Snapdeal which was going through rough waters in 2017, came back in the game with its revival plan 2.0.
“We are building a company in the most hyper-competitive e-commerce market in the world, up against not one, not two, but three multi-hundred billion dollar global e-commerce behemoths,” stated by Kunal Bahl, Co-founder of Snapdeal
- There was a time when Snapdeal was facing a tight money crunch and was looking for the $950 million mergers with rival Flipkart.
- While everyone was taking time to come on board, the founders Kunal Bahl and Rohit Bansal were still in dilemma to let go of the reins, even if it means running a stripped-down version of Snapdeal
The Japanese giant Softbank Group which is the largest investor in Snapdeal had been keen on seeing the deal through in order to secure a stake in Flipkart.
They still respected the decision of founders to pursue an independent strategy and also stated that they were looking forward to the results of the Snapdeal 2.0 strategy.
The sale of assets like payments arm Free-Charge was an important part of Snapdeal 2.0. The Axis Bank bought out FreeCharge for $60 million
Snapdeal 2.0 is all of below:
- The single-minded focus on the core business – only running a pure-play marketplace.
- To keep eye on the economics of the business, and then resume growing it
- To grow back the roots of catering to the needs of the value-conscious buyers.
- Time-bound plan to reach positive cash flow and liberate the company from fundraising cycles
Shopclues deal is unlikely
Lately, Snapdeal is in talks of acquiring smaller rival ShopClues
The deal is initiated by Nexus Venture Partners, an investor in both the e-commerce firms, may not add much value to Snapdeal.
Snapdeal already delivers 8-10 times ShopClues’ order volumes.
With the same customer base in both companies, having the same target shoppers in Tier-II,-III and -IV locations with value-priced product assortment from small sellers.
Even if Snapdeal overlooks all of these factors, it would still have to reckon with ShopClues’s outstanding payments to its marketing, logistics and technology vendors.
The extent of financial liabilities, potential litigation and poor metrics of online sales, all add up to make prospects of the deal coming through very grim for ShopClues.