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  December 6th, 2022 | Written by

M&A in the E-commerce Logistics Landscape

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With the boom in e-commerce post-pandemic, incumbent logistics players have been making mergers and acquisitions to improve their e-commerce offerings in a growing market.

Some of UPS’ most recent acquisitions are predominantly focused on strengthening UPS’ e-commerce last-mile services. For example, in May 2022 UPS acquired last-mile technology provider Delivery Solutions, a software-as-a-service delivery orchestration platform which enables retail omnichannel delivery options. According to UPS, Delivery Solutions’ leading technology helps merchants offer their customers more flexibility and an engaging online purchasing experience as they increasingly look for an experience-driven omnichannel strategy.

UPS also acquired Roadie, a technology platform that enables local same-day delivery with operations throughout the U.S., in 2021. Roadie often provides service for shipments not compatible with the UPS network because of their size and perishable nature, and often because they are in shopping bags without the packaging required to move through the UPS system.  The Roadie technology platform is purpose-built to connect merchants and consumers with contract drivers to enable efficient and scalable same-day local delivery services nationwide.

Similarly, DHL Supply Chain has set out to improve and scale its e-commerce fulfilment services through several acquisitions. In 2022, DHL acquired a majority stake in Monta, as well as a minority stake in Link Commerce.

DHL’s minority acquisition of Link Commerce expanded the company’s reach into Africa. Link Commerce offers a white-label solution for doing online-sales in emerging markets. Retailers can plug into the company’s e-commerce platform to create a web-based storefront that manages payments and logistics.  Through the acquisition, DHL hopes to build a broader client base globally using a business built in Africa. Sellers can also use the Link Commerce platform to create a web-based storefront that manages payments and logistics. This is particularly valuable to sellers looking to sell to African consumers as Link Commerce will handle the payment hurdles in the region, allowing US and UK sellers to grow and scale. In 2019, Link Commerce brought more than 200 US and US sellers online to African consumers in 34 countries. Link Commerce now functions for DHL under its e-commerce platform DHL Africa eShop.

Furthermore, DHL’s majority acquisition of Monta was intended to create a partnership to serve small and mid-sized webshops in e-fulfillment and online sales. Monta, located in Netherlands, has a workforce of 1,000 people and 14 fulfilment locations. At the time of its initial announcement of partnership with DHL, Monta served 1,500 SME e-sellers through a range of software-enabled fulfilment services and warehouse management software. Through this acquisition, DHL looks to widen its customer base to include more SMEs by utilising both Monta’s e-fulfilment capabilities and DHL’s existing international logistics infrastructure.

Overall, incumbents have been throwing money into acquisitions to gain market share of a rapid growing e-commerce vertical, but there are questions around whether this will continue into 2023.

There have been conflicting reports regarding whether M&A activity in the logistics sector has been slowing during 2022. According to BDO M&A activity in the UK, the largest e-commerce logistics market in Europe, significantly slowed in Q3 2022 as companies assessed the impact of the war and soaring inflation. Several sector bankers have also cautioned that logistics M&A is slowing significantly in the North America region. This has also seen reduced funding for e-commerce start-up companies, which incumbents often look at acquiring.

As the global economy enters a pronounced slowdown and inflation rises at historic rates, it remains to be seen whether M&A activity in this market will continue at the same pace as the beginning of the pandemic.