Online food delivery firm Zomato, which listed on Indian bourses earlier this year, is in advance talks to invest in logistics aggregator Shiprocket in a $200-million round, sources have told Moneycontrol.
Zomato is likely to invest around $75 million in Shiprocket, sources said, in what will be the Gurgram-based company's first big-ticket investment after getting listed. The company is expected to diversify its bet in the logistics space with this investment.
The move comes at a time when quick commerce expansion is prompting companies to bolster their logistics ambitions.
In India, quick commerce, which is defined as the delivery of items under 45 minutes at a nominal charge, is expected to grow by 10-15 times over the next five years to become a $5 billion market by 2025, consulting firm RedSeer has said.
Zomato did not respond to Moneycontrol’s queries but is expected to inform the stock exchange about this deal over the next few days. The company's board is to meet on November 10.
Shiprocket founder did not respond to Moneycontrol’s calls and messages.
Zomato tried its hand in the grocery space earlier this year but exited following gaps in order fulfillment, poor customer experience and increasing competition from rivals.
However, it has also invested in grocery firm Grofers. While the deal was signed ahead of Zomato's public listing, the regulator's approval came later.
Shiprocket works with courier companies in India and connects merchants, consumers and supply-chain partners across thousands of pin codes in the country and around the world.
Apart from shipping services, Shiprocket also offers a technology stack to assist retailers in integrating their online stores such as Shopify, Magento, WooCommerce and Zoho for workflow, inventory, and order management.
The company has, so far, raised around $94 million, with the last funding coming in July when it raised $41.3 million. It was a Series-D1 funding led by PayPal Ventures and existing investor Bertelsmann India Investments.
Zomato founder Deepinder Goyal is also an angel investor in the company. He invested in Shiprocket in the July funding round.
The company says that D2C commerce forms roughly 15 percent of the overall e-commerce market in India, which is projected to grow to 30-35 percent over the next five years.
According to Harish HV, managing partner at ECube Investment Advisors, everything in the emerging businesses space was revolving around logistics. Companies want a lean inventory and such an investment could be seen as a strategic move.
Logistics, as a cost, had been steadily increasing as a percentage of the total cost topped by a hike in fuel prices and vehicle costs, he said.
“Companies are looking for innovative solutions to reduce these cost additions. The rise in the popularity of quick commerce is also increasing the demand for products to be available. You need to have a robust supply chain wherever your store is located with adequate stock," he said.
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