eCargo buys Metcash export arm

E-commerce company eCargo is buying 85 per cent of the export business of Metcash, including its China-based Asian business.

Jessica Rudd is a director and shareholder of eCargo. Picture: Adam Taylor

The Jessica Rudd-backed e-commerce company eCargo is buying 85 per cent of the export business of supermarket and grocery company Metcash, including its China-based Asian business, in a deal worth more than $11 million.

Rudd is a director and shareholder in the booming ASX-listed eCargo Holdings which specialises in selling Australian food, wine and health care products into the China market on e-commerce platforms such as Alibaba.

The Brisbane-based Rudd become a director of eCargo after selling 45 per cent of her China-focused e-commerce business, Jessica’s Suitcase, to eCargo, in January. eCargo also announced this week it would be buying the outstanding 55 per cent stake in the business.

The deal will merge eCargo’s online business selling Australian goods into China with Metcash’s China business which sells Australian products online as well as through its distribution arms with supermarkets and retail groups in 11 provinces across China.

“We are excited to continue to bring Chinese consumers the best Australia has to offer,” Rudd said from Shanghai where she is temporarily based.

Rudd said she would also continue her role as a lifestyle ambassador for Chinese e-commerce giant Alibaba which launches its latest Singles Day annual shopping event in China tomorrow, an event which has become the biggest shopping day in the world.

Metcash chief executive Jeff Adams said the deal would allow the company to have a stake in a growing China business.

“China continues to provide a good opportunity for growth,” he said. “We believe this arrangement, which includes retaining part ownership, fits well with our strategic direction.”

Metcash opened an office in China a few years ago to help with sourcing goods for supermarkets in Australia which include IGA and Campbells Wholesale Group.

But the business expanded into selling goods from Australia, including food and health and beauty products to the China market on e-commerce platforms including Alibaba’s TMall Global and JD Worldwide, and then directly to supermarkets and retailers across China in many third, fourth and fifth tier cities.

John Lau, executive chairman of eCargo, said the deal with Metcash supplied “a missing piece of the puzzle”.

“While we are good at logistics, the Metcash supply agreement gives us access to quality Australian products at competitive prices,” he said. “It also gives eCargo access to key offline wholesale distribution channels in China, particularly outside the tier 1 and tier 2 cities.”

Will Zhao, the head of Metcash’s China operations based in Shanghai, will become the interim chief executive of eCargo, following the resignation of Eva Zhang.

He will be supported by Haiyun Chen, Metcash’s head of China export development, who will be appointed to the Sydney based role as eCargo’s director of international supply chain.

In a separate announcement, eCargo said that it would also be buying the final 55 per cent of the shares in Jessica’s Suitcase.

This follows a deal in January where eCargo bought a 45 per cent stake in Ms Rudd’s business which sells products including Penfolds wines, health products and food to the Chinese consumer market.