Amazon India has approached Swiggy for a potential deal involving its quick commerce business, Instamart, sources told the Economic Times. This development comes as Swiggy confidentially filed draft documents with SEBI for an INR 10,414 crore (USD 1.25 billion) public offering, marking one of the largest IPOs for a new-age internet firm.

“Amazon has shown interest in either acquiring a stake during the ongoing pre-IPO placement or proposing a buyout for Instamart. However, multiple roadblocks exist at the moment,” a source told ET.

No official offer has been made yet, and swift action from Amazon’s headquarters in Seattle is needed for discussions to advance, sources indicated. Early talks may not result in a transaction due to the deal's complicated structure.

“Swiggy is unlikely to sell only its quick commerce business, and Amazon isn’t interested in the food delivery market where growth is slowing,” the source added. “Acquiring the entire company would be too costly, given Swiggy’s USD 10-12 billion valuation. Additionally, Amazon typically doesn’t take minority stakes.”

Swiggy is expected to price itself at a substantial discount to rival Zomato, which has a market cap of INR 1.9 lakh crore. Separate valuations for Swiggy's and Zomato’s quick commerce verticals have not been provided, though a Goldman Sachs report in April valued Blinkit, Zomato’s quick commerce unit, at USD 13 billion.

Amazon’s interest in Instamart aligns with its efforts to develop a quick commerce initiative in India. However, launching a separate vertical for quick deliveries will require global approval, as Amazon does not currently offer this service in any market worldwide.

Quick commerce has brought new competition in the market for e-commerce companies. Companies are now focusing on faster delivery. In this series, Swiggy launched Instamart while Zomato launched Blinkit in the market to become a part of the quick commerce business. Whereas, a Mumbai-based start-up, Zepto is competing with both of them in this business.

Flipkart is also eyeing to expand its business and for this, the company has received a billion-dollar (approx INR 8,300 crore) fund from its parent company Walmart. The company is going to launch its new business in the name of Flipkart Minutes.

India's ecommerce market grew 18-20% by value in the first six months of this year with grocery sales surging over 38%, driven largely by a sharp uptick in quick commerce, according to estimates by 1Lattice and Datum Intelligence. Nearly 40% of online grocery sales now come from quick commerce. Between 2021 and 2023, the segment has grown 230%, led by the top three.

Article Source – The Economic Times