E-commerce giant Amazon has reportedly made its first investment into the French market: it has acquired a 25% stake in Colis Privé, a delivery company that competes in France against the likes of state-owned La Poste, and global giants TNT, DHL, UPS and FedEx to deliver parcels. The news was first reported by the French site le Journal du Net, which claims it has had direct confirmation. We are still awaiting direct confirmation ourselves.
Terms of the investment were not disclosed.
If accurate, the move makes a lot of sense for a number of reasons. In the U.S., Amazon has built up a formidable logistics operation. But to improve margins and general efficiency, it has been slowly working on ways of extending that even further, with reports last week that it is testing a parcel delivery service in San Francisco, Los Angeles and New York. Last-mile delivery is something that companies like Google and eBay are also exploring.
Amazon has been making a lot of moves to improve operations outside of its home market. That has included building up Kindle businesses in countries like Russia and Brazil, but also more developments on the side of physical goods, too. That’s included testing “mom and pop shop delivery” in India.
In France, it looks like Amazon is partnering with a local player, at least in the initial stages, rather than building something out from scratch on its own as it is in the U.S.
Le Journal estimates that in France, Amazon ships around 50 million packages annually. With that kind of scale, if Amazon can better control distribution to the customer, it can reduce its own costs more, and potentially also pass that savings on to users, or at least use it to get more aggressive on pricing against its competitors.
Colis Prive is a strategic bet for Amazon in a couple of ways: one of its two depots in the country happen to be right next to one of Amazon’s biggest French warehouses (playing up the idea of cost-reduction).
But it is also a significant move for the company at a time when it has faced significant backlash in France over accusations of it destroying French businesses. That has seen “anti-Amazon” legislation — for example forbidding Amazon to offer free shipping on books — get raised. (That law, by the way, has now been passed in France but is facing potential blockage at the EU level.)
Taking a stake in a local business means that even if Amazon cannot make aggressive price cuts on one front, it can try to reduce costs in another, and it will be doing so by investing in a French business no less.
Those who have been up in arms over Amazon’s role in France will either love them for making the move, or hate them for having figured out a way to wiggle out of what would have been a significant penalty on doing business in the country.
In any case, it could be a match made in anti-socialist heaven. Colis Prive itself appears to have been borne out of a will to rage against the French machine: it was originally founded in 1993 as “Distrihome” by cosmetics magnate Yves Rocher, as an alternative to La Poste during a particularly strong wave of union strikes. As of 2012, the company says that it employs 300 people and has distributed more than 25 million packages.