Logistics company Xpressbees raises $110 million as e-commerce booms

NEW DELHI: New age logistics startup XpressBees has raised a new round of $110 million from Norwest Venture Partners, Investcorp and Gaja Capital as the demand for e-commerce delivery services has reached new high due to the Covid-19 pandemic. The new round will value the Pune-based company at close to $400 million, and comes nearly three years after it raised capital from Chinese e-commerce giant Alibaba as investor look to back logistics players benefitting from online shopping boom. The transaction will also give an exit to mobile payments company Paytm, which invested in Xpressbees in 2015, with 3-4 times returns. Some other financial investors like Vertex Ventures and NEA have also taken an exit in this round. About $30 million from the $110 million has been used to buy shares from existing investors. XpressBees plans to use the capital to rapidly expand its delivery network from about 12,000 pin codes across the country to over 20,000 pin codes before the start of sale season in 2020, said its co-founder and CEO, Amitava Saha. The company currently ships 7-8 lakh parcels a day, up over five times from about 1.4 lakh parcels a day when it raised capital from Alibaba in early 2018. Xpressbees expects to hit Rs 1,100-1,200 crore in revenues this financial year with EBITDA profitability, with toppling number target of Rs 2,000 crore in FY22. Now Xpressbees, who sees a huge opportunity to help traditional retailers and consumer brands sell their products online, as consumer habits have shifted during the pandemic. “The area that we want to focus on is omni-channel because we understand that well given that we came out of Firstcry (which has a network of 400 stores besides e-commerce sales). We want to help companies to both business to consumer (B2C) and business to business deliveries from the same stock or warehouse,” said Saha, adding that it plans to offer a “premium service” with an emphasis on technology. Xpressbees also operates through a different model, where it works with small local entrepreneurs who have a background in logistics to run service centres and warehouses. Out of over 2,000 centres on its network, over 1,500 are run by these entrepreneurs themselves while the remaining are owned by the company. This allows the company to leverage its technology and expand the network without taking on capex. “We started on this model 3-4 years ago as it can scale fast and be executed cost-effectively. We have been able to expand during the lockdown from 9,200 to 12,000 pin codes which in a traditional model is not possible,” said Saha. This is what investors feel differentiates it from other players in the market. “The company has been able to scale to profitability by utilising a fraction of the funds raised by similar companies. Xpressbees has also been able to utilise technology to seamlessly weave its owned, franchised and outsourced delivery infrastructure to provide exceptional customer experience driven by tech which ensures complete visibility, analytics and real-time tracking at a micro-transaction level,” said Niren Shah, MD and head of Norwest Venture Partners in India. The company competes with other online retail focused logistics services providers like Softbank-backed Delhivery and Warburg Pincus-backed Ecom Express. Xpressbees is the logistics business spun out in September 2015 of baby and maternity products retailer Firstcry, which was co-founded by Saha and Supam Maheshwari in 2010. Firstcry had started logistics business in 2012 when it decided to start express deliveries of its products. The unit then forayed into third-party logistics (3PL) at the beginning of 2015, finally becoming an independent business. Since then Saha runs Xpressbees while Maheshwari runs Firstcry, which is backed by Softbank. Both had worked together at e-learning startup Brainvisa, where Maheshwari was the co-founder and Saha was a senior executive. “Amitava and Supam are proven entrepreneurs and they have the benefit of recycling their experience from their earlier stints, their frugality, not going after vanity metrics. They have built XpressBees with one of the most diversified customer base in the sector,” said Gopal Jain, managing partner at Gaja Capital.