BNPL – Buy Now Pay Later, was a concept popularised during the 2010s largely by consumer durable companies at retail stores targeting those who were purchasing products such as washing machines, refrigerators, high-end televisions, etc.
The convenience of spot approvals (with basic documentation) even for sums exceeding INR 50,000 at nominal interest rates was a boon to the aspiring middle class of India and consumers bought in abundance.
E-Commerce companies too tapped in to this market during the last few years and Amazon was among the first to drive this initiative when it acquired a 9% stake in Axio, formerly known as Capital Float.
Axio is now getting acquired by Amazon. The company has requested for approval from the nodal agencies and the Reserve Bank of India.
“In December, after successful completion of due diligence, we signed an agreement with Amazon for a proposed acquisition of axio. The transaction will now await the required regulatory approvals”, the company shared on a note in its official blog published on the company’s website.
Valued at USD 350 Mn during its peak 2019, the company’s valuation has gone down over the years.
Axio has till date raised USD 232 Mn since its inception in 2014 over 17 rounds from 35 Investors. In Aug. ‘24, the company had raised USD 20 Mn from Amazon Smbhav Venture Fund. The venture was founded by Gaurav Hinduja and Sashank Rishyasringa.
Lightrock, Ribbit Capital, Peak XV Partners are others who have invested in the company till date.
Axio has over 1 Crore customers with an AUM – Assets Under Management of INR 2,200 Cr. The platform owns a non-banking financial company (NBFC) licence under CapFloat Financial Services.
The company offers consumer loans and pay later loans through its own books as well as through partner lenders.
Amazon already possesses an Insurance Distributor license as well as a Prepaid Instrument (PPI) License. The Axio acquisition will further amplify its famed Fintech play.
Amazon has a clutch of fintech investments in companies such as Acko Insurance, Tonetag, BankBazaar, a lending marketplace and wealthtech firm Smallcase.
By focussing on customers who shop on the Amazon platform, Axio has significantly reduced its gross bad loans over the last two years.
Editor’s Note
Similar to our western counterparts during the 80s and 90s, India is moving towards a credit-first approach from being a conservative savings-led approach for the last 4 decades.
From house furniture to electronics, fashion products to mobile devices, younger Indians, especially under the age of 40 years are preferring to buy almost everything they own no credit.
Post Covid-19 lockdowns, several PSU Banks upped the game along with private banks to issue credit cards, which has burgeoned over the last 2 years.
The percentage of deferred payments has been consistently growing and the RBI has brought in stricter measures for banks to consider while offering credit cards, especially for those with lower than 600-CIBIL Scores.
The Axio-buy would be a boon to Amazon, so it could sell more to Indians. At present, the e-commerce business size of Amazon in India is estimated to be USD 4 Bn, half of that of its rival Flipkart, owned by Walmart.