Bengaluru: New-age logistics startup Xpressbees has raised a fresh round of $110 million from Norwest Venture Partners, Investcorp and Gaja Capital. The move comes as demand for e-commerce delivery services has reached a new high due to the pandemic. The latest round will value the Pune-based company at close to $400 million.
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.
Nearly three years ago, Xpressbees had raised capital from Chinese e-commerce giant Alibaba. Investors have been looking to back logistics players which have been benefiting from the online shopping boom. Xpressbees plans to use the new capital to rapidly expand its delivery network from about 12,000 pin codes across the country to over 20,000 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, and has a target of Rs 2,000 crore for FY22.
Xpressbees sees a huge opportunity to help traditional retailers and consumer brands sell their products online, as customer 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 do both business-to-consumer (B2C) and business-to-business (B2B) deliveries from the same stock or warehouse,” said Saha. He added that the company 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 that have a background in logistics to run service centres and warehouses. Out of over 2,000 centres on its network, more than 1,500 are run by these local entrepreneurs themselves, while the remaining are owned by the company. This allows it 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 is not possible in a traditional model,” 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. SEE ALL COMMENTSADD COMMENT
Xpressbees is the logistics business that, in September 2015, was spun out of baby and maternity products retailer FirstCry, which was co-founded by Saha and Supam Maheshwari in 2010. FirstCry had started the 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.