Amazon India has approached IPO-bound Swiggy for a potential deal involving its quick commerce business under Instamart, the Economic Times reported on Monday.
“Amazon has swooped in with interest to either pick up a stake in the ongoing pre-IPO placement or a buyout proposal for Instamart… but there are multiple roadblocks at the moment,” the report said, citing a source.
The early discussions may not lead to a transaction considering the complicated structure of the deal in its present form, these people said. “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,” said the person cited above.
“Buying the entire company will be too expensive at a $10-12 billion valuation. Also, Amazon is not typically known to pick up minority stakes,” the person said.
Swiggy, which competes with Reliance-backed Dunzo, Zepto, and Zomato-backed Blinkit, plans to launch a $1.25 billion initial public offering, to grab a share of the fast-growing quick commerce market in India. The players are vying for the attention of online shoppers in India’s $1-trillion retail industry, along with giants Amazon and Walmart-backed Flipkart.
What drives players to fight for the lucrative pie by offering competitive discounts, often at the cost of their margins, is the user penetration rate in India for quick commerce, which is expected to touch 3.8% by 2028 from 1.8% in 2024.
Flush with funds, quick commerce companies that started out delivering groceries and perishables slowly expanded their offerings to include books, plants, phone chargers, board games, and bouquets – all delivered within minutes. Last month, Zepto raised $665 million in a funding round valuing the Indian quick commerce at $3.6 billion, as it looks to double its store count amid rising competition and amp up its plans to go public by 2025.
