SUMMARY
Amazon and Ecom Express are in the preliminary discussion stage for a potential co-promotership in Ecom Express
Ecom Express which turned profitable in FY21 is currently valued at nearly $800 Mn and had recently stalled plans to move ahead with INR 4,680 Cr IPO
Amazon, which doesn’t own an in-house delivery system, is reportedly looking to build logistic capabilities with the acquisition
As ecommerce gains momentum within the Indian retail ecosystem, Amazon (who doesn’t own an in-house delivery system) is reportedly looking to pick a majority stake in logistics startup Ecom Express for around $500 Mn-$600 Mn.
According to a Mint report, the ecommerce giant aims to build an in-house logistics division to catch up with its rival, Flipkart. The report adds that Amazon and Ecom Express are in the preliminary discussion stage for a potential co-promotership in Ecom Express. The ecommerce giant is likely to pick a 51% stake by giving an exit to Warburg Pincus.
While Ecom Express is already among Amazon’s delivery partners, it serves a host of other ecommerce companies including Paytm, Nykaa, Myntra, among others. To note, India’s logistics market was worth $250 Bn and is expected to grow to $380 Bn by 2025. Naturally, Amazon does not want to be left behind where rivals Jio and Flipkart take the market with their in-house logistics divisions.
The deal is likely to value the Delhi NCR-based logistics startup at $1.2 Bn, up from the current valuation of approximately $800 Mn.
So far, Amazon subsidiaries have acquired four startups in India, namely Glowroad, Emvantage Payments, Tapzo and Westland. But none of these startups is as big as Ecom Express.
This deal, which is yet in the preliminary stage, may bring the watchful eye of the antitrust watchdog scrutiny on two occasions – one the newer M&A policies and Ecom Express’s IPO plans.
Ecom Express’ Stalled IPO Plans
The move comes shortly after Ecom Express had decided to wait before moving ahead with its INR 4,680 Cr IPO. The ten-year-old startup has been instead looking to raise $100 Mn-$150 Mn from private equity and venture capital investors.
Thus, Amazon’s majority acquisition is reportedly a move to facilitate the exit of some of Ecom Express’ shareholders and also bring in fresh capital for the company.
An Amazon spokesperson declined to comment on the development calling it speculation and emailed query sent to Ecom Express did not elicit a response till the time of filing the story.
Ecom Express is India’s third-largest logistics startup, only next to Delhivery and XpressBees. While Delhivery has already listed on the bourses (giving a satisfactory opening on the day of listing), XpressBees’s sister company FirstCry postponed its IPO plans.
Founded by TA Krishnan, Manju Dhawan, K Satyanarayana and Late Sanjeev Saxena, Ecom Express offers logistics solutions to Indian ecommerce companies and operates across 2.7K+ locations in India.
Only last month it announced that it will onboard over 50K delivery partners by September-end ‘especially to meet the anticipated surge in customer demand during the festive season’. It currently employs nearly 30K delivery partners and full-time employees.
In FY21, Ecom Express posted revenue of INR 1,622 Cr and a profit of INR 57 Cr as opposed to revenue of INR 1,018 Cr in FY20 at a loss of INR 313.5 Cr.
