Singapore Post is making it easier for its online retail clients to ship packages to shoppers in the United States and Europe.
The company announced it has acquired 71.1% of U.S. logistics provider Jagged Peak Inc. for $15.8 million. The acquisition will create a newly formed subsidiary known as SP Jagged Peak LLC. Officials of the two companies say the move will help Singapore Post move into the United States and Europe while allowing Jagged Peak to extend its retail clients’ access to Australia and eventually the rest of Asia-Pacific.
Lim Ho Kee, chairman of SingPost, says in a statement, “As SingPost pioneers and leads e-commerce logistics in Asia Pacific, we are casting our eyes beyond the region. Jagged Peak can enable end-to-end fulfilment of e-commerce orders across the U.S. SingPost is excited about this capability. This transaction is also part of our strategy to focus our resources on strengthening our geographical reach and the technology we employ as an e-commerce logistics company.”
Singapore Post, whose retail clients include Adidas and Levi’s, will use Jagged Peak’s more than 20 warehouses throughout the United States, Canada and Europe, and its Edge commerce software for order management, says Jagged Peak CEO Paul Demirdjian. Singapore Post will also use StorePoint, a new addition to the Edge software suite that lets retailers fulfill online orders from stores, with either in-store customer pick-up or ship-from-store capabilities, Demirdjian says.
In turn, Jagged Peak is enabling its clients to fulfill from Singapore Post’s warehouses in Asia-Pacific, says Jagged Peak president and chief operating officer Mike Mercier. Jagged Peak’s clients include Nestle Nespresso, Honeywell, United Healthcare, Tag Heuer and John Varvatos, Mercier says.
The remainder of the company’s stock, 28.9%, will continue to be owned by CEO Demirdjian and his wife, Primrose Demirdjian. The couple are directors, principal shareholders and founders of Jagged Peak.
Singapore Post’s second-largest investor, after Singapore Telecommunications, is China’s e-commerce giant Alibaba Group. Alibaba announced on July 8 that it invested $138.6 million to acquire an additional 5% stake in Singapore Post. In 2014, an Alibaba unit purchased a 10.35% stake in Singapore Post for $249 million. Alibaba also announced that it was investing $67.85 million for a 34% stake in Quantium Solutions International—a subsidiary of SingPost, which provides logistics and warehousing services to over 10 countries across Asia-Pacific.
James A. Tompkins, CEO of supply chain consulting and implementation firm Tompkins International, says the deal shows that Singapore Post needs Jagged Peak’s order management system to become a more robust third-party logistics provider, and that Southeast Asia is ripe for substantial e-commerce growth.
Also, since Alibaba is a shareholder in both Singapore Post and logistics service Cainiao Network Technology Co. Ltd., Tompkins says it would make sense for Alibaba to use Singapore Post as its delivery service throughout Singapore Post’s Southeast Asian territory, Tompkins says.
“Alibaba sees Southeast Asia as ripe for substantial growth in e-commerce, just as it sees China is, and will want to keep the Rakuten’s from Japan and the JD Worldwide’s of China at arm’s length and make sure it has a strong relationship with the delivery agent,” he says. Rakuten Inc. is Japan’s largest e-commerce and Internet services provider, and JD.com Inc. is one of the largest e-commerce companies in China, considered a chief competitor to Alibaba. JD.com is No. 1 in the 2015 Internet Retailer China 500, which ranks retailers by their online sales in China. While Alibaba operates China’s largest online marketplaces, it, like eBay Inc., does not own merchandise and as a result is not ranked in the China 500.
For the first six months of fiscal 2015 ended June 26, 2015, Jagged Peak reported:
- Net revenues of $33.3 million, up 20.3% from $27.7 million during the same time last year.
- Net income of $643,900, compared to a net loss of $307,200 during the same time last year.