Amazon along with Ecom Express are in the initial discussion phase for the possibility of a co-promotional partnership in Ecom Express
Ecom Express which turned profitable in FY21 is now valued at around $800 million and has recently put off plans to proceed with an IPO of INR 4,680 crore.
Amazon is the only company that doesn’t have an internal delivery system, is believed to be in the process of building logistic capabilities by acquiring
As e-commerce continues to gain momentum in the Indian retail industry, Amazon (who doesn’t own an internal shipping system) is said to be planning to buy an entire stake in the logistics company Ecom Express for around $500 Mn-$600 Million.
According to an Mint article the e-commerce giant is planning to establish an internal logistics division in order to compete with its competitor Flipkart. The report states the following: Amazon as well as Ecom Express are in the initial discussion stages to discuss a possible partnership with Ecom Express. The e-commerce giant is likely to choose 51% of the stake offering an exit to Warburg Pincus.
Although Ecom Express is already among Amazon’s delivery partners, it also serves many other ecommerce businesses, including Paytm, Nykaa, Myntra and many more. In the past, the logistics market in India was valued at $250 billion and is predicted to reach $380 billion in 2025. It is no surprise that Amazon is not content to remain in the shadows when competitors Jio and Flipkart have taken over the market by establishing their own logistics departments.
The deal could be worth it at Delhi NCR-based logistics firm at $1.2 Billion, an increase from the current estimate of around $800 million.
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To date, Amazon subsidiaries have acquired four startups from India including Glowroad, Emvantage Payments, Tapzo and Westland. But none of these companies is as large like Ecom Express.
The transaction, that is in the initial stage could be under the attention of the antitrust watchdogs on two occasions : one the more recent M&A policies as well as Ecom Express’s IPO plans.
Ecom Express’ Stalled IPO Plans
The decision comes just when Ecom Express had decided to hold off on launching the INR 4,680 crore IPO. The 10-year-old company is rather looking for a $100 million-$150 million investment from venture and private equity capital investors.
Therefore, Amazon’s major acquisition is believed to help ease the exit of a few members of Ecom Express’ shareholders and also to raise fresh funds for Ecom Express.
An Amazon spokesperson did not speak to the news, as speculation. An e-mail inquiry sent at Ecom Express did not elicit any response until the date of publishing the report.
Ecom Express is India’s third-largest logistics company, and is second in size to Delhivery as well as XpressBees. Although Delhivery is already listed on the market (giving an excellent start on day one of the listing) and XpressBees’s XpressBees’s subsidiary company FirstCry has delayed the date of its IPO plans.
The company was founded in the year 2000 by TA Krishnan Manju Dhawan K Satyanarayana and Late Sanjeev Sxena, Ecom Express offers logistics solutions for Indian E-commerce businesses and operates in 2.7Kplus sites across India.
Just last month, it announced that it would add more than fifty thousand delivery partners by the end of September “particularly to cater to the expected rise in customer demand in the holiday season’. The company currently employs close to 30K delivery service providers as well as full-time employees.
For FY21 Ecom Express posted revenues of INR 1,622 crore and an income of INR 57 Cr , as contrast to revenues of INR 1,018 Cr FY20 with the loss that was INR 313.5 Cr.
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