’s merger into JioMart
As per the recent reports, Reliance confirmed Milkbasket’s merger with JioMart, the bigger e-commerce platform of Reliance.
What is the reason for the merger?
See, both the subsidiaries have the same operating segment i.e. e-commerce. JioMart being the bigger and official e-commerce platform of Reliance will absorb Milkbasket, the e-grocery segment. Thus, the e-grocery segment will operate under the official e-commerce platform of Reliance.
This integration may lead to some realignment and relocation of roles across functions within the platform. But this will enhance the operational efficiency of the firms. Reliance’s e-commerce segment will be promoted only through a single brand.
The journey of Reliance funded Milkbasket shows how a startup with an efficient business model merged into a large entity. It shows that a firm can fail due to multiple reasons apart from its business model. Cut-throat competition, financial losses on a continuous basis, and most importantly the controversy led to the failure of Milkbasket.
The acquisition by Reliance might have given temporary relief to the firm. But the upcoming merger of Milkbasket with JioMart will finish the former’s existence including its name.
That was the whole story of Milkbasket born in 2015 and ending its existence in 2023 under the umbrella of Reliance!