Image Source: Urban Acres
Amazon India has said it will merge its logistics unit, Amazon Transportation Services (ATS), with its main marketplace business, Amazon Seller Services. The move, which was recently cleared by the National Company Law Tribunal (NCLT), is to simplify operations, lower regulatory costs, and pool resources in one of Amazon's most challenged and fast-changing markets.
Background and Approval
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The board had approved the merger, and interim approval came from the Bengaluru bench of the NCLT on February 5, 2025.
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Amazon's board and regulatory filings affirm that the move is part of an effort to streamline the company's organizational framework in India.
Entities Involved
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Amazon Transportation Services (ATS): ATS was established in 2013 and provides courier, cargo transportation, and logistics services, generating more than 95% of its revenues from Amazon. In 2023, it started providing services to third-party customers as well.
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Amazon Seller Services: The principal marketplace platform, allowing third-party sellers to list and sell merchandise on Amazon India.
Strategic Rationale
The merger will:
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Reduce legal, regulatory, and tax compliance obligations of both companies.
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Facilitate more effective management of resources and infrastructure.
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Combine assets and reserves, thus enhancing the financial leverage of the combined entity.
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Facilitate greater investments in business growth and innovation.
Industry and Regulatory Context
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The action is at a time when local e-commerce players such as Flipkart (having its own logistics division, Ekart) and Meesho (which has introduced Valmo for logistics aggregation) are increasing competition.
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India's e-commerce rules compel marketplace models and impose arm's length transactions among platforms and their service providers. Amazon already has 99% stakes in both combining entities, so the merger is not likely to affect regulatory compliance.
Financial Snapshot
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In FY24, ATS had operating revenue of ₹4,889 crore (7.6% YoY growth) and a net loss decrease to ₹80 crore.
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Amazon Seller Services had operating revenue of ₹25,406 crore in FY24, up 14% year-on-year.
Operational and Market Impact
The consolidation is likely to:
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Enhance operational synergy and cost optimization.
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Increase alignment between marketplace and logistics divisions, enhancing Amazon's supply chain and customer experience.
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Help Amazon maintain its competitive advantage in India's growing e-commerce market.
The merger isn't directly associated with any prospective public listing of Amazon's India business, sources said.
Conclusion
Amazon's merger of its logistics and marketplace units in India marks a clear move towards operational efficiency and robustness in a difficult market. By bringing these key business segments together, Amazon hopes to rationalize compliance, drive costs, and bolster its position as a top e-commerce player in India.
Sources: Inc42, Economic Times, Entrackr, VAR India
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