Pickrr buy will boost our overall transactions by 30-40%: Shiprocket CEO

Yatti Soni | | Updated on: Jun 15, 2022

We will mostly acquire companies in tech,says Saahil Goel

Zomato-backed Shiprocket announced the signing of an agreement to acquire 100 per cent stake in its rival Pickrr for $200 million. Shiprocket is an aggregator of logistics services and helps companies with other services like payments, warehousing and others. Shiprocket CEO Saahil Goel spoke to BusinessLine on the rationale behind the deal and the company’s future acquisition strategy.

Given that Pickrr is a major player in the logistics market, what will Shiprocket’s market share be post this acquisition?

We will have a very significant part of the market. This is a good 30- 40 per cent boost to our overall transactions and is also complementary because they have a merchant base that we were not heavily focused on earlier. We were trying to, but because their systems, processes, team, etc, were far more geared to doing a better job at that larger enterprise customer base.

In a media interaction, Pickrr had said it was burning dollars and its gross margins were depleting in its attempts to acquire the same customers as Shiprocket. Was Shiprocket also burning cash in this chase for customer acquisition?

We were not burning cash but I think it was just overall not efficient for both of us. We have a much larger base of customers and we also have customers that are longtail in nature. Our seller base is more longtail, their seller base was larger customers. That is how we were complementary in the market.

With our longtail customer base, the chances of burning money across tens of thousands of people is very little, but across a few top customers sometimes it is easy to end up burning money. So it was becoming an inefficient game for them, and to some extent for us too. While we may not be burning money, we were leaving money on the table, which is never good. If there is a way to make money, then one has to prioritise that. 

Will Shiprocket look at more acquisitions?

Acquisitions can be both opportunistic and strategic. A big part of our mandate is to deliver our outcome in the most efficient way, most efficient use of capital and most efficient use of time. In that equation, whenever we find opportunities that are better off built inorganically, we will always consider them.

We will mostly acquire companies in tech. We are very big on omni-channel, so POS (point of sale) integrations, customer support integrations, tracking, loyalty, returns, anything to do with payment. Those are all the needs that our merchants have, so on all those aspects we will have an opportunistic acquisition mindset. In terms of what can we do more to strengthen our stack and do things quickly. 

“Sometimes you have to look at acquisitions from a business building perspective. In trying to build something, even paying a high price for an acquisition can be right and even paying a lower price can be wrong.”Saahil GoelCEO of Shiprocket  

Do you believe this is a good time for acquisitions because of the global funding crunch?

There are two ways of looking at acquisition, one is the financial way where you say market is down, I have cash so it is the right time to make acquisitions. I am not saying this is wrong, but sometimes you have to look at acquisitions from a business building perspective. In trying to build something, even paying a high price for an acquisition can be right and even paying a lower price can be wrong.

Was Pickrr profitable at the time of acquisition? How do you see this acquisition impacting your path to profitability?

There might be some burn in Pickrr’s business because of new experiments and investments etc, but there is no fundamental burn in their business. In the case of Shiprocket, we were profitable in In FY21. In FY 22, we might be mildly unprofitable because of our new investments, but core business continues to make money and in FY23 also we are seeing core business continuing to make money. There might be some burn because of our expansion in Saudi but we are not fundamentally designed to burn money. 

Published on June 15, 2022
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