The much talked about merger of Snapdeal and Flipkart has been called off. The negotiations for the deal had been going on for six months. With the reports coming, it seemed that the founders of Snapdeal didn't want the merger but one of the major investors in the company, Softbank had been pushing for it.
After six months of numerous rounds of discussions to finalise the contours of Flipkart’s acquisition of Snapdeal, the latter said on Monday that it has decided to “pursue an independent path and is terminating all strategic discussions as a result”. (indianexpress.com)
Tweet by Samidha Sharma: RT @TOIStartups: After months #Snapdeal snaps sale talks with #Flipkart, will stay independent via @samidhas @DigbijayTOI #SoftBank https:/… - on Tue Aug 01 05:11:05
Over just 12 months, Snapdeal's value sunk to $1 billion from $6.5 billion. Flipkart's best price was $950 million. The valuation offered made several Snapdeal investors unhappy. (factordaily.com)
We have a new and compelling direction — Snapdeal 2.0 — that uniquely furthers this vision, and have made significant progress towards the ability to execute this by achieving a gross profit this month,” a Snapdeal spokesperson said. (indianexpress.com)
Tweet by Apurv Nagpal: I also feel it's good for #Flipkart too. Perhaps they can kick off same process internally too #Snapdeal version 2.0 https://t.co/AHZ12Qv1XK - on Tue Aug 01 05:31:19
“In addition, with the sale of certain non-core assets, Snapdeal is expected to be financially self-sustainable. We look forward to the support of our community, including employees, sellers, buyers and other stakeholders in helping us create a designed-for-India commerce platform,” the spokesperson added. On July 27, Axis Bank announced acquisition of payments firm FreeCharge from Snapdeal for a sum of Rs 385 crore. The online marketplace company is also reportedly in talks for selling its stake in logistics firm Vulcan Express. (indianexpress.com)
The Snapdeal 2.0 strategy put forth by co-founders Kunal Bahl and Rohit Bansal has been further bolstered following a meeting between Bansal and the management of Japanese e-commerce and internet company Rakuten for an investment as recent as a few weeks ago, said a person aware of the discussions. (economictimes.indiatimes.com)
Bahl's new pitch was simple: he did not want any more money from investors. The money it raised from the sale of FreeCharge to Axis Bank, Rs 385 crore in cash would help in building the new Snapdeal. (factordaily.com)
A leaner Snapdeal will focus on its top product categories with a fraction of its earlier team strength.Three Snapdeal employees ET spoke with on the layoffs said they each had been promised retention bonuses and asked to stay back when they had earlier planned to leave for other jobs . (economictimes.indiatimes.com)
In Snapdeal 2.0 strategy, the employees of the e-commerce platform will be at a disadvantage. According to a report by PTI, it is said that heads of several departments have been sent mail highlighting the next round of retrenchment.
Tweet by Sameer Hashmi: 'Employees that were promised retention bonus earlier this year are been fired' - ET report #Snapdeal https://t.co/kqRwmlCsuO - on Tue Aug 01 04:20:49
Snapdeal to become Indian TaoBao
If Snapdeal has to survive on its own, Bahl wants it to be the TaoBao of India.
TaoBao is an open marketplace of Alibaba, Chinese ecommerce giant, which allows any and every seller to list its products. It caters to the long tail of retail, unlike TMall (also an Alibaba subsidiary), which is a marketplace for brands.
“Snapdeal 2.0 is about being frugal and self-sufficient,” said the second source. Bahl has showed the board Snapdeal’s path to profitability in March 2017. “The board had approved the plan and allowed Bahl and his team to reorganise the business,” said the first source. In the days and months to come, the board will have to approve several changes for the Taobao-like model to emerge. “That will take another 90 days,” said a third source.(factordaily.com)
Interest of Softbank
The decision to call-off the deal may come as a setback to Japanese SoftBank Group, which, if the talks went through, would have got a significant stake in Flipkart. However, in a statement, a SoftBank spokesperson said that the firm backed Snapdeal’s decision. “Supporting entrepreneurs and their vision and aspirations is at the heart of Masayoshi Son’s and SoftBank’s investment philosophy. As such, we respect the decision to pursue an independent strategy. We look forward to the results of the Snapdeal 2.0 strategy, and to remaining invested in the vibrant Indian e-commerce space,” the spokesperson said. (indianexpress.com)
SoftBank was calling all the shots, even if it meant a distress sale to create a bulked-up entity in the Flipkart-Snapdeal combine that can take on industry No. 1, Amazon India. (factordaily.com)
Flipkart and eBay.in Merger
The merger between Snapdeal and Flipkart fell through but Flipkart merged with another e-commerce giant.
E-commerce major Flipkart today said it has completed the merger with eBay India’s operations. With this, eBay.in will now be a Flipkart Group company. The deal was announced in April when the Flipkart group raised USD 1.4 billion from global technology majors eBay, Tencent and Microsoft.
Besides, the companies will also partner to leverage opportunities in cross-border trade, it added. “As a result, Flipkart customers will get expanded product choices with the wide array of global inventory available on eBay while eBay customers will have access to a more unique Indian inventory from Flipkart sellers,” the statement said. (freepressjournal.in)
The fund is looking at putting between $1.5 billion and $2 billion into the largest Indian e-commerce operator within the next two months, said one of the people, asking to not be identified as the discussions are private. (economictimes.indiatimes.com)