Amazon in Acquisition Talks For Swiggy's Instamart

Amazon has initiated talks with Swiggy over a potential deal to acquire its quick commerce subsidiary, Instamart. The development comes after Swiggy filed a draft red herring prospectus (DRHP) for an initial public offering (IPO) for Rs 10,414 crore ($1.25 billion).

The IPO is considered to be the largest for a new-age internet firm, as reported by Economic Times.

There’s no official offer on the table yet, but it is stated that Amazon has to move swiftly if it wants the talks to progress to the next stage, ET reported citing sources.

There are chances that the early discussions may not materialise owing to the complicated nature of the deal in its present form. “Swiggy is unlikely to sell only its quick commerce business and Amazon won’t be interested in the food delivery space where growth is starting to plateau,” the report said.

Buying the entire company will be too expensive for Amazon at a valuation of $10-12 billion as it is not typically known to pick up minority stakes.

The Seattle-based e-commerce gaint has been working on its quick commerce initiative for several months. However, the platform would require global clearance as it does not offer quick deliveries in its markets globally.

Likewise, Flipkart explored a similar deal with Swiggy but it fell through due to a valuation mismatch.

In recent times, many legacy e-commerce platforms like Amazon and Flipkart platforms are ramping up their quick commerce powerplay.

As the sector is seeing tremendous growth over the last few years, the likes of Swiggy’s Instamart, Zomato’s Blinkit, and Zepto are seen as competitors by legacy e-commerce platforms for venturing beyond the grocery retail.

India's ecommerce market grew 18-20 per cent by value in the first six months of this year with grocery sales surging over 38 per cent, driven largely by a sharp uptick in quick commerce as per reports.

Nearly 40 per cent of online grocery sales now coming from quick commerce between 2021 and 2023, the segment has grown 230 per cent, led by the top three.

A report by Goldman Sachs recently had valued Blinkit, Zomato’s quick commerce unit, at 13$ billion.

Global brokerages estimate the quick commerce market will be worth $6 billion by 2025, up from a negligible level about three years ago.