JSE listed logistics company Imperial recently announced it has acquired specialised warehousing and distribution management business, Parcelninja on 1 February 2021.
This acquisition supports Imperial’s strategic ambitions to accelerate its digital capabilities and expand its logistics services into last-mile distribution and ecommerce fulfilment.
In simple terms, Parcelninja makes it easy for Imperial to become a much bigger player in the South African ecommerce market.
To really understand the deal, you have to go back to 2013 when Justin Drennan, Ryan Drennan, and Terence Murphy started Parcelninja.
The founders were experienced entrepreneurs. They started WantItAll, helped grow Superbalist, and partnered with Makro to serve its ecommerce needs.
They were ready for a new challenge and launched Parcelninja which makes it possible for online shops to outsource most of their ecommerce needs.
With in-depth knowledge of the South African online shopping market, they knew what companies needed and how they can add value.
To make it easy to migrate to Parcelninja, they offer integration into existing ecommerce engines, smart product warehousing, picking and packing, courier services, and real-time reporting.
It was an instant hit. Many top online shops moved their logistics to Parcelninja, including Groupon, eBucks, and Superbalist.
Their rapid growth helped them to secure a R20-million investment from UK-based C5 Holdings. This money was used to expand their operations.
They upgraded their 450 square meter warehouse, which they started in 2013, to a new 3,600 square meter facility in 2016 to accommodate their growing client base.
Last year they moved into an even bigger warehouse – a 6,100 square meter building that supports twice the height expansion. This gives them much more capacity to grow.
Parcelninja now services 150 active customers and employs 115 people, which can grow to 130 during peak periods like Black Friday.
Parcelninja’s picking activity has increased by around 400% over the last year, with revenue rising by 65%.
The company’s expansion is partly a result of its route to market strategy which has resulted in an increase in FMCG clients. This includes distribution to spaza shops.
With such impressive growth, it raises the question as to why the shareholders decided to sell the company.
Parcelninja CEO Justin Drennan explained when they started the business, they always envisioned selling it to a larger logistics business that was looking for ecommerce fulfilment capabilities.
“We were early to market, but always believed in the larger opportunity around e-commerce. With Covid-19, that accelerated the opportunity,” he said.
“Together with Imperial, we are able to scale the business much quicker, and really leverage our technology and skillset across the continent.”
Parcelninja had several potential suitors over the years, but Drennan said Imperial was a logical fit.
“We’ve had an existing relationship with the Imperial team for a number of years and always saw an alignment of values and opportunities,” he said.
The big question which most people have is – how much?
The value of the acquisition was not disclosed, but it is understood that it is one of the biggest ecommerce deals ever in South Africa.
Drennan did reveal that Parcelninja was valued on revenue and profitability multiples.
Non-active shareholders exited through the outright purchase of ecommerce fulfilment capabilities in February.
The good news for Parcelninja clients is that there will be no change in operations, processes, or management.
Synergies with Imperial will, however, be explored and introduced over time. This includes leveraging Imperial’s warehouse footprint for regional expansion in South Africa and beyond.